10-QPeriod: Q2 FY2010

AMERICAN TOWER CORP /MA/ Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 6, 2010For Securities:AMT

Summary

American Tower Corporation (AMT) reported its second-quarter and year-to-date results for the period ending June 30, 2010. The company demonstrated solid revenue growth, primarily driven by its Rental and Management segment, which saw a 12% increase in revenue year-over-year for both the quarter and the first half of the year. This growth was fueled by new tenants, existing tenant expansions, and contractual escalations on legacy sites, along with contributions from recently acquired or constructed sites. While Network Development Services revenue declined, it represents a small portion of overall revenue. Financially, AMT reported a significant increase in net income, up 77% for the quarter and 70% for the six-month period compared to the prior year, largely due to improved operating performance and a lower effective tax rate. Cash flow from operations also saw a substantial increase, supporting investing activities which included significant acquisitions, and financing activities which involved substantial share repurchases. The company also highlighted its strong liquidity position and ongoing compliance with debt covenants, indicating a stable financial footing despite ongoing legal and regulatory reviews. Key financial highlights include a notable increase in net income and operating revenues, supported by strong performance in the core rental and management business. The company continues to invest in growth through acquisitions and capital expenditures, while also returning capital to shareholders via its stock repurchase program. Investors should note the company's ongoing international expansion and its strategic focus on its core tower leasing operations.

Financial Highlights

46 data points
Beta

Revenue

$469.94M

Net Income

$99.67M

21.2% Net Margin

EPS (Diluted)

$0.25

Total Assets

$8.59B

Cash & Equivalents

$302.89M

Free Cash Flow

$262.75M

Financial Statements
Beta
Revenue$469.94M
SG&A Expenses$53.58M
Operating Expenses$281.22M
Operating Income$188.72M
Interest Expense$56.07M
Net Income$99.67M
EPS (Basic)$0.25
EPS (Diluted)$0.25
Shares Outstanding (Basic)402.73M
Shares Outstanding (Diluted)405.02M

Key Highlights

  • 1Total operating revenues increased by 11% to $469.9 million for the three months ended June 30, 2010, and by 11% to $924.4 million for the six months ended June 30, 2010, compared to the prior year periods.
  • 2Rental and Management segment revenue, the company's primary revenue driver, increased by 12% year-over-year for both the three-month and six-month periods.
  • 3Net income attributable to American Tower Corporation significantly increased, rising 77% to $99.7 million for the quarter and 70% to $196.0 million for the six months ended June 30, 2010.
  • 4Cash provided by operating activities increased by $107.1 million to $516.4 million for the six months ended June 30, 2010.
  • 5The company made significant investments in acquisitions, with $132.5 million spent on acquiring new towers in the US and Chile during the six months ended June 30, 2010.
  • 6American Tower Corporation repurchased $196.3 million of its Class A common stock during the first six months of 2010 as part of its ongoing stock repurchase program.
  • 7The company maintained compliance with its debt covenants, with a Debt Service Coverage Ratio (DSCR) of 3.21x as of June 30, 2010.

Frequently Asked Questions

American Tower's revenue growth is primarily driven by its Rental and Management segment. This segment benefits from recurring revenues from tenant leases on existing 'legacy' sites, contractual lease escalations, adding new tenants to existing sites, and new sites acquired or constructed. The company's ability to add new tenants and equipment to its existing towers, along with strategic acquisitions, are key factors.

The company has shown significant improvement in profitability. For the second quarter of 2010, net income attributable to American Tower Corporation increased by 77% compared to the same period in 2009. For the first six months of 2010, net income attributable to American Tower Corporation increased by 70% compared to the prior year. This improvement is attributed to increased revenues, better operating expense management, and a lower effective tax rate.

American Tower continues to pursue strategic acquisitions to expand its portfolio, as evidenced by significant investments in acquiring new tower sites in the US and internationally. Alongside acquisitions, the company is also focused on capital expenditures for new site development and improvements. Additionally, the company is returning capital to shareholders through its ongoing stock repurchase program.

Yes, American Tower is involved in ongoing governmental proceedings related to its historical stock option granting practices, which could lead to fines, penalties, or other liabilities. Additionally, the company is involved in various other legal proceedings, including a significant lawsuit in Mexico and a dispute related to the XCEL acquisition escrow accounts. While the company believes it is cooperating and will defend itself vigorously, these matters represent potential risks.