THIRD QUARTER 2015 HIGHLIGHTS
Consolidated Results
- Total revenue increased 19.2% to $1,238
million
- Adjusted EBITDA increased 17.0% to $779
million
- AFFO increased 21.4% to $558
million
Segment Results
- Domestic rental and management segment
revenue increased 21.8%, or 21.2% on a core basis
- International rental and management
segment revenue increased 16.5%, or 43.5% on a core basis
- Network development services segment
revenue was $25 million
American Tower Corporation (NYSE:AMT) today reported financial
results for the quarter ended September 30, 2015.
Jim Taiclet, American Tower's Chief Executive Officer stated,
"Our nearly 14% growth in AFFO per Share in the third quarter was
fueled by continuing exponential growth in mobile data demand in
both the U.S. and in our international markets. We believe that
this growth in demand will go on for many years to come, driven by
a combination of lower cost smartphones proliferating around the
world, additional spectrum being deployed for mobile data and the
competitive imperative for mobile operators to steadily invest in
their networks.
Our strategic objective is to capture this long-term growth
opportunity by building strong positions in the world’s largest
free market economies with attractive wireless industry structures.
So far in 2015, we have made tremendous progress on expanding
American Tower’s global growth platform through our acquisitions of
rights to the Verizon towers in the U.S., Telecom Italia’s towers
in Brazil, Airtel’s portfolio in Nigeria and our recently announced
Viom transaction in India. We expect that these strategically
located assets will further lengthen and strengthen our AFFO per
Share growth trajectory well into the future."
THIRD QUARTER 2015 OPERATING RESULTS OVERVIEW
American Tower generated the following operating results for the
quarter ended September 30, 2015 (unless otherwise indicated,
all comparative information is presented against the quarter ended
September 30, 2014).
- Total revenue increased 19.2% to $1,238
million, and total rental and management revenue increased 20.0% to
$1,213 million.
- Total rental and management revenue
Core Growth was approximately 27.4%, and total rental and
management Organic Core Growth was approximately 7.3%.
- Total rental and management Gross
Margin increased 16.0% to $860 million, and total rental and
management Gross Margin percentage was 71%.
- Adjusted EBITDA increased 17.0% to $779
million, Core Growth in Adjusted EBITDA was 26.0%, and Adjusted
EBITDA Margin was 63%.
- Adjusted Funds From Operations (AFFO)
increased 21.4% to $558 million, AFFO per Share increased 13.9% to
$1.31, and Core Growth in AFFO was approximately 32.6%, each of
which excludes the impact of the one-time GTP cash tax payment
described below.
- The Company incurred one-time cash
costs of approximately $93 million in the third quarter in
connection with its previously disclosed tax election, pursuant to
which Global Tower Partners (GTP) REIT was folded into the American
Tower REIT and no longer operates as a separate REIT for federal
and state income tax purposes.
- Net income attributable to American
Tower common stockholders decreased 61.9% to $76 million, and Net
income attributable to American Tower common stockholders per both
basic and diluted common share decreased to $0.18. The decreases
were primarily attributable to the one-time GTP cash tax item as
well as the non-cash impacts of unfavorable foreign currency
exchange rate fluctuations on intercompany balances.
- Cash provided by operating activities
decreased 1.7% to $1,544 million for the first nine months of
2015.
Segment Results
Domestic Rental and Management Segment
- Revenue increased 21.8% to $808
million;
- Organic Core Growth in revenue was
6.0%;
- Gross Margin increased 17.2% to $621
million;
- Gross Margin percentage was 77%;
- Operating Profit increased 18.2% to
$589 million, which represented 73% of total Operating Profit;
and
- Operating Profit Margin was 73%.
International Rental and Management Segment
- Revenue increased 16.5% to $405
million, and Core Growth in revenue was 43.5%;
- Organic Core Growth in revenue was
10.7%;
- Gross Margin increased 12.9% to $240
million;
- Gross Margin percentage was 59% (84%
excluding the impact of $119 million of pass-through
revenues);
- Operating Profit increased 14.6% to
$205 million, which represented 25% of total Operating Profit;
and
- Operating Profit Margin was 51% (72%
excluding the impact of pass-through revenues).
Network Development Services Segment
- Revenue was $25 million;
- Gross Margin was $16 million;
- Gross Margin percentage was 63%;
- Operating Profit was $12 million, which
represented 2% of total Operating Profit; and
- Operating Profit Margin was 48%.
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 third quarter of
2015, the Company paid its second quarter 2015 distribution of
$0.44 per share, or a total of approximately $186 million, to
common stockholders. Subsequent to the end of the third quarter,
the Company paid its third quarter distribution of $0.46 per share,
or a total of approximately $195 million, to common
stockholders.
Mandatory Convertible Preferred Stock Dividends – During
the third quarter of 2015, the Company paid an aggregate amount of
approximately $27 million in Series A and Series B preferred stock
dividends. Subsequent to the end of the third quarter, the Company
declared dividends on its Series A and Series B preferred stock in
an aggregate amount of approximately $27 million, payable on
November 16, 2015 to such stockholders of record at the close of
business on November 1, 2015.
Cash Paid for Capital Expenditures – During the third
quarter of 2015, total capital expenditures of $207 million
included:
- $71 million for discretionary capital
projects, including spending to complete the construction of 22
towers and the installation of two distributed antenna system
networks domestically and the construction of 737 towers and the
installation of nine distributed antenna system networks
internationally;
- $38 million to purchase land under the
Company’s communications sites;
- $28 million for start-up capital
projects;
- $43 million for the redevelopment of
existing communications sites to accommodate new tenant equipment;
and
- $27 million for capital improvements
and corporate capital expenditures.
Cash Paid for Acquisitions – During the third quarter of
2015, the Company spent approximately $946 million to acquire five
sites in the U.S. and 6,206 sites internationally.
This included the Company’s acquisition of 4,700 communications
sites in Nigeria in the third quarter, as part of its previously
announced transaction with Bharti Airtel, for a total consideration
of approximately $1.1 billion, including VAT. Of the purchase
price, approximately $807 million of the consideration has been
paid, with the remainder to be paid prior to January 15, 2016.
Further, on September 30, 2015, the Company closed on an
additional 1,125 communications sites in Brazil as part of a
previously announced transaction with TIM Celular S.A., for an
aggregate purchase price of approximately BRL 517 million
(approximately $131 million at the date of acquisition).
Subsequent to the end of the third quarter, the Company
announced that one of its wholly owned subsidiaries had entered
into a definitive agreement to acquire a 51% controlling interest
in Viom Networks Limited, which owns and operates approximately
42,200 wireless communications towers and 200 indoor distributed
antenna systems across India, for a total cash consideration of
approximately INR 76 billion (approximately $1,157 million assuming
an exchange rate of 66 INR per USD). The Company expects the
transaction to close in mid-2016.
FINANCING OVERVIEW
Leverage – For the quarter ended September 30, 2015,
the Company’s Net Leverage Ratio was approximately 5.4x net debt
(total debt less cash and cash equivalents) to third quarter 2015
annualized Adjusted EBITDA.
Liquidity – As of September 30, 2015, the Company
had approximately $2.0 billion of total liquidity, comprised of the
ability to borrow up to an aggregate of approximately $1.7 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 quarter, the Company extended the
maturity dates of its 2014 Credit Facility, 2013 Credit Facility
and Term Loan to January 29, 2021, June 28, 2019 and January 29,
2021, respectively.
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 October 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.
The Company’s current outlook reflects unfavorable impacts of
foreign currency fluctuations of approximately $56 million for
total rental and management revenue, $30 million for Adjusted
EBITDA and $28 million for AFFO, relative to the foreign exchange
rate assumptions used in the Company's prior outlook.
After incorporating these impacts, the Company has reduced the
midpoint of its full year 2015 outlook for total rental and
management revenue by $20 million, and raised the midpoint for
Adjusted EBITDA by $5 million and AFFO by $10 million.
The Company's outlook is based on the following average foreign
currency exchange rates to 1.00 U.S. Dollar for the fourth
quarter of 2015: (a) 3.95 Brazilian Reais; (b) 695 Chilean
Pesos; (c) 3,100 Colombian Pesos; (d) 0.91 Euros;
(e) 4.10 Ghanaian Cedi; (f) 66.00 Indian Rupees;
(g) 16.80 Mexican Pesos; (h) 200 Nigerian Naira; (i) 3.25
Peruvian Soles; (j) 13.75 South African Rand; and
(k) 3,700 Ugandan Shillings. These assumptions are based on
the more conservative of: (a) the 30-day average spot rate; or (b)
the average Bloomberg forecast for each currency.
($ in millions) Full Year 2015
MidpointGrowth
Midpoint CoreGrowth
Total rental and management revenue $ 4,635 to $ 4,665 16.1
% 22.9 % Adjusted EBITDA(1) 3,035 to 3,055 14.9 % 22.4 % AFFO(1)
2,115 to 2,135 17.1 % 26.6 % Net income 670 to 690 (15.3 )% 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 $3,145 million and Organic Core Growth of approximately
7%; and
- International rental and management
segment revenue of $1,505 million and Organic Core Growth of nearly
11%. International rental and management segment revenue includes
approximately $413 million of pass-through revenue.
The calculation of midpoint Core Growth is as follows:
(Totals may not add due to rounding)
Total Rental
andManagementRevenue
AdjustedEBITDA
AFFO Outlook midpoint Core Growth 22.9 % 22.4 % 26.6 %
Impact of pass-through revenues (0.2 )% — — Estimated impact of
fluctuations in foreign currency exchange rates (6.8 )% (7.3 )%
(9.2 )% Impact of straight-line revenue and expense recognition 0.2
% — — Impact of significant one-time items — (0.1 )% (0.2 )%
Outlook midpoint growth 16.1 % 14.9 % 17.1 %
Total Rental
and Management Revenue Core Growth Components(1):
(Totals may not add due to rounding)
Full Year 2015 Organic Core Growth ~8% New Property
Core Growth(2) ~15% Core Growth ~23%
(1) Reflects growth at the midpoint of outlook ranges.
Excludes pass-through revenue. (2) Revenue growth attributable to
sites added to the portfolio on or after January 1, 2014.
Outlook for Capital Expenditures:($ in millions)
(Totals may not add due to rounding)
Full Year 2015 Discretionary capital projects(1) $
280 to $ 290 Ground lease purchases 130 to 140
Start-up capital projects 85 to 95 Redevelopment 160 to 170 Capital
improvement 80 to 90 Corporate 15 — 15 Total $ 750 to
$ 800 (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 $ 670 to $
690 Interest expense 593 to 610 Depreciation, amortization and
accretion 1,262 to 1,272 Income tax provision(1) 170 to 140
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)
251 to 254 Adjusted EBITDA $ 3,035 to $ 3,055 (1)
Includes approximately $93 million one-time cash tax charge
as part of the tax election related to the GTP REIT.
Reconciliations of Outlook for Net Income to AFFO:
($ in millions)
(Totals may not add due to rounding)
Full Year 2015 Net income $ 670 to $ 690
Straight-line revenue (152 ) — (152 ) Straight-line expense 55 — 55
Depreciation, amortization and accretion 1,262 to 1,272 Stock-based
compensation expense 90 — 90 Non-cash portion of tax provision (6 )
to (9 ) GTP REIT one-time cash tax charge 93 — 93
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
198 to 201 Capital improvement capital expenditures (80 ) to (90 )
Corporate capital expenditures (15 ) — (15 ) AFFO $ 2,115 to
$ 2,135
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 September
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: 54299144
When available, a replay of the call can be accessed until 11:59
p.m. ET on November 5, 2015. The replay dial-in numbers are as
follows:
U.S./Canada dial-in: (855)
859-2056International dial-in: (404) 537-3406Passcode: 54299144
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 99,000
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 the anticipated
closing 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)
September 30, 2015 December 31,
2014(1) ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 287,404 $ 313,492 Restricted cash 137,926 160,206
Short-term investments 14,485 6,302 Accounts receivable, net
206,154 199,074 Prepaid and other current assets 282,068 264,793
Deferred income taxes 12,318 14,000 Total current
assets 940,355 957,867 PROPERTY AND EQUIPMENT, NET
9,806,190 7,590,112 GOODWILL 4,055,171 4,032,174 OTHER INTANGIBLE
ASSETS, NET 10,012,397 6,900,162 DEFERRED INCOME TAXES 200,885
253,186 DEFERRED RENT ASSET 1,123,009 1,030,707 NOTES RECEIVABLE
AND OTHER NON-CURRENT ASSETS 788,781 567,724 TOTAL $
26,926,788 $ 21,331,932
LIABILITIES AND
EQUITY CURRENT LIABILITIES: Accounts payable $ 99,590 $ 90,366
Accrued expenses 743,256 417,836 Distributions payable 196,833
159,864 Accrued interest 80,682 130,265 Current portion of
long-term obligations 45,852 897,624 Unearned revenue 203,295
233,819 Total current liabilities 1,369,508
1,929,774 LONG-TERM OBLIGATIONS 16,981,556 13,711,084 ASSET
RETIREMENT OBLIGATIONS 811,620 609,035 OTHER NON-CURRENT
LIABILITIES 1,079,902 1,028,687 Total liabilities
20,242,586 17,278,580
COMMITMENTS AND
CONTINGENCIES EQUITY: 5.25%, Series A Preferred Stock 60
60
5.50%, Series B Preferred Stock
14 — Common stock 4,263 3,995 Additional paid-in capital 9,650,129
5,788,786 Distributions in excess of earnings (995,932 ) (837,320 )
Accumulated other comprehensive loss (1,832,903 ) (794,221 )
Treasury stock (207,740 ) (207,740 ) Total American Tower
Corporation equity 6,617,891 3,953,560 Noncontrolling interest
66,311 99,792 Total equity 6,684,202 4,053,352
TOTAL $ 26,926,788 $ 21,331,932 (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 Nine Months Ended
September 30, September 30, 2015
2014 2015 2014 REVENUES: Rental and
management $ 1,212,849 $ 1,011,119 $ 3,429,264 $ 2,977,000 Network
development services 25,061 27,069 62,211
76,734 Total operating revenues 1,237,910 1,038,188
3,491,475 3,053,734 OPERATING EXPENSES: Costs
of operations (exclusive of items shown separately below):
Rental and management (including
stock-based compensation expense of$396, $344, $1,218 and $1,059,
respectively)
356,082 272,355 929,624 786,374
Network development services (including
stock-based compensationexpense of $99, $101, $336 and $343,
respectively)
9,307 11,847 22,863 30,872 Depreciation, amortization and accretion
341,096 249,066 932,972 740,256
Selling, general, administrative and
development expense (including stock-based compensation expense of
$17,850, $17,824, $70,697 and $60,306, respectively)
114,832 108,909 354,460 317,437 Other operating expenses 15,668
11,204 40,891 37,852 Total operating
expenses 836,985 653,381 2,280,810 1,912,791
OPERATING INCOME 400,925 384,807 1,210,665
1,140,943 OTHER INCOME (EXPENSE): Interest income, TV
Azteca, net 2,993 2,661 8,251 7,918 Interest income 4,503 3,850
11,871 8,149 Interest expense (149,787 ) (143,212 ) (446,228 )
(432,753 ) Gain (loss) on retirement of long-term obligations —
2,969 (78,793 ) 1,447
Other expense (including unrealized
foreign currency losses of $77,864,$36,998, $107,871 and $62,556,
respectively)
(66,659 ) (34,019 ) (123,291 ) (54,225 ) Total other expense
(208,950 ) (167,751 ) (628,190 ) (469,464 ) INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 191,975 217,056 582,475 671,479
Income tax provision (94,235 ) (10,426 ) (132,063 ) (49,877 ) NET
INCOME 97,740 206,630 450,412 621,602 Net loss attributable to
noncontrolling interest 5,259 963 1,960 22,921
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER
CORPORATIONSTOCKHOLDERS
102,999 207,593 452,372 644,523 Dividends on preferred stock
(26,781 ) (7,700 ) (63,382 ) (12,075 )
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER
CORPORATIONCOMMON STOCKHOLDERS
$ 76,218 $ 199,893 $ 388,990 $ 632,448
NET INCOME PER COMMON SHARE AMOUNTS:
Basic net income attributable to American
Tower Corporation commonstockholders
$ 0.18 $ 0.50 $ 0.93 $ 1.60
Diluted net income attributable to
American Tower Corporation commonstockholders
$ 0.18 $ 0.50 $ 0.92 $ 1.58 WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING: Basic 423,375 396,243
417,280 395,758 Diluted 427,227 400,397
421,352 399,806
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended September 30, 2015
2014 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
450,412 $ 621,602 Adjustments to reconcile net income to cash
provided by operating activities: Stock-based compensation expense
72,251 61,708 Depreciation, amortization and accretion 932,972
740,256 Loss (gain) on early retirement of long-term obligations
78,793 (1,447 ) Other non-cash items reflected in statements of
operations 143,412 73,825 Increase in net deferred rent asset
(69,019 ) (65,460 ) Decrease in restricted cash 19,971 23,560
Increase in assets (106,535 ) (42,931 ) Increase in liabilities
21,358 158,493 Cash provided by operating activities
1,543,615 1,569,606 CASH FLOWS FROM INVESTING
ACTIVITIES: Payments for purchase of property and equipment and
construction activities (518,018 ) (723,353 ) Payments for
acquisitions, net of cash acquired (1,616,205 ) (324,936 ) Payment
for Verizon transaction (5,058,895 ) — Proceeds from sale of
assets, net of cash — 15,464 Proceeds from sale of short-term
investments and other non-current assets 1,002,214 453,396 Payments
for short-term investments (1,011,320 ) (460,686 ) Deposits,
restricted cash and other (2,053 ) (63,295 ) Cash used for
investing activities (7,204,277 ) (1,103,410 ) CASH FLOWS
FROM FINANCING ACTIVITIES: Proceeds from short-term borrowings, net
8,282 — Borrowings under credit facilities 5,727,831 785,000
Proceeds from issuance of senior notes, net 1,492,298 1,415,844
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 (6,092,710 )
(2,928,434 ) Contributions from noncontrolling interest holders,
net 4,449 5,446 Proceeds from stock options and stock purchase plan
29,324 47,938 Proceeds from the issuance of common stock, net
2,440,327 — Proceeds from the issuance of preferred stock, net
1,337,946 583,105 Payment for early retirement of long-term
obligations (86,107 ) (6,767 ) Deferred financing costs and other
financing activities (30,314 ) (32,129 ) Purchase of noncontrolling
interest — (64,822 ) Distributions paid on common stock (516,012 )
(261,913 ) Distributions paid on preferred stock (57,866 ) (8,138 )
Cash provided by (used for) financing activities 5,632,448
(461,837 ) Net effect of changes in foreign currency exchange rates
on cash and cash equivalents 2,126 (2,322 ) NET (DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS (26,088 ) 2,037 CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD 313,492 293,576 CASH
AND CASH EQUIVALENTS, END OF PERIOD $ 287,404 $ 295,613
CASH PAID FOR INCOME TAXES, NET $ 130,231 $ 52,379
CASH PAID FOR INTEREST $ 472,079 $ 438,404
UNAUDITED RESULTS FROM OPERATIONS, BY
SEGMENT
(In thousands, except percentages. Totals
may not add due to rounding.)
Three Months Ended September 30, 2015
Rental and Management
NetworkDevelopment Services
Total Domestic International
Total Segment revenues $ 807,978 $ 404,871 $ 1,212,849 $
25,061 $ 1,237,910 Segment operating expenses (1) 187,368 168,318
355,686 9,208 364,894 Interest income, TV Azteca, net —
2,993 2,993 — 2,993 Segment Gross
Margin 620,610 239,546 860,156 15,853
876,009
Segment selling, general, administrative
and development expense (1)
31,374 34,737 66,111 3,730 69,841
Segment Operating Profit $ 589,236 $ 204,809 $
794,045 $ 12,123 $ 806,168 Segment Operating
Profit Margin 73 % 51 % 65 % 48 % 65 % Percent of total Operating
Profit 73 % 25 % 98 % 2 % 100 %
Three Months Ended
September 30, 2014 Rental and Management
NetworkDevelopment Services Total
Domestic International Total Segment revenues
$ 663,570 $ 347,549 $ 1,011,119 $ 27,069 $ 1,038,188 Segment
operating expenses (1) 133,951 138,060 272,011 11,746 283,757
Interest income, TV Azteca, net — 2,661 2,661
— 2,661 Segment Gross Margin 529,619 212,150
741,769 15,323 757,092
Segment selling, general, administrative
and development expense (1)
30,955 33,441 64,396 3,020 67,416
Segment Operating Profit $ 498,664 $ 178,709 $
677,373 $ 12,303 $ 689,676 Segment Operating
Profit Margin 75 % 51 % 67 % 45 % 66 % 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:
Long-term obligations summary, including current
portion September 30, 2015 2013 Credit Facility $
1,080,000 2013 Term Loan 2,000,000 2014 Credit Facility 1,980,000
2.800% senior notes due 2020 748,560 3.40% senior notes due 2019
1,004,553 3.450% senior notes due 2021 646,757 3.50% senior notes
due 2023 993,779 4.000% senior notes due 2025 744,555 4.500% senior
notes due 2018 999,717 4.70% senior notes due 2022 699,077 5.00%
senior notes due 2024 1,010,106 5.050% senior notes due 2020
699,561 5.900% senior notes due 2021 499,522 7.25% senior notes due
2019 297,669 Total unsecured debt at American Tower Corporation $
13,403,856 Secured Tower Revenue Securities, Series 2013-1A 500,000
Secured Tower Revenue Securities, Series 2013-2A 1,300,000 American
Tower Secured Revenue Notes, Series 2015-1 Class A 350,000 American
Tower Secured Revenue Notes, Series 2015-2 Class A 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(1)
284,250 Unison Notes(1) 202,368 South African facility(2) 57,600
Colombian credit facility(2) 61,660 BR Towers debentures(2)(3)
82,647 Brazil credit facility(2) 12,535 Shareholder loans(4)
137,839 Other debt, including capital leases 109,653 Total secured
or subsidiary debt $ 3,623,552 Total debt $ 17,027,408 Cash and
cash equivalents 287,404 Net debt (total debt less cash and cash
equivalents) $ 16,740,004 (1) Secured debt assumed in
connection with an acquisition. (2) Denominated in local currency.
(3) Assumed in connection with an acquisition. (4)
Reflects balances attributable to minority
shareholder loans in the Company's joint ventures in Ghana and
Uganda. The Ghana shareholder loan isdenominated 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 EndedSeptember 30,
2015
Total debt $ 17,027,408 Cash and cash equivalents 287,404
Numerator: net debt (total debt less cash and cash equivalents) $
16,740,004 Adjusted EBITDA $ 779,027 Denominator: annualized
Adjusted EBITDA 3,116,108 Net Leverage Ratio 5.4x
Share count
rollforward: (in millions of shares)
Three Months EndedSeptember 30,
2015
Total common shares, beginning of period 423.3 Common shares
repurchased — Common shares issued 0.2 Total common shares
outstanding, end of period (1) 423.5 (1) As of
September 30, 2015, excludes (a) 3.9 million potentially dilutive
common shares associated with vested and exercisable stock options
with an average exercise price of $54.01 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 September 30, Domestic
straight-line revenue and expense detail: 2015
2014 Straight-line revenue $ 32,327 $ 23,788 Straight-line
expense $ 14,750 $ 9,688
Three Months Ended September
30,
International straight-line revenue and
expense detail:
2015
2014
Straight-line revenue
$
6,472
$
8,154
Straight-line expense
$
1,682
$
2,676
(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 September 30, International
pass-through revenue detail: 2015 2014
Pass-through revenue $ 118,592 $ 93,386
Three Months
Ended September 30, Pre-paid rent
detail(1)(2): 2015 2014
Beginning balance $ 498,404 $ 399,510 Cash 25,892 62,490
Amortization(3) (22,732 ) (18,118 ) Ending balance $ 501,565
$ 443,881 (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
September 30, Selling, general, administrative and
development expense breakout: 2015 2014
Total rental and management overhead $ 66,111 $ 64,396 Network
development services segment overhead 3,730 3,020 Corporate and
development expenses 27,141 23,669 Stock-based compensation expense
17,850 17,824 Total $ 114,832 $ 108,909
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 September 30, 2015
Total Rental
andManagementRevenue
AdjustedEBITDA
AFFO Core Growth 27.4 % 26.0 % 32.6 % Impact of pass-through
0.7 % — — Estimated impact of fluctuations in foreign currency
exchange rates (8.2 )% (8.8 )% (11.0 )% Estimated Impact of
straight-line revenue recognition — (0.1 )% — Estimated Impact of
material one-time items — (0.1 )% (0.2 )% Reported growth
20.0 % 17.0 % 21.4 %
The components of Core Growth in rental
and management revenue are as follows:
Three Months Ended September 30, 2015
Domestic International Total Organic Core
Growth 6.0% 10.7 % 7.3 % New Property Core Growth(1) 15.2% 32.8 %
20.1 % Core Growth 21.2 % 43.5 % 27.4 % (1) Revenue
growth attributable to sites added to the portfolio on or after
July 1, 2014.
UNAUDITED SELECTED FINANCIAL
INFORMATION
($ in thousands. Totals may not add due to
rounding.)
SELECTED CASH FLOW DETAIL:
Three Months Ended September 30, Payments for
purchase of property and equipment and construction activities:
2015 2014 Discretionary - capital projects $
71,375 $ 154,914 Discretionary - ground lease purchases 37,700
23,131 Start-up capital projects 27,853 4,352 Redevelopment 43,423
53,203 Capital improvements 22,202 15,845 Corporate 4,343
5,661 Total $ 206,896 $ 257,106
Nine Months Ended
September 30, Payments for purchase of property and
equipment and construction activities: 2015
2014 Discretionary - capital projects $ 200,081 $ 421,487
Discretionary - ground lease purchases 95,862 90,826 Start-up
capital projects 42,268 13,974 Redevelopment 111,092 131,942
Capital improvements 58,835 50,301 Corporate 9,880 14,824
Total $ 518,018 $ 723,354
SELECTED PORTFOLIO DETAIL – OWNED AND
OPERATED SITES:
Tower Count
(1):
As ofJune 30, 2015
Constructed Acquired Adjustments
As ofSeptember 30, 2015
United States 40,064 22 5 (25 ) 40,066 Brazil 16,327 236 1,125 11
17,699 Chile 1,165 10 — (2 ) 1,173 Colombia 3,677 49 — (50 ) 3,676
Costa Rica 464 6 — — 470 Germany 2,030 — — — 2,030 Ghana 2,067 18 —
(1 ) 2,084 India 13,883 392 381 (38 ) 14,618 Mexico 8,721 15 — (3 )
8,733 Nigeria — — 4,700 — 4,700 Peru 579 5 — (3 ) 581 South Africa
1,918 — — (1 ) 1,917 Uganda 1,380 6 — 2
1,388 Total 92,275 759 6,211 (110 ) 99,135 (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 September 30, 2015
2014 Net income $ 97,740 $ 206,630 Income tax provision
94,235 10,426 Other expense 66,659 34,019 Gain on retirement of
long-term obligations — (2,969 ) Interest expense 149,787 143,212
Interest income (4,503 ) (3,850 ) Other operating expenses 15,668
11,204 Depreciation, amortization and accretion 341,096 249,066
Stock-based compensation expense 18,345 18,269
Adjusted EBITDA $ 779,027 $ 666,007 Divided by total
revenue 1,237,910 1,038,188 Adjusted EBITDA Margin 63
% 64 %
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 September 30, 2015
2014 Net income $ 97,740 $ 206,630 Real estate related
depreciation, amortization and accretion 297,263 219,977 Losses
from sale or disposal of real estate and real estate related
impairment charges 1,200 626 Dividends on preferred stock (26,781 )
(7,700 ) Adjustments for unconsolidated affiliates and
noncontrolling interest 804 (4,049 ) NAREIT Funds From
Operations 370,226 415,484 Straight-line revenue
(38,798 ) (31,942 ) Straight-line expense 16,433 12,364 Stock-based
compensation expense 18,345 18,269 Non-cash portion of tax
provision (6,085 ) (6,177 ) Non-real estate related depreciation,
amortization and accretion 43,833 29,089
Amortization of deferred financing costs,
capitalized interest, debt discounts andpremiums and long-term
deferred interest charges
7,292 (1,460 ) GTP REIT one-time charge(1) 93,044 — Other
expense(2) 66,659 34,019 Gain on retirement of long-term
obligations — (2,969 ) Other operating expenses(3) 14,468 10,578
Capital improvement capital expenditures (22,202 ) (15,845 )
Corporate capital expenditures (4,343 ) (5,661 ) Adjustments for
unconsolidated affiliates and noncontrolling interest (804 ) 4,049
AFFO $ 558,068 $ 459,798 Divided by weighted
average diluted shares outstanding 427,227 400,397 AFFO per Share $
1.31 $ 1.15 (1) In the third quarter, the Company
filed a tax election, pursuant to which GTP no longer operates as a
REIT for federal and state income tax purposes. In connection with
this election, the Company incurred a one-time cash tax charge
during the third quarter of 2015. As this charge is non-recurring,
the Company does not believe it is an indication of operating
performance and believes it is more meaningful to reflect AFFO
excluding its impact. Accordingly, the Company presents AFFO for
the three months ended September 30, 2015 excluding this charge.
(2) Primarily includes unrealized losses on foreign currency
exchange rate fluctuations. (3) 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/20151029005558/en/
American Tower CorporationLeah Stearns, 617-375-7500Senior Vice
President, Treasurer & Investor Relations
American Tower (NYSE:AMT)
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