FIRST QUARTER 2015 HIGHLIGHTS
Consolidated Results
• Total revenue increased 9.7% to $1,079 million
• Adjusted EBITDA increased 13.0% to $724 million
• AFFO increased 16.9% to $514 million
Segment Results
• Domestic rental and management segment revenue increased 12.9%
to $718 million
• International rental and management segment revenue increased
6.2% to $344 million
• Network development services segment revenue was $17
million
American Tower Corporation (NYSE:AMT) today reported financial
results for the quarter ended March 31, 2015.
Jim Taiclet, American Tower's Chief Executive Officer stated,
"Our U.S. and international operations maintained strong leasing
momentum through the first quarter of 2015, driving global Organic
Core Growth of over 9%. We also completed the largest tower
transaction in the domestic tower industry’s history by adding over
11,400 Verizon assets to our portfolio. Additionally, in Latin
America, we closed on nearly 4,200 TIM Brazil sites in April.
Our regional management teams are intently focused on
integrating these assets and closing our Airtel Nigeria transaction
as quickly and efficiently as possible. These three portfolios
solidify our strategic positioning in the most populous countries
in North America, South America and EMEA, respectively, securing
our ability to benefit from their vibrant wireless markets far into
the future."
FIRST QUARTER 2015 OPERATING RESULTS OVERVIEW
American Tower generated the following operating results for the
quarter ended March 31, 2015 (unless otherwise indicated, all
comparative information is presented against the quarter ended
March 31, 2014).
Please note that the definitions of Core Growth, Organic Core
Growth and New Property Core Growth now exclude the impacts of
pass-through.
- Total revenue increased 9.7% to $1,079
million, and total rental and management revenue increased 10.6% to
$1,062 million.
- Total rental and management revenue
Core Growth was approximately 15.6%, and total rental and
management Organic Core Growth was approximately 9.4%.
- Total rental and management Gross
Margin increased 13.2% to $806 million, and total rental and
management Gross Margin percentage was 75.9%.
- Adjusted EBITDA increased 13.0% to $724
million, Core Growth in Adjusted EBITDA was 17.5%, and Adjusted
EBITDA Margin was 67%.
- Adjusted Funds From Operations (AFFO)
increased 16.9% to $514 million, AFFO per Share increased 13.6% to
$1.25, and Core Growth in AFFO was approximately 21.9%.
- Net income attributable to American
Tower Corporation common stockholders decreased 9.4% to $183
million, and Net income attributable to American Tower Corporation
stockholders per basic and diluted common share decreased to
$0.45.
- Cash provided by operating activities
increased 7.0% to $510 million.
Segment Results
Domestic Rental and Management Segment
- Revenue increased 12.9% to $718
million;
- Organic Core Growth in revenue was 9.3%
and included a favorable impact of about 1.9% due to the timing of
$17 million of revenue recognition associated with an equipment
decommissioning agreement;
- Gross Margin increased 13.7% to $585
million;
- Gross Margin percentage was 81%;
- Operating Profit increased 14.6% to
$558 million, which represented 74% of total Operating Profit;
and
- Operating Profit Margin was 78%.
International Rental and Management Segment
- Revenue increased 6.2% to $344
million;
- Organic Core Growth in revenue was
9.7%, and Core Growth in revenue was 22.3%;
- Gross Margin increased 11.7% to $221
million;
- Gross Margin percentage was 64% (86%
excluding the impact of $88 million of pass-through revenues);
- Operating Profit increased 10.5% to
$186 million, which represented 25% of total Operating Profit;
and
- Operating Profit Margin was 54% (73%
excluding the impact of $88 million of pass-through revenues).
Network Development Services Segment
- Revenue was $17 million;
- Gross Margin was $12 million;
- Gross Margin percentage was 69%;
- Operating Profit was $8 million, which
represented 1% of total Operating Profit; and
- Operating Profit Margin was 49%.
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.
INVESTING OVERVIEW
Common Stock Distributions – During the quarter ended
March 31, 2015, the Company paid its fourth quarter 2014
distribution of $0.38 per share, or a total of approximately $151
million, to common stockholders. Subsequent to the end of the first
quarter, the Company paid its first quarter distribution of $0.42
per share, or a total of approximately $178 million, to common
stockholders.
Mandatory Convertible Preferred Stock Dividends – During
the first quarter ended March 31, 2015, the Company paid its Series
A Preferred Stock dividend of approximately $8 million. Subsequent
to the end of the first quarter, the Company declared dividends
attributable to its Series A and Series B Preferred Stock in an
aggregate amount of $23 million, payable on May 15, 2015 to
stockholders of record at the close of business on May 1, 2015.
Cash Paid for Capital Expenditures – During the first
quarter of 2015, total capital expenditures of $159 million
included:
- $71 million for discretionary capital
projects, including spending to complete the construction of 23
towers and the installation of two distributed antenna system
networks and six shared generators domestically and the
construction of 621 towers and the installation of nine distributed
antenna system networks internationally;
- $29 million to purchase land under the
Company’s communications sites;
- $5 million for start-up capital
projects;
- $35 million for the redevelopment of
existing communications sites to accommodate new tenant equipment;
and
- $19 million for capital improvements
and corporate capital expenditures.
Cash Paid for Acquisitions – During the first quarter of
2015, the Company spent approximately $120 million to acquire 190
sites in the U.S. and six sites internationally.
In addition to the 163 wireless communications sites the Company
purchased from Verizon on March 27, 2015, which are reflected
above, the Company also expanded its domestic portfolio by
obtaining the exclusive right to lease or otherwise operate and
manage 11,285 sites for a total cash payment of approximately $5.0
billion. American Tower funded the transaction with proceeds from
its concurrent registered public offerings, borrowings under its
revolving credit facilities and cash on hand.
Subsequent to the end of the first quarter, the Company closed
on 4,176 sites as part of its previously announced TIM Brazil
transaction, for a total consideration of approximately $644
million and expects to close on the remaining sites over the next
twelve months. The Company’s previously announced Airtel Nigeria
transaction is still expected to close during the second quarter of
2015.
FINANCING OVERVIEW
Leverage – For the quarter ended March 31, 2015, the
Company’s Net Leverage Ratio was approximately 5.3x net debt (total
debt less cash and cash equivalents) to first quarter 2015
annualized Adjusted EBITDA.
Liquidity – As of March 31, 2015, the Company had
approximately $2.7 billion of total liquidity, comprised of the
ability to borrow up to an aggregate of approximately $2.4 billion
under its revolving credit facilities, net of outstanding letters
of credit, and approximately $0.3 billion in cash and cash
equivalents.
Subsequent to the end of the first quarter, the Company
completed the redemption of all of its outstanding 7.000% senior
notes due 2017, at 114.0629% of the principal amount, plus accrued
and unpaid interest. The total aggregate redemption price was
approximately $571.7 million, including approximately $1.4 million
in accrued interest. The redemption was funded with borrowings
under the Company’s existing credit facilities and cash on
hand.
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 April 30, 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 $290 million, Adjusted EBITDA by $150 million
and AFFO by $85 million. These estimates include the impacts of the
Verizon transaction, which closed on March 27, 2015 and the first
tranche of 4,176 TIM Brazil sites, which closed on April 29, 2015.
The impacts of the approximately 2,300 TIM Brazil sites that have
not yet closed are not included in our current outlook.
We expect to close our Airtel Nigeria acquisition during the
second quarter of 2015 and anticipate that the over 4,800 Airtel
towers will contribute approximately $145 million in revenue, $38
million in Adjusted EBITDA and $22 million in AFFO in 2015, at
current exchange rates. These contributions are not currently
included in our outlook.
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) 640 Chilean Pesos;
(c) 2,625 Colombian Pesos; (d) 0.95 Euros; (e) 3.75
Ghanaian Cedi; (f) 63.00 Indian Rupees; (g) 15.15 Mexican
Pesos; (h) 3.15 Peruvian Soles; (i) 12.25 South African
Rand; and (j) 3,000 Ugandan Shillings. The result of the
updated foreign currency exchange rates assumptions versus our
prior outlook was a reduction of approximately $75 million in
rental and management revenue, $45 million in Adjusted EBITDA and
$45 million in AFFO for the full year. These assumptions are based
on the more conservative of: (a) the 30-day average spot rate; or
(b) the average Bloomberg forecast for each currency.
($ in millions) Full Year 2015
Midpoint
Growth
Midpoint Core
Growth
Total rental and management revenue $ 4,555 to $
4,605 14.3% 22.0% Adjusted EBITDA(1) 2,990 to 3,030 13.6% 19.4%
AFFO(1) 2,035 to 2,075 13.2% 21.3% Net income 830 to 860 5.2% N/A
(1) See “Non-GAAP and Defined Financial
Measures” below.
The Company’s outlook for total rental and management revenue
reflects the following at the midpoint:
- Domestic rental and management segment
revenue of $3,160 million and Organic Core Growth of over 7%;
and
- International rental and management
segment revenue of $1,420 million and Organic Core Growth of
approximately 10%. International rental and management segment
revenue includes approximately $346 million of pass-through
revenue.
The calculation of midpoint Core Growth
is as follows:(Totals may not add due to rounding)
Total Rental and
Management
Revenue
Adjusted
EBITDA
AFFO Outlook midpoint Core Growth 22.0% 19.4% 21.3% Impact
of pass-through revenues (1.9)% —% —% Estimated impact of
fluctuations in foreign currency exchange rates (6.0)% (5.8)%
(7.9)% Impact of straight-line revenue and expense recognition 0.2%
0.1% — Impact of significant one-time items —% (0.1)% (0.2)%
Outlook midpoint growth 14.3% 13.6% 13.2%
Total Rental and Management Revenue
Core Growth Components(1):(Totals may not add due
to rounding)
Full Year 2015 Organic Core Growth ~8% New Property Core
Growth(2) ~14% Core Growth ~22%
(1) Reflects growth at the midpoint of
outlook ranges. Excludes pass-through revenue.
(2) Revenue growth attributable to sites
added to the portfolio on or after January 1, 2014.
Outlook for Capital
Expenditures: ($ in millions) (Totals may not add due to
rounding)
Full Year 2015 Discretionary capital projects(1) $
335 to $ 375 Ground lease purchases 170 to 190 Start-up capital
projects 85 to 95 Redevelopment 155 to 175 Capital improvement 90
to 100 Corporate 15 — 15 Total $ 850 to $ 950
(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 $ 830
to $ 860 Interest expense 600 to 630 Depreciation,
amortization and accretion 1,205 to 1,215 Income tax provision 85
to 62 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) 181 to 174 Adjusted
EBITDA $ 2,990 to $ 3,030
Reconciliations of
Outlook for Net Income to AFFO: ($ in millions)
(Totals may not add due to rounding)
Full Year 2015 Net
income $ 830 to $ 860 Straight-line revenue (151 ) —
(151 ) Straight-line expense 51 — 51 Depreciation, amortization and
accretion 1,205 to 1,215 Stock-based compensation expense 90 — 90
Non-cash portion of tax provision 7 to 13 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 108 to 113 Capital improvement capital
expenditures (90 ) to (100 ) Corporate capital expenditures (15 ) —
(15 ) AFFO $ 2,035 to $ 2,075
Conference Call Information
American Tower will host a conference call today at 8:30 a.m. ET
to discuss its financial results for the quarter ended March 31,
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: 19903164
When available, a replay of the call can be accessed until 11:59
p.m. ET on May 7, 2015. The replay dial-in numbers are as
follows:
U.S./Canada dial-in: (855)
859-2056International dial-in: (404) 537-3406Passcode: 19903164
American Tower will also sponsor a live simulcast and replay of
the call on its website, www.americantower.com.
About American Tower
American Tower, one of the largest global REITs, is a leading
independent owner, operator and developer of multitenant
communications real estate with a portfolio of over 87,000
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 Measures
In 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 our anticipated closing
dates of 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)
March 31, 2015 December 31,
2014(1) ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 323,400 $ 313,492 Restricted cash 129,505 160,206
Short-term investments 14,394 6,302 Accounts receivable, net
175,784 199,074 Prepaid and other current assets 269,181 255,083
Deferred income taxes 13,555 14,510 Total current
assets 925,819 948,667 PROPERTY AND EQUIPMENT, NET
9,422,641 7,595,939 GOODWILL 3,980,174 4,028,549 OTHER INTANGIBLE
ASSETS, NET 9,536,782 6,908,043 DEFERRED INCOME TAXES 226,710
253,186 DEFERRED RENT ASSET 1,059,953 1,030,707 NOTES RECEIVABLE
AND OTHER NON-CURRENT ASSETS 778,115 566,454 TOTAL $
25,930,194 $ 21,331,545
LIABILITIES AND
EQUITY CURRENT LIABILITIES: Accounts payable $ 72,512 $ 90,366
Accrued expenses 392,450 417,754 Distributions payable 179,192
159,864 Accrued interest 77,654 130,265 Current portion of
long-term obligations 789,152 897,624 Unearned revenue 220,454
233,819 Total current liabilities 1,731,414
1,929,692 LONG-TERM OBLIGATIONS 14,930,952 13,711,084 ASSET
RETIREMENT OBLIGATIONS 792,991 609,035 OTHER NON-CURRENT
LIABILITIES 1,043,198 1,028,382 Total liabilities
18,498,555 17,278,193
COMMITMENTS AND
CONTINGENCIES EQUITY: 5.25%, Series A Preferred Stock 60
60 5.50%, Series B Preferred Stock 14 — Common stock 4,259 3,995
Additional paid-in capital 9,583,498 5,788,786 Distributions in
excess of earnings (822,545 ) (837,320 ) Accumulated other
comprehensive loss (1,205,860 ) (794,221 ) Treasury stock (207,740
) (207,740 ) Total American Tower Corporation equity 7,351,686
3,953,560 Noncontrolling interest 79,953 99,792 Total
equity 7,431,639 4,053,352 TOTAL $ 25,930,194
$ 21,331,545
(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 March 31,
2015 2014 REVENUES: Rental and management $
1,062,180 $ 960,120 Network development services 17,010
23,969 Total operating revenues 1,079,190 984,089
OPERATING EXPENSES: Costs of operations (exclusive of items
shown separately below): Rental and management (including
stock-based compensation expense of $432 and $372, respectively)
259,257 250,835 Network development services (including stock-based
compensation expense of $139 and $132, respectively) 5,383 9,934
Depreciation, amortization and accretion 263,520 245,763 Selling,
general, administrative and development expense (including
stock-based compensation expense of $29,290 and $24,100,
respectively) 123,290 110,029 Other operating expenses 7,774
13,891 Total operating expenses 659,224 630,452
OPERATING INCOME 419,966 353,637 OTHER INCOME
(EXPENSE): Interest income, TV Azteca, net 2,596 2,595 Interest
income 2,964 2,018 Interest expense (147,934 ) (143,307 ) Loss on
retirement of long-term obligations (3,725 ) (238 ) Other expense
(including unrealized foreign currency losses of $55,468 and
$2,005, respectively) (54,503 ) (3,743 ) Total other expense
(200,602 ) (142,675 ) INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 219,364 210,962 Income tax provision (23,872 ) (17,649
) NET INCOME 195,492 193,313 Net (income) loss attributable to
noncontrolling interest (2,175 ) 9,186 NET INCOME
ATTRIBUTABLE TO AMERICAN TOWER CORPORATION STOCKHOLDERS 193,317
202,499 Dividends on preferred stock (9,819 ) — NET INCOME
ATTRIBUTABLE TO AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS $
183,498 $ 202,499 NET INCOME PER COMMON SHARE
AMOUNTS: Basic net income attributable to American Tower
Corporation common stockholders $ 0.45 $ 0.51 Diluted
net income attributable to American Tower Corporation common
stockholders $ 0.45 $ 0.51 WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING: Basic 405,111 395,146 Diluted
409,399 399,120
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
Three months ended March 31, 2015
2014 CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$ 195,492 $ 193,313 Adjustments to reconcile net income to cash
provided by operating activities: Stock-based compensation expense
29,861 24,604 Depreciation, amortization and accretion 263,520
245,763 Loss on early retirement of long-term obligations 3,725 238
Other non-cash items reflected in statements of operations 66,309
5,060 Increase in net deferred rent asset (25,074 ) (21,393 )
Decrease (increase) in restricted cash 28,180 (8,347 ) Increase in
assets (2,779 ) (43,449 ) (Decrease) increase in liabilities
(49,304 ) 80,793 Cash provided by operating activities
509,930 476,582 CASH FLOWS FROM INVESTING
ACTIVITIES: Payments for purchase of property and equipment and
construction activities (159,184 ) (213,891 ) Payments for
acquisitions, net of cash acquired (20,946 ) (62,761 ) Payment for
Verizon transaction (5,058,019 ) — Proceeds from sale of short-term
investments and other non-current assets 72,684 138,228 Payments
for short-term investments (82,557 ) (151,263 ) Deposits,
restricted cash and other (1,397 ) (1,369 ) Cash used for investing
activities (5,249,419 ) (291,056 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Repayments of short-term borrowings, net — (172 )
Borrowings under credit facilities 3,150,000 — Proceeds from
issuance of senior notes, net — 769,640 Proceeds from term loan
500,000 — Proceeds from other long-term borrowings — 3,033
Repayments of notes payable, credit facilities, senior notes and
capital leases (2,490,771 ) (916,632 ) Distributions to
noncontrolling interest holders, net (137 ) (154 ) Proceeds from
stock options 5,106 13,795 Proceeds from the issuance of common
stock, net 2,440,390 — Proceeds from the issuance of preferred
stock, net 1,338,009 — Deferred financing costs and other financing
activities (22,558 ) (21,857 ) Distributions paid on common stock
(152,037 ) (554 ) Distributions paid on preferred stock (7,875 ) —
Cash provided by (used for) financing activities 4,760,127
(152,901 ) Net effect of changes in foreign currency
exchange rates on cash and cash equivalents (10,730 ) 7,238
NET INCREASE IN CASH AND CASH EQUIVALENTS 9,908 39,863 CASH AND
CASH EQUIVALENTS, BEGINNING OF PERIOD 313,492 293,576
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 323,400 $ 333,439 CASH
PAID FOR INCOME TAXES, NET $ 14,714 $ 19,094 CASH
PAID FOR INTEREST $ 199,022 $ 154,497
UNAUDITED RESULTS FROM OPERATIONS, BY
SEGMENT
(In thousands, except percentages. Totals
may not add due to rounding.)
Three months ended March 31, 2015 Rental
and Management NetworkDevelopment
Services Total Domestic
International Total Segment revenues $ 717,880
$ 344,300 $ 1,062,180 $ 17,010 $ 1,079,190 Segment operating
expenses (1) 133,032 125,793 258,825 5,244 264,069 Interest income,
TV Azteca, net — 2,596 2,596 — 2,596
Segment Gross Margin 584,848 221,103 805,951
11,766 817,717 Segment selling, general,
administrative and development expense (1) 26,822 34,611
61,433 3,436 64,869 Segment Operating
Profit $ 558,026 $ 186,492 $ 744,518 $ 8,330
$ 752,848 Segment Operating Profit Margin 78 % 54 %
70 % 49 % 70 % Percent of total Operating Profit 74 % 25 % 99 % 1 %
100 %
Three months ended March 31, 2014 Rental and
Management NetworkDevelopment Services
Total Domestic International Total
Segment revenues $ 635,779 $ 324,341 $ 960,120 $ 23,969 $ 984,089
Segment operating expenses (1) 121,509 128,954 250,463 9,802
260,265 Interest income, TV Azteca, net — 2,595 2,595
— 2,595 Segment Gross Margin 514,270
197,982 712,252 14,167 726,419 Segment
selling, general, administrative and development expense (1) 27,409
29,216 56,625 2,530 59,155
Segment Operating Profit $ 486,861 $ 168,766 $
655,627 $ 11,637 $ 667,264 Segment Operating
Profit Margin 77 % 52 % 68 % 49 % 68 % Percent of total Operating
Profit 73 % 25 % 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:
Long-term obligations summary, including current
portion March 31, 2015 Pro Forma
March 31, 2015 (1)
2013 Credit Facility 400,000 1,952,000 2013 Term Loan 2,000,000
2,000,000 2014 Credit Facility 1,980,000 1,980,000 3.40% senior
notes due 2019 1,005,193 1,005,193 3.450% senior notes due 2021
646,513 646,513 3.50% senior notes due 2023 993,412 993,412 4.500%
senior notes due 2018 999,660 999,660 4.70% senior notes due 2022
699,017 699,017 5.00% senior notes due 2022 1,010,594 1,010,594
5.050% senior notes due 2020 699,518 699,518 5.900% senior notes
due 2021 499,490 499,490 7.000% senior notes due 2017 500,000 —
7.25% senior notes due 2019 297,394 297,394 Total unsecured
at American Tower Corporation $ 11,730,791 $ 12,782,791
Secured Tower Revenue Securities, Series 2013-1A 500,000 500,000
Secured Tower Revenue Securities, Series 2013-2A 1,300,000
1,300,000 GTP Notes(2) 1,259,506 1,259,506 Unison Notes(3) 203,245
203,245 South African facility(4) 70,089 70,089 Colombian credit
facility(4) 76,668 76,668 BR Towers debentures(4)(5) 100,937
100,937 Mexican loan(4) 254,649 254,649 Shareholder loans(6)
129,298 129,298 Capital leases 94,921 94,921 Total secured
or subsidiary debt $ 3,989,313 $ 3,989,313 Total debt $
15,720,104 $ 16,772,104 Cash and cash equivalents 323,400
Net debt (total debt less cash and cash equivalents) $
15,396,704
(1) Pro Forma for the following activity in
April 2015, (i) the redemption of all of the outstanding 7.000%
senior notes due in 2017 in accordance with the terms thereof and
(ii) net borrowings of $1,552 million under the 2013 Credit
Facility, the proceeds of which, together with cash on hand, were
used to fund the closing of the first tranche of TIM Brazil sites,
redeem the 7.000% senior notes, fund our Q1 common stock
distribution and will also be used to repay the Mexican Loan.
(2) The GTP Notes are secured debt and were
assumed in connection with the acquisition.
(3) The Unison Notes are secured debt and
were assumed in connection with the acquisition.
(4) Denominated in local currency.
(5) The BR Towers debentures were assumed in
connection with the acquisition.
(6) Reflects balances attributable to
minority shareholder loans in the Company's joint ventures in Ghana
and Uganda. The Ghana shareholder loan is denominated in Ghanaian
Cedi and the Uganda shareholder loan is denominated in USD.
UNAUDITED SELECTED FINANCIAL
INFORMATION
(In thousands, except where noted. Totals
may not add due to rounding.)
SELECTED BALANCE SHEET DETAIL
(CONTINUED):
Calculation of Net Leverage Ratio ($ in thousands)
Three months endedMarch 31,
2015
Total debt $ 15,720,104 Cash and cash equivalents 323,400
Numerator: net debt (total debt less cash and cash equivalents) $
15,396,704 Adjusted EBITDA $ 723,717 Denominator: annualized
Adjusted EBITDA 2,894,868 Net Leverage Ratio 5.3x
Share
count rollforward: (in millions of shares)
Three months endedMarch 31,
2015
Total common shares, beginning of period 396.7 Common shares
repurchased — Common shares issued 26.4 Total common shares
outstanding, end of period (1) 423.1
(1) As of March 31, 2015, excludes
(a) 4.2 million potentially dilutive common shares
associated with vested and exercisable stock options with an
average exercise price of $54.08 per common share,
(b) 4.2 million potentially dilutive common shares
associated with unvested stock options, (c) 1.7 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 March 31, Domestic
straight-line revenue and expense detail: 2015
2014 Straight-line revenue $ 26,658 $ 24,176 Straight-line
expense $ 6,473 $ 6,811
Three months ended March 31,
International straight-line revenue and expense detail:
2015 2014 Straight-line revenue $ 7,179 $
7,055 Straight-line expense $ 2,291 $ 2,667
(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 March 31, International
pass-through revenue detail: 2015 2014
Pass-through revenue $ 87,671 $ 82,432
Three months ended
March 31, Pre-paid rent detail(1):
2015 2014 Beginning balance $ 496,524 $
326,177 Cash 50,881 102,933 Amortization(2) (37,805 ) (24,848 )
Ending balance $ 509,600 $ 404,262
(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) Includes the impact of fluctuations in
foreign currency exchange rates.
Three months ended March 31, Selling, general,
administrative and development expense breakout: 2015
2014 Total rental and management overhead $ 61,433 $
56,625 Network development services segment overhead 3,436 2,530
Corporate and development expenses 29,131 26,774 Stock-based
compensation expense 29,290 24,100 Total $ 123,290 $
110,029
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:
Three months ended March 31, 2015
Total Rental
andManagementRevenue
AdjustedEBITDA
AFFO Core Growth 15.6 % 17.5 % 21.9 % Impact of
pass-through (0.4 )% — % — % Estimated Impact of fluctuations in
foreign currency exchange rates (4.5 )% (4.6 )% (5.8 )% Estimated
Impact of straight-line revenue recognition (0.1 )% 0.1 % —
Estimated Impact of material one-time items — — % 0.8 %
Reported growth 10.6 % 13.0 % 16.9 %
The components of Core Growth in rental and management
revenue are as follows:
Three months ended March 31, 2015 Domestic
International Total Organic Core Growth
9.3% 9.7% 9.4% New Property Core Growth(1) 3.7% 12.6% 6.2% Core
Growth 13.0% 22.3% 15.6%
(1) Revenue growth attributable to sites
added to the portfolio on or after January 1, 2014.
UNAUDITED SELECTED FINANCIAL
INFORMATION
($ in thousands. Totals may not add due to
rounding.)
SELECTED CASH FLOW DETAIL:
Three months ended March 31, Payments for
purchase of property and equipment and construction activities:
2015 2014 Discretionary - capital projects $
70,991 $ 111,172 Discretionary - ground lease purchases 28,993
44,860 Start-up capital projects 5,043 5,033 Redevelopment 35,061
30,372 Capital improvements 16,784 17,231 Corporate 2,312
5,223 Total $ 159,184 $ 213,892
SELECTED PORTFOLIO DETAIL – OWNED AND
OPERATED SITES:
Tower Count (1):
As of December 31,2014
Constructed Acquired
Adjustments
As of March 31,2015
United States 28,566 23 11,475 (16 ) 40,048 Brazil 11,873 92 — 24
11,989 Chile 1,156 4 — (1 ) 1,159 Colombia 3,589 41 — (4 ) 3,626
Costa Rica 464 — — — 464 Germany 2,031 — — — 2,031 Ghana 2,038 14 —
— 2,052 India 12,977 407 — (95 ) 13,289 Mexico 8,716 1 — — 8,717
Peru 571 7 — — 578 South Africa 1,918 — — — 1,918 Uganda 1,265
55 6 — 1,326 Total 75,164 644 11,481
(92 ) 87,197
(1) Excludes in-building and outdoor
distributed antenna system networks.
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 March 31, 2015
2014 Net income $ 195,492 $ 193,313 Income tax
provision 23,872 17,649 Other expense 54,503 3,743 Loss on
retirement of long-term obligations 3,725 238 Interest expense
147,934 143,307 Interest income (2,964 ) (2,018 ) Other operating
expenses 7,774 13,891 Depreciation, amortization and accretion
263,520 245,763 Stock-based compensation expense 29,861
24,604 Adjusted EBITDA $ 723,717 $ 640,490
Divided by total revenue 1,079,190 984,089 Adjusted
EBITDA Margin 67 % 65 %
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 March 31, 2015
2014 Net income $ 195,492 $ 193,313 Real estate
related depreciation, amortization and accretion 228,828 217,018
Losses from sale or disposal of real estate and real estate related
impairment charges 3,681 1,670 Dividends on preferred stock (9,819
) — Adjustments for unconsolidated affiliates and noncontrolling
interest (7,226 ) 2,446 NAREIT Funds From Operations 410,956
414,447 Straight-line revenue (33,838 ) (31,230 )
Straight-line expense 8,764 9,478 Stock-based compensation expense
29,861 24,604 Non-cash portion of tax (benefit) provision 9,158
(1,445 ) Non-real estate related depreciation, amortization and
accretion 34,692 28,745 Amortization of deferred financing costs,
capitalized interest, debt discounts and premiums and long-term
deferred interest charges 3,603 3,417 Other expense (1) 54,503
3,743 Loss on retirement of long-term obligations 3,725 238 Other
operating expense (2) 4,093 12,221 Capital improvement capital
expenditures (16,784 ) (17,231 ) Corporate capital expenditures
(2,312 ) (5,223 ) Adjustments for unconsolidated affiliates and
noncontrolling interest 7,226 (2,446 ) AFFO $ 513,647
$ 439,318 Divided by weighted average diluted shares
outstanding 409,399 399,120 AFFO per Share $ 1.25 $ 1.10
(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.
American Tower CorporationLeah Stearns, 617-375-7500Senior Vice
President, Treasurer & Investor Relations
American Tower (NYSE:AMT)
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