10-QPeriod: Q1 FY2016

AMERICAN TOWER CORP /MA/ Quarterly Report for Q1 Ended Mar 31, 2016

Filed April 29, 2016For Securities:AMT

Summary

American Tower Corporation (AMT) reported solid financial results for the first quarter of 2016, demonstrating strong revenue growth driven by its property segment, which saw a significant 19% increase year-over-year. This growth was fueled by contributions from new site acquisitions and collocations, reflecting robust demand for wireless infrastructure. The company's international segments also showed notable performance, particularly in EMEA, although foreign currency fluctuations presented a headwind in some regions, notably Latin America. The company's focus on organic growth through collocations and amendments, alongside strategic acquisitions, continues to be a key driver of its financial performance. While Adjusted EBITDA and Net Income saw healthy increases, investors should note the ongoing impact of depreciation, amortization, and interest expenses on profitability. The company maintains a strong liquidity position and ample capacity under its credit facilities to fund ongoing operations, capital expenditures, and strategic growth initiatives, including the recently closed acquisition of a controlling stake in Viom Networks in India.

Financial Highlights

50 data points
Beta

Revenue

$1.29B

Net Income

$275.20M

21.3% Net Margin

EPS (Diluted)

$0.58

Total Assets

$27.06B

Cash & Equivalents

$336.40M

Free Cash Flow

$563.51M

Financial Statements
Beta
Revenue$1.29B
SG&A Expenses$135.31M
Operating Expenses$837.19M
Operating Income$451.90M
Interest Expense$159.88M
Net Income$275.20M
EPS (Basic)$0.59
EPS (Diluted)$0.58
Shares Outstanding (Basic)424.06M
Shares Outstanding (Diluted)427.89M

Key Highlights

  • 1Total revenues increased by 19% year-over-year to $1.29 billion, primarily driven by a 19% increase in property segment revenues.
  • 2The U.S. property segment revenue grew by 19%, significantly boosted by new site acquisitions (including the Verizon transaction) and collocations.
  • 3EMEA property segment revenue experienced a substantial 71% increase, driven by acquisitions (like Airtel) and contractual escalations.
  • 4Adjusted EBITDA increased by 15% to $833.1 million, indicating strong operational performance before non-cash and financing charges.
  • 5Net income attributable to common stockholders rose by 35% to $248.4 million, reflecting improved profitability.
  • 6The company maintained a strong liquidity position with $3.2 billion in total liquidity, including cash and available credit facilities, as of March 31, 2016.
  • 7Significant debt issuance in January 2016 ($1.25 billion in senior notes) was used to repay existing debt and for general corporate purposes, strengthening the company's capital structure.

Frequently Asked Questions

Foreign currency exchange rates had a mixed impact. While they positively affected segment SG&A in Asia and Latin America, they negatively impacted revenue and gross margin in Asia (primarily due to the Indian Rupee) and Latin America (significantly due to the Brazilian Real and Mexican Peso). There was also a notable negative impact on EMEA revenue due to fluctuations in the South African Rand, Ghanaian Cedi, and Ugandan Shilling.

The acquisition of a 51% controlling ownership interest in Viom Networks in India, which closed shortly after the quarter end, is a significant strategic move. Viom operates over 42,000 wireless communications towers and 200 indoor DAS networks. This acquisition is expected to be consolidated into AMT's financial results and aligns with the company's strategy to expand in selected geographic areas, particularly in the key Asian market.

AMT has a substantial amount of long-term debt ($17.1 billion as of March 31, 2016). However, the company demonstrated proactive debt management by issuing $1.25 billion in senior notes in January 2016 to repay existing debt. The company was in compliance with its debt covenants as of the reporting date, and its liquidity position, including substantial availability under its credit facilities, provides flexibility for ongoing operations and future investments.

Revenue growth is primarily driven by the leasing of space on its communications sites. Key factors include revenue from new tenant leases on acquired or constructed sites, collocations (adding new tenants or equipment to existing sites), contractual rent escalations, and pass-through revenues. Management expects continued growth driven by increasing wireless data usage, smartphone penetration, the deployment of advanced wireless technologies (like 4G), and network densification by wireless carriers. The company also aims to supplement organic growth through selective acquisitions and development.