CONSOLIDATED HIGHLIGHTSThird Quarter 2016
- Total revenue increased 22.4% to $1,515
million
- Property revenue increased 23.5% to
$1,498 million
- Net income increased 169.8% to $264
million
- Adjusted EBITDA increased 17.5% to $915
million
- Consolidated AFFO increased 14.9% to
$641 million
American Tower Corporation (NYSE:AMT) today reported financial
results for the quarter ended September 30, 2016.
Jim Taiclet, American Tower’s Chief Executive Officer stated,
“In response to rapid growth in mobile data usage, our tenants
continue to utilize a combination of incremental spectrum assets,
advancing technology and our diverse portfolio of real estate to
expand their mobile networks and deliver top quality service to
their subscribers. Our global asset base of nearly 144,000 towers
and over 700 small cell systems is uniquely positioned to benefit
from these continuing investments, and as a result, we were able to
extend our long track record of generating double digit growth in
property revenue, Adjusted EBITDA and Consolidated AFFO per Share
in the third quarter.”
CONSOLIDATED OPERATING RESULTS OVERVIEWAmerican Tower
generated the following operating results for the quarter ended
September 30, 2016 (unless otherwise indicated, all
comparative information is presented against the quarter ended
September 30, 2015).
($ in millions, except per share amounts)
Q3 2016 Growth Rate Total revenue $
1,515 22.4 % Total property revenue $ 1,498 23.5 % Total Tenant
Billings Growth $ 216 21.1 % Organic Tenant Billings Growth $ 78
7.7 % Property Gross Margin $ 1,016 18.1 % Property Gross Margin %
67.8 % Net income attributable to AMT common stockholders(1) $ 238
211.9 % Net income attributable to AMT common stockholders per
diluted share(1) $ 0.55 205.6 % Adjusted EBITDA $ 915 17.5 %
Adjusted EBITDA Margin % 60.4 % NAREIT Funds From Operations
(FFO) attributable to AMT common stockholders $ 578 56.0 %
Consolidated AFFO $ 641 14.9 % Consolidated AFFO per Share $ 1.49
13.7 % AFFO attributable to AMT common stockholders $ 612 10.8 %
AFFO attributable to AMT common stockholders per Share $ 1.42 10.1
% Cash provided by operating activities $ 667 31.5 % Less:
total cash capital expenditures(2) $ 161
(22.3)
%
Free Cash Flow $ 506 68.6 %
_______________
(1) Growth rate includes the impact of unrealized foreign
currency losses of approximately $78 million in the prior-year
period and a one-time cash tax charge of approximately $93 million
as part of a tax election recorded in the prior-year period,
pursuant to which GTP REIT no longer operates as a separate REIT
for federal and state income tax purposes. (2) Cash capital
expenditures for Q3 2016 include $5.0 million of payments on
capital leases of property and equipment, which are presented in
the condensed consolidated statements of cash flows included herein
under Repayments of notes payable, credit facilities, senior notes,
term loan and capital leases.
Please refer to “Non-GAAP and Defined Financial Measures” below
for definitions and other information regarding the Company’s use
of non-GAAP measures. For financial information and reconciliations
to GAAP measures, please refer to the “Unaudited Selected
Consolidated Financial Information” and “Unaudited Reconciliations
to GAAP Measures and the Calculation of Defined Financial Measures”
below.
CAPITAL ALLOCATION OVERVIEW
Distributions – During the third quarter of 2016, the
Company declared the following regular cash distributions to its
common stockholders:
Common Stock Distributions Q3
2016(1) Distribution per share $ 0.55 Aggregate amount
(in millions) $ 234 Year-over-year per share growth 19.6 %
_______________
(1) The dividend declared was paid in the fourth quarter of 2016
to stockholders of record as of the close of business on September
30, 2016.
In addition, the Company declared approximately $27 million in
preferred stock dividends during the third quarter of 2016.
Capital Expenditures – During the third quarter of 2016,
total capital expenditures were $161 million, of which
approximately $30 million was for non-discretionary capital
improvements and corporate capital expenditures. For additional
capital expenditure details, please refer to the supplemental
disclosure package available on the Company’s website.
Acquisitions and Other Transactions – During the third
quarter of 2016, the Company spent $93.4 million to acquire 351
communications sites primarily in the Company’s international
markets.
Subsequent to the end of the third quarter of 2016, the Company
announced that it had entered into a definitive agreement with
Dutch pension fund manager PGGM to form a joint venture.
LEVERAGE AND FINANCING OVERVIEW
Leverage – For the quarter ended September 30, 2016,
the Company’s Net Leverage Ratio was approximately 5.0x net debt
(total debt less cash and cash equivalents) to third quarter 2016
annualized Adjusted EBITDA.
Calculation of Net Leverage Ratio ($ in
millions)
As of September 30, 2016 Total debt $ 18,679 Less:
Cash and cash equivalents 530 Net Debt 18,149 Divided By: Third
quarter annualized Adjusted EBITDA(1) 3,660 Net Leverage Ratio 5.0x
_______________
(1) Q3 2016 Adjusted EBITDA multiplied by four.
Liquidity – As of September 30, 2016, the Company
had approximately $3.3 billion of total liquidity, consisting of
over $0.5 billion in cash and cash equivalents plus the ability to
borrow an aggregate of approximately $2.8 billion under its
revolving credit facilities, net of any outstanding letters of
credit.
On September 30, 2016, the Company completed an offering of
2.250% senior unsecured notes due 2022 and 3.125% senior unsecured
notes due 2027, in principal amounts of $600.0 million and $400.0
million, respectively. The proceeds from this offering were used to
repay existing indebtedness under the Company’s term loan entered
into in October 2013, as amended.
FULL YEAR 2016 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 27, 2016. 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 is raising the midpoint of its full year 2016
outlook for property revenue, net income, Adjusted EBITDA and
Consolidated AFFO by $50 million, $15 million, $25 million and $30
million, respectively. This includes the impact of foreign currency
exchange rate fluctuations on property revenue, Adjusted EBITDA and
Consolidated AFFO, as outlined below.
The Company’s revised outlook is based on the following average
foreign currency exchange rates to 1.00 U.S. Dollar for the
fourth quarter of 2016: (a) 3.40 Brazilian Reais; (b) 680
Chilean Pesos; (c) 3,050 Colombian Pesos; (d) 0.91 Euros;
(e) 4.10 Ghanaian Cedi; (f) 68.30 Indian Rupees;
(g) 18.60 Mexican Pesos; (h) 330 Nigerian Naira; (i) 3.45
Peruvian Soles; (j) 15.00 South African Rand; and
(k) 3,400 Ugandan Shillings.
Based on these assumptions, the Company’s current outlook
reflects favorable impacts of foreign currency fluctuations of
approximately $23 million for total property revenue, $15 million
for Adjusted EBITDA and $8 million for Consolidated AFFO, as
compared to the Company’s previously issued full year outlook.
Additional information pertaining to the impact of foreign currency
fluctuations on the Company’s outlook has been provided in the
supplemental disclosure package available on its website. The
impact of foreign currency fluctuations on net income is not
provided, as the impact on all components of the net income measure
cannot be calculated without unreasonable effort.
2016 Outlook ($ in millions)
Full
Year 2016 Midpoint
Growth
Total property revenue(1) $ 5,685 to $ 5,735
22.0% Net income 995 to 1,025 50.3% Adjusted EBITDA 3,530 to 3,560
15.6% Consolidated AFFO 2,455 to 2,485 14.9%
_______________
(1) Includes U.S. Property revenue of $3,360 to $3,380 and
International Property revenue of $2,325 to $2,355, reflecting
midpoint growth rates of 6.7% and 53.7%, respectively.
2016 Outlook for Total Property
revenue, at the midpoint, includes the
International Total
following
components(1): ($ in millions,totals may not add
due to rounding.)
U.S. Property
Property(2)
Property International pass-through revenue $ N/A $ 737 $
737 Straight-line revenue 78 51 129
_______________
(1) For additional discussion regarding these components,
please refer to “Revenue Components” below. (2) International
property revenue reflects the Company’s Latin America, EMEA and
Asia segments.
Total Property
Adjusted Consolidated
2016 Outlook growth, at the midpoint,
includes the following components(1):
Revenue
EBITDA
AFFO
Outlook midpoint growth
22.0% 15.6% 14.9% Estimated impact of fluctuations in foreign
currency exchange rates (2.8)% (2.6)% (2.7)% Estimated impact of
straight-line revenue and expense recognition (1.3)% (1.8)% —%
Estimated impact of international pass-through revenue 5.2% —% —%
_______________
(1) Growth components for net income are not provided, as the
impact of each of the line items on the measure cannot be
calculated without unreasonable effort.
2016 Outlook growth, at the midpoint,
includes the following components(1):
International
(Totals may not add due to rounding.)
U.S. Property
Property(2)
Total Property
Organic Tenant Billings 5.8% 13.3% 7.8% New Site Tenant Billings
3.2% 45.6% 14.5% Total Tenant Billings Growth 8.9% 58.9% 22.3%
_______________
(1) For additional discussion regarding the component growth
rates, please refer to “Revenue Components” below. (2)
International property revenue reflects the Company’s Latin
America, EMEA and Asia segments.
Outlook for Capital
Expenditures:
($ in millions)
(Totals may not add due to rounding.)
Full Year 2016 Discretionary capital projects(1) $ 170 to $
200 Ground lease purchases 140 to 160 Start-up capital projects 95
to 115 Redevelopment 155 to 175 Capital improvement 110 to 120
Corporate 15 — 15 Total $ 685 to $ 785
_______________
(1) Includes the construction of approximately 1,750 to 2,250
communications sites globally, reflecting reduced expectations for
new site construction in India for the balance of the year.
Reconciliation of Outlook for Net Income to Adjusted
EBITDA: ($ in millions) (Totals may not add due
to rounding.)
Full Year 2016 Net income $ 995
to $ 1,025 Interest expense 730 to 720 Depreciation,
amortization and accretion 1,520 to 1,550 Income tax provision 133
to 122 Stock-based compensation expense 90 — 90
Other, including other operating expenses,
interest income, gain (loss) on retirement of long-term
obligations and other income (expense)
62 to 53 Adjusted EBITDA $ 3,530 to $ 3,560
Reconciliation of Outlook for Net Income to Consolidated
AFFO: ($ in millions) (Totals may not add due to
rounding.)
Full Year 2016 Net income $ 995 to
$ 1,025 Straight-line revenue (129 ) — (129 ) Straight-line expense
67 — 67 Depreciation, amortization and accretion 1,520 to 1,550
Stock-based compensation expense 90 — 90 Deferred portion of income
tax 38 to 25
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
income (expense), long-term deferred
interest charges and dividends on preferred stock
(1 )
to
(8 ) Capital improvement capital expenditures (110 ) to (120 )
Corporate capital expenditures (15 ) — (15 ) Consolidated AFFO $
2,455 to $ 2,485
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 September 30, 2016 and its
outlook for 2016. 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: (800)
260-0712International dial-in: (651) 291-1170Passcode: 403366
When available, a replay of the call can be accessed until 11:59
p.m. ET on November 10, 2016. The replay dial-in numbers are as
follows:
U.S./Canada dial-in: (800)
475-6701International dial-in: (320) 365-3844Passcode: 403366
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 over 144,000 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 (FFO) attributable to American Tower
Corporation common stockholders, Consolidated Adjusted Funds From
Operations (AFFO), AFFO attributable to American Tower Corporation
common stockholders, Consolidated AFFO per Share, AFFO attributable
to American Tower Corporation common stockholders per Share, Free
Cash Flow, Net Debt and Net Leverage Ratio. In addition, the
Company presents: Tenant Billings, Tenant Billings Growth, Organic
Tenant Billings Growth and New Site Tenant Billings Growth.
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 and are commonly used across its
industry peer group. As outlined in detail below, the Company
believes that these measures can assist in comparing company
performance on a consistent basis irrespective of depreciation and
amortization or capital structure, while also providing valuable
incremental insight into the underlying operating trends of its
business.
Depreciation and amortization can vary significantly among
companies depending on accounting methods, particularly where
acquisitions or non-operating factors, including historical cost
basis, are involved. Notwithstanding the foregoing, the Company's
Non-GAAP and Defined Financial measures may not be comparable to
similarly titled measures used by other companies.
Revenue Components
In addition to reporting total revenue, the Company believes
that providing transparency around the components of its revenue
provides investors with insight into the indicators of the
underlying demand for, and operating performance of, its real
estate portfolio. Accordingly, the Company has provided disclosure
of the following revenue components: (i) Tenant Billings, (ii) New
Site Tenant Billings; (iii) Organic Tenant Billings; (iv)
International pass-through revenue; (v) Straight-line revenue; (vi)
Pre-paid amortization revenue; and (vii) Other revenue.
Tenant Billings: The majority of the Company’s revenue is
generated from non-cancellable, long-term tenant leases. Revenue
from Tenant Billings reflects several key aspects of the Company’s
real estate business: (i) “colocations/amendments” reflects new
tenant leases for space on existing towers and amendments to
existing leases to add additional tenant equipment; (ii)
“escalations” reflects contractual increases in billing rates,
which are typically tied to fixed percentages or a variable
percentage based on a consumer price index; (iii) “cancellations”
reflects the impact of tenant lease terminations or non-renewals
or, in limited circumstances, when the lease rates on existing
leases are reduced; and (iv) “new sites” reflects the impact of new
property construction and acquisitions.
New Site Tenant Billings: Day-one Tenant Billings
associated with sites that have been built or acquired since the
beginning of the prior-year period. Incremental
colocations/amendments, escalations or cancellations that occur on
these sites after the date of their initial addition to our
portfolio is not included in New Site Tenant Billings. The Company
believes providing New Site Tenant Billings enhances an investor’s
ability to analyze our existing real estate portfolio growth as
well as our development program growth, as the Company’s
construction and acquisition activities can drive variability in
growth rates from period to period.
Organic Tenant Billings: Tenant Billings on sites that
the Company has owned since the beginning of the prior-year period,
as well as Tenant Billings activity on new sites that occurred
after the date of their initial addition to the Company’s
portfolio.
International pass-through revenue: A portion of the
Company’s pass-through revenue is based on power and fuel expense
reimbursements and therefore subject to fluctuations in fuel
prices. As a result, revenue growth rates may fluctuate depending
on the market price for fuel in any given period, which is not
representative of the Company’s real estate business and its
economic exposure to power and fuel costs. Furthermore, this
expense reimbursement mitigates the economic impact associated with
fluctuations in operating expenses, such as power and fuel costs
and land rents in certain of the Company’s markets. As a result,
the Company believes that it is appropriate to provide insight into
the impact of pass-through revenue on certain revenue growth
rates.
Straight-line revenue: Under GAAP, the Company recognizes
revenue on a straight-line basis over the term of the contract for
certain of its tenant leases. Due to the Company’s significant base
of non-cancellable, long-term tenant leases, this can result in
significant fluctuations in growth rates upon tenant lease signings
and renewals (typically increases), when amounts billed or received
upfront upon these events are initially deferred. These signings
and renewals are only a portion of the Company’s underlying
business growth and can distort the underlying performance of our
Tenant Billings Growth. As a result, the Company believes that it
is appropriate to provide insight into the impact of straight-line
revenue on certain growth rates in revenue and select other
measures.
Pre-paid amortization revenue: The Company recovers a
portion of the costs it incurs for the redevelopment and
development of its properties from its tenants. These upfront
payments are then amortized over the initial term of the
corresponding tenant lease. Given this amortization is not
necessarily directly representative of underlying leasing activity
on our real estate portfolio, (i.e.: does not have a renewal option
or escalation as our tenant leases do) the Company believes that it
is appropriate to provide insight into the impact of pre-paid
amortization revenue on certain revenue growth rates to provide
transparency into the underlying performance of our real estate
business.
Foreign currency exchange impact: The majority of the
Company’s international revenue and operating expenses are
denominated in each respective country’s local currency. As a
result, foreign currency fluctuations may distort the underlying
performance of our real estate business from period to period,
depending on the movement of foreign currency exchange rates versus
the U.S. Dollar. The Company believes it is appropriate to quantify
the impact of foreign currency exchange fluctuations to its
reported growth to provide transparency into the underlying
performance of its real estate business.
Other revenue: Typically an immaterial portion of the
Company’s total revenue, Other revenue represents revenue not
captured by the above listed terms and can include items such as
tenant settlements.
Non-GAAP and Defined Financial Measure
Definitions
Tenant Billings Growth: The increase or decrease
resulting from a comparison of Tenant Billings for a current period
with Tenant Billings for the corresponding prior-year period, in
each case adjusted for foreign currency exchange fluctuations. The
Company believes this measure provides valuable insight into the
growth in recurring Tenant Billings and underlying demand for its
real estate portfolio.
Organic Tenant Billings Growth: The portion of Tenant
Billings Growth attributable to Organic Tenant Billings. The
Company believes that organic growth is a useful measure of its
ability to add tenancy and incremental revenue to its assets for
the reported period, which enables investors and analysts to gain
additional insight into the relative attractiveness, and therefore
the value, of the Company’s property assets.
New Site Tenant Billings Growth: The portion of Tenant
Billings Growth attributable to New Site Tenant Billings. The
Company believes this measure provides valuable insight into the
growth attributable to Tenant Billings from recently acquired or
constructed properties.
Gross Margin: 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 believes this measure provides valuable
insight into the site-level profitability of its assets.
Operating Profit: Gross Margin less selling, general,
administrative and development expense, excluding stock-based
compensation expense and corporate expenses. The Company believes
this measure provides valuable insight into the site-level
profitability of its assets while also taking into account the
overhead expenses required to manage each of its operating
segments.
For segment reporting purposes, the Latin America property
segment Operating Profit and Gross Margin also include interest
income, TV Azteca, net. Operating Profit and Gross Margin are
before interest income, interest expense, gain (loss) on retirement
of long-term obligations, other income (expense), net income (loss)
attributable to noncontrolling interest and income tax benefit
(provision).
Operating Profit Margin: The percentage that results from
dividing Operating Profit by revenue.
Adjusted EBITDA: Net income before 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 believes this measure
provides valuable insight into the profitability of its operations
while at the same time taking into account the central overhead
expenses required to manage its global operations. In addition, it
is a widely used performance measure across our telecommunications
real estate sector.
Adjusted EBITDA Margin: The percentage that results from
dividing Adjusted EBITDA by total revenue.
NAREIT Funds From Operations (FFO), as defined by the
National Association of Real Estate Investment Trusts (NAREIT),
attributable to American Tower Corporation common stockholders:
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 interests. The Company believes this
measure provides valuable insight into the operating performance of
its property assets by excluding the charges described above,
particularly depreciation expenses, given the high initial,
up-front capital intensity of the Company’s operating model. In
addition, it is a widely used performance measure across our
telecommunications real estate sector.
Consolidated Adjusted Funds From Operations (AFFO):
NAREIT FFO attributable to American Tower Corporation common
stockholders before (i) straight-line revenue and expense, (ii)
stock-based compensation expense, (iii) the deferred portion of its
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 interests, less
cash payments related to capital improvements and cash payments
related to corporate capital expenditures. The Company believes
this measure provides valuable insight into the operating
performance of its property assets by further adjusting the NAREIT
FFO attributable to American Tower Corporation common stockholders
metric to exclude the factors outlined above, which if unadjusted,
may cause material fluctuations in NAREIT FFO attributable to
American Tower Corporation common stockholders growth from period
to period that would not be representative of the underlying
performance of our property assets in those periods. In addition,
it is a widely used performance measure across our
telecommunications real estate sector.
Adjusted Funds From Operations (AFFO) attributable to
American Tower Corporation common stockholders: Consolidated
AFFO, excluding the impact of noncontrolling interests on both
NAREIT FFO attributable to American Tower Corporation common
stockholders as well as the other line items included in the
calculation of Consolidated AFFO. The Company believes that
providing this additional metric enhances transparency, given a
significantly larger minority interest component of its business as
a result of the Company’s Viom transaction, which closed in the
second quarter of 2016.
Consolidated AFFO per Share: Consolidated AFFO divided by
the diluted weighted average common shares outstanding.
AFFO attributable to American Tower Corporation common
stockholders per Share: AFFO attributable to American Tower
Corporation common stockholders divided by the diluted weighted
average common shares outstanding.
Free Cash Flow: Cash provided by operating activities
less total cash capital expenditures, including payments on capital
leases of property and equipment. The Company believes that Free
Cash Flow is useful to investors as the basis for comparing our
performance and coverage ratios with other companies in its
industry.
Net Debt: Total long-term debt less cash and cash
equivalents.
Net Leverage Ratio: Net Debt divided by the quarter’s
annualized Adjusted EBITDA (the quarter’s Adjusted EBITDA
multiplied by four). The Company believes that including this
calculation is important for investors and analysts given it is a
critical component underlying its credit agency ratings.
Cautionary Language Regarding Forward-Looking
StatementsThis 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
2016 outlook, foreign currency exchange rates and our expectation
regarding the leasing demand for communications real estate. 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 and tax 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, including our ability to raise additional financing to
fund capital expenditures, future growth and expansion initiatives
and to satisfy our distribution requirements; (7) our expansion
initiatives involve a number of risks and uncertainties, including
those related to integration of acquired or leased assets, that
could adversely affect our operating results, disrupt our
operations or expose us to additional risk; (8) 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; (9) new technologies or changes in a
tenant’s business model could make our tower leasing business less
desirable and result in decreasing revenues; (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) if we fail to remain
qualified for taxation as a REIT, we will be subject to tax at
corporate income tax rates, which may substantially reduce funds
otherwise available, and even if we qualify for taxation as a REIT,
we may face tax liabilities that impact earnings and available cash
flow; (12) complying with REIT requirements may limit our
flexibility or cause us to forego otherwise attractive
opportunities; (13) if we are unable to protect our rights to the
land under our towers, it could adversely affect our business and
operating results; (14) 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; (15) restrictive
covenants in the agreements related to our securitization
transactions, our credit facilities and our debt securities and the
terms of our preferred stock could materially and adversely affect
our business by limiting flexibility, and we may be prohibited from
paying dividends on our common stock, which may jeopardize our
qualification for taxation as a REIT; (16) our costs could increase
and our revenues could decrease due to perceived health risks from
radio emissions, especially if these perceived risks are
substantiated; (17) we could have liability under environmental and
occupational safety and health laws; and (18) 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, 2015, under the caption “Risk Factors”. We
undertake no obligation to update the information contained in this
press release to reflect subsequently occurring events or
circumstances.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, 2016 December 31, 2015
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 530,358 $
320,686 Restricted cash 150,655 142,193 Accounts receivable, net
273,907 227,354 Prepaid and other current assets 415,836
306,235 Total current assets 1,370,756 996,468
PROPERTY AND EQUIPMENT, net 10,452,038 9,866,424 GOODWILL 4,997,224
4,091,805 OTHER INTANGIBLE ASSETS, net 11,557,964 9,837,876
DEFERRED TAX ASSET 197,914 212,041 DEFERRED RENT ASSET 1,265,700
1,166,755 NOTES RECEIVABLE AND OTHER NON-CURRENT ASSETS 813,931
732,903 TOTAL $ 30,655,527 $ 26,904,272
LIABILITIES CURRENT LIABILITIES: Accounts payable $ 105,551
$ 96,714 Accrued expenses 571,989 516,413 Distributions payable
236,608 210,027 Accrued interest 108,077 115,672 Current portion of
long-term obligations 242,992 50,202 Unearned revenue 254,336
211,001 Total current liabilities 1,519,553
1,200,029 LONG-TERM OBLIGATIONS 18,436,144 17,068,807 ASSET
RETIREMENT OBLIGATIONS 965,087 856,936 DEFERRED TAX LIABILITY
792,139 106,333 OTHER NON-CURRENT LIABILITIES 1,068,121
959,349 Total liabilities 22,781,044 20,191,454
COMMITMENTS AND CONTINGENCIES REDEEMABLE
NONCONTROLLING INTERESTS 1,100,202 —
EQUITY: Preferred
stock, Series A 60 60 Preferred stock, Series B 14 14 Common stock
4,284 4,267 Additional paid-in capital 9,817,815 9,690,609
Distributions in excess of earnings (1,030,663 ) (998,535 )
Accumulated other comprehensive loss (1,876,374 ) (1,836,996 )
Treasury stock (207,740 ) (207,740 ) Total American Tower
Corporation equity 6,707,396 6,651,679 Noncontrolling interests
66,885 61,139 Total equity 6,774,281 6,712,818
TOTAL $ 30,655,527 $ 26,904,272
UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30, 2016
2015 2016 2015 REVENUES: Property $
1,497,936 $ 1,212,849 $ 4,191,779 $ 3,429,264 Services 16,909
25,061 54,340 62,211 Total operating
revenues 1,514,845 1,237,910 4,246,119
3,491,475 OPERATING EXPENSES: Costs of operations (exclusive
of items shown separately below):
Property (including stock-based
compensation expense of $426, $396,
$1,325 and $1,218, respectively)
485,525 356,082 1,280,386 929,624
Services (including stock-based
compensation expense of $172, $99, $578
and $336, respectively)
5,712 9,307 22,007 22,863 Depreciation, amortization and accretion
397,999 341,096 1,137,398 932,972
Selling, general, administrative and
development expense (including stock-based
compensation expense of $19,628, $17,850,
$68,309 and $70,697,
respectively) 131,537 114,832 405,086 354,460 Other operating
expenses 14,998 15,668 37,509 40,891
Total operating expenses 1,035,771 836,985 2,882,386
2,280,810 OPERATING INCOME 479,074 400,925
1,363,733 1,210,665 OTHER INCOME (EXPENSE):
Interest income, TV Azteca, net of
interest expense of $279, $40, $846 and $780,
respectively
2,742 2,993 8,206 8,251 Interest income 6,376 4,503 16,378 11,871
Interest expense (190,160 ) (149,787 ) (531,076 ) (446,228 ) Gain
(loss) on retirement of long-term obligations — — 830 (78,793 )
Other expense (including unrealized
foreign currency losses of $8,321, $77,864,
$3,544 and $107,871, respectively)
(12,260 ) (66,659 ) (25,894 ) (123,291 ) Total other expense
(193,302 ) (208,950 ) (531,556 ) (628,190 ) INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 285,772 191,975 832,177 582,475
Income tax provision(1)
(22,037 ) (94,235 ) (94,671 ) (132,063 ) NET INCOME 263,735 97,740
737,506 450,412 Net loss (income) attributable to noncontrolling
interests 774 5,259 (10,288 ) 1,960
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER
CORPORATION
STOCKHOLDERS
264,509 102,999 727,218 452,372 Dividends on preferred stock
(26,781 ) (26,781 ) (80,344 ) (63,382 ) NET INCOME ATTRIBUTABLE TO
AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS $ 237,728 $
76,218 $ 646,874 $ 388,990 NET INCOME PER
COMMON SHARE AMOUNTS:
Basic net income attributable to American
Tower Corporation common
stockholders
$ 0.56 $ 0.18 $ 1.52 $ 0.93
Diluted net income attributable to
American Tower Corporation common
stockholders
$ 0.55 $ 0.18 $ 1.51 $ 0.92 WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING: BASIC 425,517 423,375
424,831 417,280 DILUTED 429,925 427,227
429,019 421,352
_______________
(1) 2015 amounts include the impact of a one-time cash tax
charge of approximately $93 million as part of the tax election
related to the GTP REIT.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
Nine Months Ended September 30, 2016
2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
737,506 $ 450,412 Adjustments to reconcile net income to cash
provided by operating activities: Depreciation, amortization and
accretion 1,137,398 932,972 Stock-based compensation expense 70,212
72,251 (Gain) loss on early retirement of long-term obligations
(830 ) 78,793 Other non-cash items reflected in statements of
operations 120,170 143,412 Decrease in restricted cash 4,126 19,971
Increase in net deferred rent balances (51,762 ) (69,019 ) Increase
in assets (8,863 ) (106,535 ) (Decrease) increase in liabilities
(29,526 ) 21,358 Cash provided by operating activities
1,978,431 1,543,615 CASH FLOWS FROM INVESTING
ACTIVITIES: Payments for purchase of property and equipment and
construction activities (475,174 ) (518,018 ) Payments for
acquisitions, net of cash acquired (1,309,915 ) (1,616,205 )
Payment for Verizon transaction (4,748 ) (5,058,895 ) Proceeds from
sales of short-term investments and other non-current assets 4,459
1,002,214 Payments for short-term investments — (1,011,320 )
Deposits, restricted cash, investments and other (824 ) (2,053 )
Cash used for investing activities (1,786,202 ) (7,204,277 ) CASH
FLOWS FROM FINANCING ACTIVITIES: (Repayments of) proceeds from of
short-term borrowings, net (7,337 ) 8,282 Borrowings under credit
facilities 1,529,477 5,727,831 Proceeds from issuance of senior
notes, net 3,236,383 1,492,298 Proceeds from term loan — 500,000
Proceeds from other borrowings 70,806 — Proceeds from issuance of
securities in securitization transaction — 875,000 Repayments of
notes payable, credit facilities, senior notes, term loan and
capital leases(1) (4,116,645 ) (6,092,710 ) (Distributions to)
contributions from noncontrolling interest holders, net (700 )
4,449 Proceeds from stock options and ESPP 76,601 29,324
Distributions paid on preferred stock (80,344 ) (57,866 )
Distributions paid on common stock (651,966 ) (516,012 ) Proceeds
from the issuance of common stock, net — 2,440,327 Proceeds from
the issuance of preferred stock, net — 1,337,946 Payment for early
retirement of long-term obligations (125 ) (86,107 ) Deferred
financing costs and other financing activities (29,423 ) (30,314 )
Cash provided by financing activities 26,727 5,632,448
Net effect of changes in foreign currency exchange rates on
cash and cash equivalents (9,284 ) 2,126 NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS 209,672 (26,088 ) CASH AND
CASH EQUIVALENTS, BEGINNING OF PERIOD 320,686 313,492
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 530,358 $ 287,404
CASH PAID FOR INCOME TAXES, NET $ 71,868 $ 130,231
CASH PAID FOR INTEREST $ 516,382 $ 472,079
_______________
(1) Nine months ended September 30, 2016 includes $13.8 million
of payments on capital leases of property and equipment.
UNAUDITED CONSOLIDATED RESULTS FROM OPERATIONS, BY
SEGMENT
($ in millions. Totals may not add due to
rounding.)
Three Months Ended September 30, 2016 Property
Services Total U.S.
LatinAmerica
Asia EMEA
TotalInternational
TotalProperty
Segment revenues $ 837 $ 260 $ 270 $ 131 $ 661 $ 1,498 $ 17 $ 1,515
Segment operating expenses(1)
189 88 154 54
296
485 6 491 Interest income, TV Azteca, net — 3 —
— 3 3 — 3 Segment Gross
Margin $ 648 $ 175 $ 116 $ 77 $ 367
$ 1,016 $ 11 $ 1,027
Segment SG&A(1)
36 15 15 13 43 79 3
82 Segment Operating Profit $ 613 $ 159
$ 101 $ 64 $ 324 $ 937 $ 9 $ 945
Segment Operating Profit Margin 73 % 61 % 37 % 49 % 49 % 63
% 51 % 62 % Revenue Growth 3.6 % 19.0 % 338.4 % 4.9 % 63.2 %
23.5 % (32.5 )% 22.4 % Total Tenant Billings Growth 5.8 % 20.3 %
355.9 % 14.5 % 62.1 % 21.1 % Organic Tenant Billings Growth 5.7 %
13.9 % 11.2 % 12.0 % 13.0 % 7.7 %
Revenue Components(2)
Prior-Year Tenant Billings $ 744 $ 152 $ 36 $ 91 $ 279 $ 1,023
Colocations/Amendments 33 10 5 5 20 53 Escalations 21 12 2 5 19 40
Cancellations (13 ) (1 ) (3 ) (1 ) (5 ) (18 ) Other 2 1
(0 ) 1 1 3 Organic Tenant Billings $
786 $ 173 $ 40 $ 102 $ 315 $
1,101 New Site Tenant Billings 1 10 125
2 137 138 Total Tenant Billings $ 787 $
182 $ 165 $ 104 $ 451 $ 1,239
Foreign Currency Exchange Impact(3)
— (1 ) (5 ) (7 ) (14 ) (14 ) Total Tenant Billings (Current
Period) $ 787 $ 181 $ 160 $ 97 $ 437
$ 1,225 Straight-Line Revenue 20 9 6 1 15 36
Prepaid Amortization Revenue 23 0 — 0 0 24 Other Revenue 6 2 (4 )
(1 ) (2 ) 4 International Pass-Through Revenue — 69 112 42 223 223
Foreign Currency Exchange Impact(4)
— (1 ) (4 ) (8 ) (13 ) (13 ) Total Property Revenue (Current
Period) $ 837 $ 260 $ 270 $ 131 $ 661
$ 1,498
_______________
(1) Excludes stock-based compensation expense. (2) All
components of revenue, except those labeled current period, have
been translated at prior period foreign exchange rates. (3)
Reflects foreign currency exchange impact on all components of
Total Tenant Billings. (4) Reflects foreign currency exchange
impact on components of revenue, other than Total Tenant Billings.
UNAUDITED CONSOLIDATED RESULTS FROM OPERATIONS, BY
SEGMENT (CONTINUED)
($ in millions. Totals may not add due to
rounding.)
Three Months Ended September 30,
2015
Property Services Total
U.S.
Latin America
Asia EMEA
TotalInternational
TotalProperty
Segment revenues $ 808 $ 219 $ 62 $ 125 $ 405 $ 1,213 $ 25 $ 1,238
Segment operating expenses(1)
187 78 33 57 168 356 9 365 Interest income, TV Azteca, net —
3 — — 3 3 — 3
Segment Gross Margin $ 621 $ 144 $ 29 $ 67
$ 240 $ 860 $ 16 $ 876
Segment SG&A(1)
31 14 6 13 33 65 4
68 Segment Operating Profit $ 589 $ 129 $ 23
$ 54 $ 206 $ 796 $ 12 $ 808
Segment Operating Profit Margin 73 % 59 % 38 % 43 % 51 % 66
% 48 % 65 % Revenue Growth 21.8 % 2.0 % 6.3 % 65.6 % 16.5 %
20.0 % (7.4 )% 19.2 % Total Tenant Billings Growth 21.9 % 38.6 %
22.7 % 84.9 % 46.9 % 29.0 % Organic Tenant Billings Growth 6.3 %
12.1 % 12.1 % 13.8 % 12.5 % 8.1 %
Revenue Components(2)
Prior-Year Tenant Billings $ 611 $ 155 $ 32 $ 54 $ 241 $ 852
Colocations/Amendments 34 11 4 4 19 54 Escalations 19 9 1 4 13 32
Cancellations (14 ) (2 ) (1 ) (0 ) (3 ) (18 ) Other (0 ) 1 0
0 1 1 Organic Tenant Billings $ 649
$ 174 $ 36 $ 62 $ 271 $ 920
New Site Tenant Billings 95 41 3 39
83 178 Total Tenant Billings $ 744 $
215 $ 39 $ 101 $ 354 $ 1,098
Foreign Currency Exchange Impact(3)
— (63 ) (3 ) (10 ) (76 ) (76 ) Total Tenant Billings
(Current Period) $ 744 $ 152 $ 36 $ 91
$ 279 $ 1,023 Straight-Line Revenue 32 6 0 2 8
41 Prepaid Amortization Revenue 21 0 — 0 1 21 Other Revenue 11 3 (0
) 3 6 16 International Pass-Through Revenue — 83 27 32 142 142
Foreign Currency Exchange Impact(4)
— (25 ) (2 ) (3 ) (30 ) (30 ) Total Property Revenue
(Current Period) $ 808 $ 219 $ 62 $ 125
$ 405 $ 1,213
_______________
(1) Excludes stock-based compensation expense. (2) All
components of revenue, except those labeled current period, have
been translated at prior period foreign exchange rates. (3)
Reflects foreign currency exchange impact on all components of
Total Tenant Billings. (4) Reflects foreign currency exchange
impact on components of revenue, other than Total Tenant Billings.
UNAUDITED SELECTED CONSOLIDATED FINANCIAL INFORMATION
($ in thousands. Totals may not add due to rounding.)
The following table reflects the estimated impact of foreign
currency exchange rate fluctuations, pass-through revenue and
straight-line revenue and expense recognition on total property
revenue, Adjusted EBITDA and Consolidated AFFO growth rates.
Components of Growth(1)(2):
Property Adjusted
Consolidated Three months ended September 30, 2016
Revenue EBITDA AFFO Growth 23.5 % 17.5 % 14.9
% Estimated impact of fluctuations in foreign currency exchange
rates (1.2
)%
(0.5 )% (0.1 )% Estimated impact of straight-line revenue and
expense recognition (1.1 )% (1.2 )% — % Estimated impact of
international pass-through revenue 6.3 % — % — %
_______________
(1) See “Non-GAAP and Defined Financial Measures” above. (2)
Growth components for net income are not provided, as the impact of
each of the line items on the measure cannot be calculated without
unreasonable effort.
The reconciliation of net income to Adjusted EBITDA and the
calculation of Adjusted EBITDA Margin are as follows:
Three months ended September 30, 2016
2015 Net income $ 263,735 $ 97,740 Income tax
provision 22,037 94,235 Other expense 12,260 66,659 Interest
expense 190,160 149,787 Interest income (6,376 ) (4,503 ) Other
operating expenses 14,998 15,668 Depreciation, amortization and
accretion 397,999 341,096 Stock-based compensation expense 20,226
18,345 Adjusted EBITDA $ 915,039 $ 779,027
Total revenue 1,514,845 1,237,910 Adjusted
EBITDA Margin 60 % 63 %
UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE
CALCULATION OF DEFINED FINANCIAL MEASURES
($ in thousands, except per share data. Totals may not add due
to rounding.)
The reconciliation of net income to NAREIT FFO attributable
to American Tower Corporation common stockholders and the
calculation of Consolidated AFFO, Consolidated AFFO per Share, AFFO
attributable to American Tower Corporation common stockholders and
AFFO attributable to American Tower Corporation common stockholders
per Share are presented below:
Three months ended September 30, 2016
2015 Net income $ 263,735 $ 97,740 Real estate
related depreciation, amortization and accretion 355,721 297,263
Losses from sale or disposal of real estate and real estate related
impairment charges 12,150 1,200 Dividends on preferred stock
(26,781 ) (26,781 ) Adjustments for unconsolidated affiliates and
noncontrolling interests (27,224 ) 804 NAREIT FFO
attributable to AMT common stockholders $ 577,601 $ 370,226
Straight-line revenue (34,645 ) (38,798 ) Straight-line
expense 17,814 16,433 Stock-based compensation expense 20,226
18,345 Deferred portion of income tax 582 (6,085 )
GTP REIT One-time charge(1)
— 93,044 Non-real estate related depreciation, amortization and
accretion 42,278 43,833
Amortization of deferred financing costs,
capitalized interest and debt discounts and
premiums and long-term deferred interest
charges
5,578 7,292
Other expense(2)
12,260 66,659 Other operating expense(3) 2,848 14,468 Capital
improvement capital expenditures (27,975 ) (22,202 ) Corporate
capital expenditures (2,508 ) (4,343 ) Adjustments for
unconsolidated affiliates and noncontrolling interests 27,224
(804 ) Consolidated AFFO $ 641,283 $ 558,068
Adjustments for unconsolidated affiliates and noncontrolling
interests (29,315 ) (5,834 ) AFFO attributable to AMT common
stockholders $ 611,968 $ 552,234 Divided by weighted
average diluted shares outstanding 429,925 427,227
Consolidated AFFO per Share $ 1.49 $ 1.31 AFFO
attributable to AMT common stockholders per Share $ 1.42 $
1.29
_______________
(1) In the third quarter of 2015, the Company filed a tax
election, pursuant to which GTP no longer operates as a separate
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 present its AFFO
metrics excluding its impact. Accordingly, the Company presents
Consolidated AFFO and AFFO attributable to American Tower
Corporation common stockholders for the three months ended
September 30, 2015 excluding this charge. (2) Primarily includes
realized and unrealized (gains) losses on foreign currency exchange
rate fluctuations. (3) Primarily includes integration and
acquisition-related costs.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161027005585/en/
American Tower CorporationLeah Stearns, 617-375-7500Senior Vice
President, Treasurer and Investor Relations
American Tower (NYSE:AMT)
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