10-QPeriod: Q2 FY2014

AMERICAN TOWER CORP /MA/ Quarterly Report for Q2 Ended Jun 30, 2014

Filed July 30, 2014For Securities:AMT

Summary

AMERICAN TOWER CORP /MA/ (AMT) reported a strong financial performance for the second quarter and the first half of 2014, demonstrating significant year-over-year growth in revenues and profitability. Total revenues increased by 28% for the quarter and 25% for the six-month period, primarily driven by the substantial acquisition of MIP Tower Holdings LLC (MIPT) and organic growth from existing sites. This growth was bolstered by increases in both domestic and international rental and management segments, along with contributions from network development services. Profitability metrics also saw substantial improvements. Adjusted EBITDA increased by 30% for the quarter and 26% for the six-month period, reflecting effective cost management and the revenue uplift from new site acquisitions and existing site improvements. The company's strategic focus on expanding its portfolio and adding new tenants to its legacy sites continues to drive solid performance. Management expressed confidence in the company's liquidity and ability to fund future operations, capital expenditures, and distributions.

Financial Highlights

52 data points
Beta

Revenue

$1.03B

Net Income

$234.43M

22.7% Net Margin

EPS (Diluted)

$0.58

Total Assets

$20.85B

Cash & Equivalents

$282.96M

Free Cash Flow

$595.80M

Financial Statements
Beta
Revenue$1.03B
SG&A Expenses$98.50M
Operating Expenses$628.96M
Operating Income$402.50M
Interest Expense$146.23M
Net Income$234.43M
EPS (Basic)$0.58
EPS (Diluted)$0.58
Shares Outstanding (Basic)395.87M
Shares Outstanding (Diluted)399.59M

Key Highlights

  • 1Total revenues increased to $1.03 billion for Q2 2014 and $2.02 billion for the first six months of 2014, representing year-over-year growth of 28% and 25%, respectively.
  • 2Adjusted EBITDA grew to $682.2 million for Q2 2014 and $1.32 billion for the first six months of 2014, up 30% and 26% year-over-year, respectively.
  • 3The acquisition of MIP Tower Holdings LLC (MIPT) significantly contributed to revenue growth, adding approximately 5,370 communications sites and related assets.
  • 4Domestic rental and management segment revenue increased by 27% in Q2 2014, driven by MIPT acquisition and organic growth from legacy sites (11% increase).
  • 5International rental and management segment revenue saw a 29% increase in Q2 2014, with new site acquisitions and legacy site growth contributing significantly, although partially offset by foreign currency translation impacts.
  • 6Interest expense increased significantly due to higher average debt outstanding from acquisitions, rising 45% in Q2 2014 and 36% for the six-month period.
  • 7The company issued $582.9 million in Mandatory Convertible Preferred Stock in May 2014 to fund recent acquisitions.

Frequently Asked Questions

The primary driver of revenue growth was the acquisition of MIP Tower Holdings LLC (MIPT), which added approximately 5,370 communications sites. Additionally, organic revenue growth from existing 'legacy' sites, driven by new tenant leases and contractual rent escalations, contributed significantly to the increase.

The company's total outstanding debt increased to approximately $14.0 billion as of June 30, 2014. This increase was primarily due to borrowings used to fund acquisitions, including the MIPT acquisition and the Richland acquisition. Interest expense consequently rose, reflecting the higher debt load.

American Tower expects continued revenue growth driven by increased wireless data usage, network densification, and the deployment of new technologies. The company plans to fund future capital expenditures, including new site construction and acquisitions, through operating cash flow, its credit facilities, and potentially further debt or equity offerings. Management remains confident in the company's ability to fund operations, distributions, and strategic investments.

Foreign currency translation had a negative impact on the company's international segment results. For Q2 2014, the negative impact from foreign currency translation decreased international segment revenue by approximately 11% and gross margin by approximately 11%. This was mainly due to fluctuations in the Ghanaian Cedi, Brazilian Reais, and Indian Rupees.