Summary
American Tower Corporation (AMT) reported its first quarter 2008 results, showcasing robust revenue growth driven primarily by its rental and management segment. Total revenues increased by 8% year-over-year, reaching $382.2 million, with rental and management revenue up 8% to $374.0 million. This growth was fueled by adding new tenants and equipment to existing sites, as well as revenue from acquired and constructed sites. Despite an increase in interest expenses due to higher average debt, the company saw a significant improvement in net income, which more than doubled to $42.2 million from $22.2 million in the prior year period. This enhanced profitability was largely influenced by a substantial reduction in depreciation, amortization, and accretion expenses, a result of extending the estimated useful lives of towers and related intangible assets from 15 to 20 years, effective January 1, 2008. The company also actively managed its capital structure, initiating a new $1.5 billion stock repurchase program in March 2008 and repaying $325 million of existing debt. Liquidity remained strong, with approximately $709.7 million in total liquidity at quarter-end, comprising cash and cash equivalents and undrawn credit facilities. Investors should note the ongoing legal proceedings related to historical stock option granting practices, for which the company reached a settlement in principle in December 2007, and a material weakness identified in internal controls over financial reporting related to income tax accounting, which is being actively remediated.
Key Highlights
- 1Total revenues increased by 8% to $382.2 million for the three months ended March 31, 2008, compared to $352.5 million for the same period in 2007.
- 2Rental and management revenue, the company's primary revenue stream, grew by 8% to $374.0 million.
- 3Net income more than doubled to $42.2 million ($0.10 per diluted share) from $22.2 million ($0.05 per diluted share) in the prior year period.
- 4Depreciation, amortization, and accretion expenses decreased by 25% to $97.1 million due to a change in accounting estimate extending tower useful lives from 15 to 20 years.
- 5Interest expense increased by 23% to $65.5 million, primarily due to higher average outstanding debt.
- 6The company repurchased approximately 4.5 million shares of Class A common stock for $170.6 million during the quarter, and announced a new $1.5 billion stock repurchase program.
- 7Total liquidity stood at $709.7 million as of March 31, 2008, consisting of $121.6 million in cash and cash equivalents and $588.1 million available under the revolving credit facility.