10-QPeriod: Q3 FY2014

AMERICAN TOWER CORP /MA/ Quarterly Report for Q3 Ended Sep 30, 2014

Filed October 30, 2014For Securities:AMT

Summary

American Tower Corporation (AMT) reported strong financial performance for the nine months ended September 30, 2014, demonstrating significant growth across its key segments. Total revenues increased by 26% year-over-year to $3.05 billion, driven by a robust 26% rise in rental and management revenues, which benefited from organic growth on existing sites and the integration of newly acquired and constructed sites. The company's domestic and international operations both showed substantial improvements, with domestic segment revenue up 25% and international segment revenue up 28%. Adjusted EBITDA saw a healthy 26% increase to $1.99 billion, reflecting improved operational efficiencies and expanded scale, largely due to strategic acquisitions including the significant MIPT transaction. The company also reported strong growth in Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO), which increased by 38% and 26% respectively for the nine-month period. These figures highlight the company's ability to generate increasing cash flow from its operations. AMT also successfully managed its debt, issuing new notes and amending its credit facilities to enhance liquidity and extend maturity profiles, positioning the company for continued growth and strategic flexibility.

Financial Highlights

52 data points
Beta

Revenue

$1.04B

Net Income

$207.59M

20.0% Net Margin

EPS (Diluted)

$0.50

Total Assets

$20.60B

Cash & Equivalents

$295.61M

Free Cash Flow

$497.22M

Financial Statements
Beta
Revenue$1.04B
SG&A Expenses$108.91M
Operating Expenses$653.38M
Operating Income$384.81M
Interest Expense$143.21M
Net Income$207.59M
EPS (Basic)$0.50
EPS (Diluted)$0.50
Shares Outstanding (Basic)396.24M
Shares Outstanding (Diluted)400.40M

Key Highlights

  • 1Total revenues increased by 26% to $3.05 billion for the nine months ended September 30, 2014.
  • 2Adjusted EBITDA grew by 26% to $1.99 billion for the nine months ended September 30, 2014.
  • 3The MIPT acquisition significantly contributed to revenue and site portfolio growth.
  • 4Domestic rental and management revenue increased by 25%, driven by organic growth and new sites.
  • 5International rental and management revenue increased by 28%, demonstrating successful global expansion.
  • 6NAREIT FFO and AFFO showed strong year-over-year growth of 38% and 26% respectively.
  • 7The company actively managed its debt and credit facilities, issuing new notes and amending existing agreements.

Frequently Asked Questions

The primary driver of American Tower's revenue growth was the significant increase in both its domestic and international rental and management segments. This growth was fueled by organic revenue increases from existing 'legacy' sites (due to new tenant leases, amendments, and contractual rent escalations) and substantial revenue contributions from the approximately 15,770 new sites acquired or constructed since January 1, 2013, including those from the MIPT acquisition.

The acquisition of MIPT, completed in October 2013, had a material positive impact on American Tower's financial results. It contributed approximately $255.9 million to total revenues for the first nine months of 2014. This acquisition significantly expanded the company's site portfolio, adding approximately 4,860 domestic sites and approximately 5,370 sites across the United States, Costa Rica, and Panama, which directly translated into increased rental and management revenues and gross margin.

American Tower demonstrated strong financial health and a positive outlook. The company reported significant year-over-year growth in revenues, Adjusted EBITDA, FFO, and AFFO. It also actively managed its debt by issuing new notes and amending credit facilities, enhancing its liquidity and extending debt maturities. The company's robust cash flow from operations and available borrowing capacity provide confidence in its ability to fund ongoing operations, capital expenditures, REIT distribution requirements, and future growth initiatives.

Several risks were highlighted. These include potential decreases in demand for communications sites due to factors like increased network sharing, tenant consolidation, or changes in technology; reliance on a small number of key tenants, making the company sensitive to their financial health; risks associated with foreign operations due to economic, political, and currency fluctuations; and the restrictive covenants in debt agreements that could limit financial flexibility. The company also noted the potential impact of new technologies and the importance of maintaining its REIT status.