10-QPeriod: Q2 FY2016

AMERICAN TOWER CORP /MA/ Quarterly Report for Q2 Ended Jun 30, 2016

Filed July 28, 2016For Securities:AMT

Summary

American Tower Corporation (AMT) reported solid financial results for the second quarter and first half of 2016, demonstrating continued revenue growth driven by strong performance in its property segment, particularly in the U.S. and Asia. The Viom Acquisition in India, completed in April 2016, significantly boosted the Asia segment's revenue and is expected to be a key growth driver. Despite increased interest expenses and foreign currency fluctuations impacting net income, the company's operational performance remained robust, evidenced by a 23% year-over-year increase in total revenues for the quarter. Management expressed confidence in ongoing demand for communications sites due to increasing wireless data usage and network densification, positioning AMT for sustained organic growth supplemented by strategic acquisitions. Liquidity remains strong, with substantial availability under credit facilities and significant cash on hand. The company continues to manage its debt effectively and remains committed to its REIT distribution requirements. Investors can look forward to continued expansion and operational efficiency driving future performance.

Financial Highlights

50 data points
Beta

Revenue

$1.44B

Net Income

$187.60M

13.0% Net Margin

EPS (Diluted)

$0.37

Total Assets

$30.74B

Cash & Equivalents

$410.54M

Free Cash Flow

$747.80M

Financial Statements
Beta
Revenue$1.44B
SG&A Expenses$138.23M
Operating Expenses$1.01B
Operating Income$432.80M
Interest Expense$181.04M
Net Income$187.60M
EPS (Basic)$0.38
EPS (Diluted)$0.37
Shares Outstanding (Basic)424.91M
Shares Outstanding (Diluted)429.00M

Key Highlights

  • 1Total revenues increased by 23% to $1.44 billion for the three months ended June 30, 2016, compared to the prior year period, largely driven by a 24% increase in property revenues.
  • 2The significant acquisition of a 51% stake in India's Viom Networks Limited in April 2016 contributed substantially to the Asia property segment's revenue growth, which surged by 274% year-over-year for the quarter.
  • 3Operating income grew by 11% to $432.8 million for the quarter, showcasing operational leverage and the recurring nature of the company's revenue streams.
  • 4Despite a 22% increase in interest expense due to higher debt levels, net income attributable to common stockholders rose by 22% to $160.8 million for the quarter.
  • 5Diluted EPS increased to $0.37 from $0.30 in the prior year's comparable quarter.
  • 6The company maintained a strong liquidity position with $3.24 billion in total liquidity as of June 30, 2016, including $410.5 million in cash and cash equivalents and significant availability under its credit facilities.

Frequently Asked Questions

The acquisition of a 51% controlling interest in Viom Networks Limited in India, completed in April 2016, significantly boosted the Asia property segment's revenue. For the three months ended June 30, 2016, Asia property segment revenue grew by 274% year-over-year, largely due to tenant billings and pass-through revenue from this acquisition. The goodwill from this acquisition amounted to approximately $856.1 million.

American Tower anticipates continued revenue growth driven by increasing wireless data usage, the deployment of new wireless technologies, and network densification. Key drivers include new leases on acquired/constructed sites, collocations (adding new tenants/equipment to existing sites), contractual rent escalations, and international expansion, particularly in emerging markets. The company expects to generate approximately $32 billion in non-cancellable tenant lease revenue over future periods based on current leases.

As of June 30, 2016, American Tower had total outstanding indebtedness of $18.8 billion. The company has access to significant liquidity, with $3.24 billion in total liquidity, comprising $410.5 million in cash and cash equivalents and over $2.8 billion available under its credit facilities. The company has actively managed its debt through various senior note offerings and credit facility activities. Management believes its operating cash flow and credit facilities are sufficient to fund operations, capital expenditures, and distributions for the upcoming year.

The filing notes that there were no material changes to the risk factors discussed in the prior annual report. However, typical risks for this industry include tenant concentration (reliance on a few large tenants), potential for lease cancellations or non-renewals, foreign currency exchange rate fluctuations, interest rate fluctuations, and compliance with debt covenants. The company also faces risks related to international operations and regulatory environments.