CONSOLIDATED HIGHLIGHTSSecond Quarter 2017
- Total revenue increased 15.3% to $1,662
million
- Property revenue increased 14.9% to
$1,638 million
- Net income increased 101.9% to $388
million
- Adjusted EBITDA increased 17.5% to
$1,021 million
- Consolidated AFFO increased 22.5% to
$725 million
American Tower Corporation (NYSE: AMT) today reported financial
results for the quarter ended June 30, 2017.
Jim Taiclet, American Tower’s Chief Executive Officer stated,
“The second quarter of 2017 represented our 17th consecutive
quarter of double-digit growth in property revenue, Adjusted EBITDA
and Consolidated AFFO per Share, driven by strong demand for our
tower real estate from Los Angeles to São Paolo to Paris. Organic
Tenant Billings Growth in the U.S. of over 6% was complemented by
Organic Tenant Billings Growth of more than 10% in our
international markets, where the pace of advanced handset adoption
and mobile data usage growth continues to require the addition of
substantial network equipment on our sites.
"As we seek to continue to capitalize on the worldwide
competitive advantage we have built over the last 20 years, we
remain committed to our core principles, our employees and the
investment discipline that has enabled us to build a distinctive
global portfolio. As a result of the ever-increasing consumer
appetite for mobile broadband and our strategic positioning in key
markets spanning five continents, we believe that we are on track
to sustain strong growth in Consolidated AFFO per Share and our
dividend for many years to come.”
CONSOLIDATED OPERATING RESULTS OVERVIEWAmerican Tower
generated the following operating results for the quarter ended
June 30, 2017 (all comparative information is presented
against the quarter ended June 30, 2016).
($ in millions, except
per share amounts)
Q2 2017 Growth Rate Total
revenue $ 1,662 15.3 % Total property revenue $ 1,638 14.9 % Total
Tenant Billings Growth $ 140 11.9 % Organic Tenant Billings Growth
$ 89 7.6 % Property Gross Margin $ 1,134 16.1 % Property Gross
Margin % 69.2 % Net income $ 388 101.9 % Net income attributable to
AMT common stockholders $ 344 114.1 % Net income attributable to
AMT common stockholders per diluted share $ 0.80 116.2 % Adjusted
EBITDA $ 1,021 17.5 % Adjusted EBITDA Margin % 61.4 % NAREIT
Funds From Operations (FFO) attributable to AMT common stockholders
$ 679 33.7 % Consolidated AFFO $ 725 22.5 % Consolidated AFFO per
Share $ 1.68 21.7 % AFFO attributable to AMT common stockholders $
681 19.4 % AFFO attributable to AMT common stockholders per Share $
1.58 18.8 % Cash provided by operating activities $ 795 6.4
% Less: total cash capital expenditures(1) $ 210 24.4 % Free
Cash Flow $ 585 1.1 %
(1) Q2 2017 cash capital expenditures include $6.9 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 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 quarter ended June 30, 2017,
the Company declared the following regular cash distributions to
its common stockholders:
Common Stock Distributions
Q2 2017(1) Distribution per share $ 0.64
Aggregate amount (in millions) $ 275 Year-over-year per share
growth 21 %
(1) The distribution declared was paid in the third quarter of
2017 to stockholders of record as of the close of business on June
19, 2017.
In addition, the Company paid $27 million in preferred stock
dividends during the second quarter of 2017. During the second
quarter of 2017, all outstanding shares of the Company’s 5.25%
Mandatory Convertible Preferred Stock, Series A, converted into 5.6
million shares of its common stock.
Stock Repurchase Program – During the second quarter of
2017, the Company repurchased a total of 3.3 million shares of its
common stock for $416 million under its stock repurchase program.
The Company has repurchased a total of 5.2 million shares of its
common stock year to date, for a total of $641 million, and has
$470 million remaining under its existing stock repurchase
program.
Capital Expenditures – During the second quarter of 2017,
total capital expenditures were $210 million, of which $28 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 second
quarter of 2017, the Company spent $79 million to acquire 152
sites, including 54 towers in Brazil as part of the final tranche
of its previously announced transaction with a subsidiary of TIM
Participações S.A., bringing the final number of towers acquired
under that agreement to 5,873, for an aggregate purchase price of
$842 million.
The Company also has agreements to acquire up to approximately
1,200 sites in Colombia, up to approximately 1,400 sites in
Paraguay and up to approximately 100 additional sites in Mexico.
The expected impacts from these transactions are not included in
the Company’s current outlook.
LEVERAGE AND FINANCING OVERVIEW
Leverage – For the quarter ended June 30, 2017, the
Company’s Net Leverage Ratio was 4.5x net debt (total debt less
cash and cash equivalents) to second quarter 2017 annualized
Adjusted EBITDA.
Calculation of Net Leverage Ratio ($ in
millions)
As of June 30, 2017 Total debt $ 19,242 Less: Cash
and cash equivalents 770 Net Debt 18,472 Divided By: Second quarter
annualized Adjusted EBITDA(1) 4,082 Net Leverage Ratio 4.5x
(1) Q2 2017 Adjusted EBITDA multiplied by four.
Liquidity – As of June 30, 2017, the Company had
$3.5 billion of total liquidity, consisting of $0.8 billion in cash
and cash equivalents plus the ability to borrow an aggregate of
$2.7 billion under its revolving credit facilities, net of any
outstanding letters of credit.
On April 6, 2017, the Company issued €500.0 million aggregate
principal amount of Euro-denominated 1.375% senior unsecured notes
due 2025. The net proceeds from this issuance were used to repay a
portion of existing indebtedness under one of the Company’s
revolving credit facilities and for general corporate purposes.
On June 30, 2017, the Company issued $750.0 million aggregate
principal amount of 3.55% senior unsecured notes due 2027. The net
proceeds from this issuance were used to repay a portion of
existing indebtedness under one of the Company’s revolving credit
facilities.
Finally, on June 30, 2017, the Company announced its election to
call for redemption all of its outstanding 4.500% senior unsecured
notes due 2018. The redemption date has been set for July 31,
2017.
FULL YEAR 2017 OUTLOOK
The following estimates are based on a number of assumptions
that management believes to be reasonable and reflect the Company’s
expectations as of July 27, 2017. 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 outlook is based on the following average foreign
currency exchange rates to 1.00 U.S. Dollar for July 27, 2017
through December 31, 2017: (a) 17.00 Argentinean Pesos;
(b) 3.35 Brazilian Reais; (c) 670 Chilean Pesos;
(d) 3,030 Colombian Pesos; (e) 0.89 Euros; (f) 4.50
Ghanaian Cedi; (g) 65.30 Indian Rupees; (h) 18.70 Mexican
Pesos; (i) 325.00 Nigerian Naira; (j) 3.30 Peruvian Soles;
(k) 13.55 South African Rand; and (l) 3,610 Ugandan
Shillings.
The Company is raising the midpoint of its full year 2017
outlook for property revenue, net income, Adjusted EBITDA and
Consolidated AFFO by $25 million, $40 million, $45 million and $55
million, respectively.
The Company’s outlook reflects estimated favorable impacts from
foreign currency exchange rate fluctuations to property revenue,
Adjusted EBITDA and Consolidated AFFO, of approximately $35
million, $16 million and $11 million, respectively, as compared to
the Company’s prior 2017 outlook. The impact of foreign currency
rate fluctuations on net income is not provided, as the impact on
all components of the net income measure cannot be calculated
without unreasonable effort. The Company’s current expectations for
property revenue include an approximately $17 million decline in
International pass-through revenue, on a currency-neutral basis, as
compared to the Company’s prior 2017 outlook, primarily due to
lower fuel price projections.
Additional information pertaining to the impact of foreign
currency and London Interbank Offered Rate (LIBOR) fluctuations on
the Company’s outlook has been provided in the supplemental
disclosure package available on its website.
2017 Outlook ($ in
millions)
Full Year 2017 Midpoint
Growth
Total property revenue(1) $ 6,480 to $ 6,580 14.3 %
Net income 1,355 to 1,405 42.2 % Adjusted EBITDA 4,045 to 4,105
14.7 % Consolidated AFFO 2,835 to 2,885 14.8 %
(1) Includes U.S. property revenue of $3,585 million to $3,625
million and international property revenue of $2,895 million to
$2,955 million reflecting midpoint growth rates of 7.0% and 24.8%,
respectively. The U.S. growth rate includes a negative impact of
1.2% from the non-recurrence of $39 million in decommissioning
revenue from 2016. International property revenue reflects the
Company’s Latin America, EMEA and Asia segments.
2017 Outlook for Total Property revenue, at the midpoint,
includes the following components(1): ($ in
millions, totals may not add due to rounding.)
U.S. Property International
Property(2) Total Property
International pass-through revenue
$
N/A
$ 904 $ 904 Straight-line revenue 144 49 193
_______________
(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.
2017 Outlook growth, at the midpoint, includes the following
components(1): (Totals may not add due to
rounding.)
U.S. Property International
Property(2) Total Property Organic Tenant
Billings >6% ~10% ~7-8% New Site Tenant Billings ~0.2% ~15% ~5%
Total Tenant Billings Growth >6% ~24-25% >12%
_______________
(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 2017 Discretionary capital projects(1)
$ 145 to $ 175 Ground lease purchases 150 to 160 Start-up capital
projects 165 to 185 Redevelopment 195 to 225 Capital improvement
130 to 140 Corporate 15 — 15 Total $ 800 to $ 900
(1) Includes the construction of approximately 2,000 to 3,000
communications sites globally.
Reconciliation of Outlook for Adjusted EBITDA to Net
income: ($ in millions, totals may not add due to rounding.)
Full Year 2017 Net income $ 1,355
to $ 1,405 Interest expense 745 to 765
Depreciation, amortization and accretion 1,625 to 1,645 Income tax
provision 115 to 105 Stock-based compensation expense 107 — 107
Other, including other operating expenses, interest income, gain
(loss) on retirement of long-term obligations and other income
(expense) 98 to 78 Adjusted EBITDA $ 4,045 to $ 4,105
Reconciliation of Outlook for Consolidated AFFO to
Net income: ($ in millions, totals may not add due to
rounding.)
Full Year 2017 Net income $
1,355 to $ 1,405 Straight-line revenue (193 )
— (193 ) Straight-line expense 65 — 65 Depreciation, amortization
and accretion 1,625 to 1,645 Stock-based compensation expense 107 —
107 Deferred portion of income tax (34 ) to (24 ) Other, including
other operating expense, 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 55 to 35 Capital improvement capital expenditures (130 ) to
(140 ) Corporate capital expenditures (15 ) — (15 ) Consolidated
AFFO $ 2,835 to $ 2,885
Conference Call InformationAmerican Tower will host a
conference call today at 8:30 a.m. ET to discuss its financial
results for the quarter ended June 30, 2017 and its updated
outlook for full year 2017. 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)
260-0718International dial-in: (651) 291-3820Passcode: 426329
When available, a replay of the call can be accessed until 11:59
p.m. ET on August 10, 2017. The replay dial-in numbers are as
follows:
U.S./Canada dial-in: (800)
475-6701International dial-in: (320) 365-3844Passcode: 426329
American Tower will also sponsor a live simulcast and replay of
the call on its website, www.americantower.com.
About American TowerAmerican Tower, one of the largest
global REITs, is a leading independent owner, operator and
developer of multitenant communications real estate with a
portfolio of approximately 148,000 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. 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; (vii) Foreign currency exchange
impact; and (viii) 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 addition to our portfolio are
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 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 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 on 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
income tax, (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 and 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 and European joint venture with
PGGM, which both closed in 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, although this measure of Free Cash Flow may not be
directly comparable to similar measures used by other
companies.
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
2017 outlook and other targets, foreign currency exchange rates,
our expectations for the closing of signed acquisitions and our
expectations 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
infrastructure would materially and adversely affect our operating
results, and we cannot control that demand; (2) increasing
competition for tenants in the tower industry may materially and
adversely affect our revenue; (3) 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; (4) 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; (5) 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; (6) our expansion initiatives involve a number of risks and
uncertainties, including those related to integrating acquired or
leased assets, that could adversely affect our operating results,
disrupt our operations or expose us to additional risk; (7)
competition for assets could adversely affect our ability to
achieve our return on investment criteria; (8) new technologies or
changes in a tenant’s business model could make our tower leasing
business less desirable and result in decreasing revenues; (9) our
leverage and debt service obligations may materially and adversely
affect our ability to raise additional financing to fund capital
expenditures, future growth and expansion initiatives and to
satisfy our distribution requirements; (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)
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; (14) if we
are unable to protect our rights to the land under our towers, it
could adversely affect our business and operating results; (15) 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; (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, 2016, 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)
June 30, 2017 December 31, 2016 ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 770,024 $ 787,161
Restricted cash 143,277 149,281 Short-term investments 1,012 4,026
Accounts receivable, net 322,060 308,369 Prepaid and other current
assets 566,386 441,033 Total current assets 1,802,759
1,689,870 PROPERTY AND EQUIPMENT, net 10,725,707
10,517,258 GOODWILL 5,371,165 5,070,680 OTHER INTANGIBLE ASSETS,
net 11,728,666 11,274,611 DEFERRED TAX ASSET 213,582 195,678
DEFERRED RENT ASSET 1,407,478 1,289,530 NOTES RECEIVABLE AND OTHER
NON-CURRENT ASSETS 888,853 841,523 TOTAL $ 32,138,210
$ 30,879,150
LIABILITIES CURRENT LIABILITIES:
Accounts payable $ 102,726 $ 118,666 Accrued expenses 727,966
620,563 Distributions payable 277,772 250,550 Accrued interest
154,926 157,297 Current portion of long-term obligations 1,732,035
238,806 Unearned revenue 283,486 245,387 Total
current liabilities 3,278,911 1,631,269 LONG-TERM
OBLIGATIONS 17,509,937 18,294,659 ASSET RETIREMENT OBLIGATIONS
1,026,535 965,507 DEFERRED TAX LIABILITY 950,299 777,572 OTHER
NON-CURRENT LIABILITIES 1,171,546 1,142,723 Total
liabilities 23,937,228 22,811,730
COMMITMENTS AND
CONTINGENCIES REDEEMABLE NONCONTROLLING INTERESTS
1,155,867 1,091,220
EQUITY: Preferred stock, Series A — 60
Preferred stock, Series B 14 14 Common stock 4,372 4,299 Additional
paid-in capital 10,165,343 10,043,559 Distributions in excess of
earnings (989,153 ) (1,076,965 ) Accumulated other comprehensive
loss (1,848,803 ) (1,999,332 ) Treasury stock (849,064 ) (207,740 )
Total American Tower Corporation equity 6,482,709 6,763,895
Noncontrolling interests 562,406 212,305 Total equity
7,045,115 6,976,200 TOTAL $ 32,138,210 $
30,879,150
UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June
30, 2017 2016 2017
2016 REVENUES: Property $ 1,638,175 $
1,426,192 $ 3,232,239 $ 2,693,843 Services 24,259 16,035
46,433 37,431 Total operating revenues
1,662,434 1,442,227 3,278,672 2,731,274
OPERATING EXPENSES: Costs of operations (exclusive of items shown
separately below): Property (including stock-based compensation
expense of $645, $392, $1,300 and $899, respectively) 507,234
452,571 993,401 794,861 Services (including stock-based
compensation expense of $201, $255, $424 and $406, respectively)
9,949 7,140 16,490 16,295 Depreciation, amortization and accretion
396,355 397,765 817,495 739,399 Selling, general, administrative
and development expense (including stock-based compensation expense
of $24,892, $21,260, $60,236 and $48,681, respectively) 153,148
138,234 317,944 273,549 Other operating expenses 18,839
13,711 25,054 22,511 Total operating expenses
1,085,525 1,009,421 2,170,384 1,846,615
OPERATING INCOME 576,909 432,806 1,108,288
884,659 OTHER INCOME (EXPENSE): Interest income, TV Azteca,
net of interest expense of $291, $284, $582 and $567, respectively
2,770 2,748 5,470 5,464 Interest income 8,311 6,468 18,238 10,002
Interest expense (187,028 ) (181,036 ) (370,723 ) (340,916 ) (Loss)
gain on retirement of long-term obligations (274 ) 830 (55,714 )
830 Other income (expense) (including unrealized foreign currency
gains (losses) of $7,785, ($24,585), $35,736 and $4,777,
respectively) 11,782 (25,842 ) 41,084 (13,634 ) Total
other expense (164,439 ) (196,832 ) (361,645 ) (338,254 ) INCOME
FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 412,470 235,974
746,643 546,405 Income tax provision (23,980 ) (43,510 ) (50,743 )
(72,634 ) NET INCOME 388,490 192,464 695,900 473,771 Net income
attributable to noncontrolling interests (21,439 ) (4,914 ) (12,769
) (11,062 ) NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION
STOCKHOLDERS 367,051 187,550 683,131 462,709 Dividends on preferred
stock (22,843 ) (26,782 ) (49,624 ) (53,563 ) NET INCOME
ATTRIBUTABLE TO AMERICAN TOWER CORPORATION COMMON STOCKHOLDERS $
344,208 $ 160,768 $ 633,507 $ 409,146
NET INCOME PER COMMON SHARE AMOUNTS: Basic net income attributable
to American Tower Corporation common stockholders $ 0.81 $
0.38 $ 1.48 $ 0.96 Diluted net income
attributable to American Tower Corporation common stockholders $
0.80 $ 0.37 $ 1.47 $ 0.95 WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING: BASIC 427,298 424,909
427,288 424,484 DILUTED 430,487 429,004
430,444 428,529
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended June 30, 2017
2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$ 695,900 $ 473,771 Adjustments to reconcile net income to cash
provided by operating activities: Depreciation, amortization and
accretion 817,495 739,399 Stock-based compensation expense 61,960
49,986 Loss (gain) on early retirement of long-term obligations
55,714 (830 ) Other non-cash items reflected in statements of
operations (50,222 ) 53,464 Decrease in restricted cash 5,659
12,170 Increase in net deferred rent balances (71,470 ) (34,931 )
Increase in assets (101,982 ) (32,984 ) Increase in liabilities
65,404 51,271 Cash provided by operating activities
1,478,458 1,311,316 CASH FLOWS FROM INVESTING
ACTIVITIES: Payments for purchase of property and equipment and
construction activities (371,512 ) (319,427 ) Payments for
acquisitions, net of cash acquired (857,220 ) (1,216,467 ) Payment
for Verizon transaction — (4,748 ) Proceeds from sales of
short-term investments and other non-current assets 7,196 2,601
Deposits, restricted cash, investments and other 7,025
(5,360 ) Cash used for investing activities (1,214,511 ) (1,543,401
) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of short-term
borrowings, net — (2,843 ) Borrowings under credit facilities
2,508,607 1,397,672 Proceeds from issuance of senior notes, net
1,279,435 2,237,503 Repayments of notes payable, credit facilities,
senior notes and capital leases(1) (3,126,661 ) (2,858,415 )
Contributions from (distributions to) noncontrolling interest
holders, net 265,255 (503 ) Purchases of common stock (641,324 ) —
Proceeds from stock options and ESPP 82,641 60,361 Distributions
paid on preferred stock (53,562 ) (53,563 ) Distributions paid on
common stock (514,905 ) (426,564 ) Payment for early retirement of
long-term obligations (61,764 ) (125 ) Deferred financing costs and
other financing activities (28,311 ) (23,264 ) Cash (used for)
provided by financing activities (290,589 ) 330,259 Net
effect of changes in foreign currency exchange rates on cash and
cash equivalents 9,505 (8,322 ) NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (17,137 ) 89,852 CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD 787,161 320,686 CASH
AND CASH EQUIVALENTS, END OF PERIOD $ 770,024 $ 410,538
CASH PAID FOR INCOME TAXES, NET $ 60,384 $ 50,413
CASH PAID FOR INTEREST $ 351,991 $ 288,880
(1) Six months ended June 30, 2017 and June 30, 2016 includes
$16.1 million and $8.7 million, respectively, of payments on
capital leases of property and equipment.
UNAUDITED CONSOLIDATED RESULTS FROM
OPERATIONS, BY SEGMENT
($ in millions, totals may not add due to
rounding.)
Three Months Ended June 30, 2017 Property
Services
Total U.S.
Latin America
Asia EMEA
Total International
Total Property
Segment revenues $ 897 $ 287 $ 295 $ 160 $ 741 $ 1,638 $ 24 $ 1,662
Segment operating expenses(1) 184 96 168 59 323 507 10 516 Interest
income, TV Azteca, net — 3 — — 3
3 — 3 Segment Gross Margin $ 714 $ 194
$ 127 $ 101 $ 421 $ 1,134 $ 15
$ 1,149 Segment SG&A(1) 36 19 17
18 54 90 3 94 Segment
Operating Profit $ 677 $ 174 $ 110 $ 83
$ 367 $ 1,044 $ 11 $ 1,055 Segment
Operating Profit Margin 75 % 61 % 37 % 52 % 49 % 64 % 46 % 63 %
Revenue Growth 8.1 % 20.9 % 31.1 % 18.5 % 24.2 % 14.9 % 51.3
% 15.3 % Total Tenant Billings Growth 6.4 % 13.6 % 32.0 % 25.8 %
22.7 % 11.9 % Organic Tenant Billings Growth 6.2 % 11.2 % 10.1 %
8.9 % 10.3 % 7.6 %
Revenue
Components(2) Prior-Year Tenant Billings $ 780 $ 168 $
131 $ 99 $ 398 $ 1,177 Colocations/Amendments 38 9 15 5 29 67
Escalations 24 10 4 6 20 44 Cancellations (14 ) (1 ) (6 ) (1 ) (8 )
(22 ) Other (0 ) 1 0 (0 ) 0 (0 ) Organic
Tenant Billings $ 828 $ 187 $ 144 $ 107
$ 438 $ 1,267 New Site Tenant Billings 2 4
29 17 49 51 Total Tenant
Billings $ 830 $ 191 $ 173 $ 124 $ 488
$ 1,318 Foreign Currency Exchange Impact(3) —
9 6 (5 ) 10 10 Total Tenant Billings
(Current Period) $ 830 $ 200 $ 179 $ 119
$ 498 $ 1,328 Straight-Line Revenue 36
8 4 2 14 51 Prepaid Amortization Revenue 26 0 — 0 1 26 Other
Revenue 5 3 (6 ) (0 ) (3 ) 2 International Pass-Through Revenue —
72 113 48 233 233 Foreign Currency Exchange Impact(4) — 4
4 (10 ) (2 ) (2 ) Total Property Revenue (Current
Period) $ 897 $ 287 $ 295 $ 160 $ 741
$ 1,638
(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 June 30, 2016 Property
Services
Total U.S.
Latin America
Asia EMEA
Total International
Total Property
Segment revenues $ 830 $ 237 $ 225 $ 135 $ 597 $ 1,426 $ 16 $ 1,442
Segment operating expenses(1) 182 83 128 58 270 452 7 459 Interest
income, TV Azteca, net — 3 — — 3
3 — 3 Segment Gross Margin $ 647 $ 156
$ 97 $ 76 $ 329 $ 977 $ 9
$ 986 Segment SG&A(1) 35 15 15 17
46 81 3 85 Segment Operating
Profit $ 613 $ 141 $ 82 $ 60 $ 283
$ 896 $ 6 $ 901 Segment Operating
Profit Margin 74 % 60 % 37 % 44 % 47 % 63 % 36 % 62 %
Revenue Growth 3.3 % 7.3 % 274.3 % 91.4 % 69.7 % 23.6 % (20.4 )%
22.8 % Total Tenant Billings Growth 5.8 % 20.8 % 294.8 % 90.7 %
74.3 % 23.1 % Organic Tenant Billings Growth 5.6 % 12.2 % 10.4 %
20.4 % 13.7 % 7.7 %
Revenue
Components(2) Prior-Year Tenant Billings $ 737 $ 161 $
35 $ 54 $ 250 $ 987 Colocations/Amendments 32 9 5 6 19 51
Escalations 21 12 1 4 17 38 Cancellations (12 ) (1 ) (2 ) (0 ) (3 )
(15 ) Other 0 0 (0 ) 1 1 2
Organic Tenant Billings $ 779 $ 180 $ 39 $ 65
$ 284 $ 1,063 New Site Tenant Billings 1
14 100 38 151 152 Total
Tenant Billings $ 780 $ 194 $ 138 $ 102
$ 435 $ 1,215 Foreign Currency Exchange Impact(3) —
(26 ) (7 ) (4 ) (37 ) (37 ) Total Tenant Billings (Current
Period) $ 780 $ 168 $ 131 $ 99 $ 398
$ 1,177 Straight-Line Revenue 21 12 3 1 16 37
Prepaid Amortization Revenue 24 1 — 0 1 25 Other Revenue 5 (5 ) 2 1
(2 ) 3 International Pass-Through Revenue — 72 93 35 201 201
Foreign Currency Exchange Impact(4) — (11 ) (5 ) (1 ) (17 )
(17 ) Total Property Revenue (Current Period) $ 830 $ 237
$ 225 $ 135 $ 597 $ 1,426
(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 reconciliation of net income to
Adjusted EBITDA and the calculation of Adjusted EBITDA Margin are
as follows:
Three Months Ended June 30, 2017
2016 Net income $ 388,490 $ 192,464 Income tax
provision 23,980 43,510 Other (income) expense (11,782 ) 25,842
Loss (gain) on retirement of long-term obligations 274 (830 )
Interest expense 187,028 181,036 Interest income (8,311 ) (6,468 )
Other operating expenses 18,839 13,711 Depreciation, amortization
and accretion 396,355 397,765 Stock-based compensation expense
25,738 21,907 Adjusted EBITDA $ 1,020,611 $
868,937 Total revenue 1,662,434 1,442,227
Adjusted EBITDA Margin 61 % 60 %
The reconciliation of NAREIT FFO attributable to American
Tower Corporation common stockholders to net income 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 June 30, 2017
2016 Net income $ 388,490 $ 192,464
Real estate related depreciation, amortization and accretion
352,566 360,333 Losses from sale or disposal of real estate and
real estate related impairment charges 12,370 5,130 Dividends on
preferred stock (22,843 ) (26,782 ) Adjustments for unconsolidated
affiliates and noncontrolling interests (51,284 ) (22,942 ) NAREIT
FFO attributable to AMT common stockholders $ 679,299 $
508,203 Straight-line revenue (50,759 ) (35,236 )
Straight-line expense 14,346 16,476 Stock-based compensation
expense 25,738 21,907 Deferred portion of income tax (13,330 )
12,465 Non-real estate related depreciation, amortization and
accretion 43,789 37,432 Amortization of deferred financing costs,
capitalized interest and debt discounts and premiums and long-term
deferred interest charges 8,027 4,417 Other (income) expense(1)
(11,782 ) 25,842 Loss (gain) on retirement of long-term obligations
274 (830 ) Other operating expense(2) 6,468 8,581 Capital
improvement capital expenditures (24,785 ) (25,753 ) Corporate
capital expenditures (3,521 ) (4,557 ) Adjustments for
unconsolidated affiliates and noncontrolling interests 51,284
22,942 Consolidated AFFO 725,048 591,889
Adjustments for unconsolidated affiliates and noncontrolling
interests(3) (43,869 ) (21,434 ) AFFO attributable to AMT common
stockholders $ 681,179 $ 570,455 Divided by weighted
average diluted shares outstanding 430,487 429,004
Consolidated AFFO per Share $ 1.68 $ 1.38 AFFO
attributable to AMT common stockholders per Share $ 1.58 $
1.33
(1) Includes unrealized (gains) losses on foreign currency
exchange rate fluctuations of ($7.8 million) and $24.6 million,
respectively.(2) Primarily includes integration and
acquisition-related costs.(3) Includes adjustments for the impact
on both NAREIT FFO attributable to American Tower Corporation
common stockholders and the other line items included in the
calculation of Consolidated AFFO.
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version on businesswire.com: http://www.businesswire.com/news/home/20170727005417/en/
American Tower CorporationIgor Khislavsky, 617-375-7500Director,
Investor Relations
American Tower (NYSE:AMT)
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