10-QPeriod: Q3 FY2016

AMERICAN TOWER CORP /MA/ Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 27, 2016For Securities:AMT

Summary

American Tower Corporation (AMT) reported strong growth in its third quarter and nine-month 2016 results, primarily driven by its property operations. Total revenues increased by 22% year-over-year for both periods, reaching $1.51 billion for the quarter and $4.25 billion for the nine months. This growth was significantly bolstered by the acquisition of a 51% stake in India's Viom Networks Limited (Viom) in April 2016, which added over 42,000 communication sites to its portfolio and significantly expanded its Asia segment. Net income attributable to common stockholders more than doubled year-over-year for the third quarter to $237.7 million ($0.55 per diluted share) and increased by 64% for the nine months to $646.9 million ($1.51 per diluted share). Despite increased operating expenses, including higher depreciation and interest expenses due to recent acquisitions and debt issuances, the company demonstrated robust profitability. Adjusted EBITDA grew 17% for the quarter and 16% for the nine months, reflecting effective cost management and the recurring nature of its lease revenue. The company also maintained a strong liquidity position with over $3.29 billion in available liquidity as of September 30, 2016, and continues to execute its growth strategy through strategic acquisitions and capital expenditures, while also focusing on maintaining its REIT status through dividend distributions.

Financial Highlights

50 data points
Beta

Revenue

$1.51B

Net Income

$264.50M

17.5% Net Margin

EPS (Diluted)

$0.55

Total Assets

$30.66B

Cash & Equivalents

$530.36M

Free Cash Flow

$667.12M

Financial Statements
Beta
Revenue$1.51B
SG&A Expenses$131.54M
Operating Expenses$1.04B
Operating Income$479.10M
Interest Expense$190.16M
Net Income$264.50M
EPS (Basic)$0.56
EPS (Diluted)$0.55
Shares Outstanding (Basic)425.52M
Shares Outstanding (Diluted)429.93M

Key Highlights

  • 1Total revenues increased by 22% year-over-year for both the three and nine months ended September 30, 2016, reaching $1.51 billion and $4.25 billion, respectively.
  • 2The Viom Networks Limited acquisition in India, completed in April 2016, significantly boosted the Asia segment and contributed substantially to revenue and site portfolio growth.
  • 3Net income attributable to common stockholders saw substantial growth, rising to $237.7 million ($0.55 per diluted share) in Q3 2016 and $646.9 million ($1.51 per diluted share) for the first nine months of 2016.
  • 4Adjusted EBITDA demonstrated strong performance, increasing by 17% year-over-year for the quarter to $915.0 million and by 16% for the nine months to $2.62 billion.
  • 5The company maintained a healthy liquidity position with over $3.29 billion in available liquidity as of September 30, 2016, supported by strong operating cash flows and credit facilities.
  • 6Long-term debt increased to $18.4 billion as of September 30, 2016, largely due to debt assumed in the Viom acquisition and proceeds from new senior note offerings used to repay existing debt.
  • 7The company continues to strategically deploy capital for acquisitions and capital expenditures, with planned 2016 total capital expenditures between $685 million and $785 million.

Frequently Asked Questions

The acquisition of a 51% controlling interest in Viom Networks Limited (Viom) in India on April 21, 2016, was a significant driver of American Tower's growth. It added over 42,000 wireless communication sites to its portfolio, substantially increasing its presence in the Asia segment. This acquisition contributed significantly to the 22% year-over-year revenue growth seen in the nine months ended September 30, 2016, particularly in the Asia property segment, which saw a 212% revenue increase. Goodwill increased by approximately $826.7 million related to this acquisition.

American Tower has actively managed its debt and capital structure. Total long-term obligations increased to $18.4 billion as of September 30, 2016, up from $17.1 billion at the end of 2015. This increase was driven by debt assumed in the Viom acquisition ($0.8 billion) and several senior note offerings totaling over $3.2 billion in proceeds, which were largely used to repay existing indebtedness under credit facilities. The company also repaid approximately $1.0 billion of its Term Loan during the nine months ended September 30, 2016. Despite the increased debt, the company reported compliance with its financial covenants and maintained significant liquidity.

American Tower's primary revenue driver is its property operations, which lease space on communications sites. Key trends supporting revenue growth include the increasing use of wireless services, driven by growing smartphone penetration, bandwidth-intensive applications, and the deployment of new wireless technologies (like 4G). Contractual rent escalations on existing leases and revenue from new tenants (colocations) on existing sites are also significant contributors. The company expects continued growth from both organic site development/acquisitions and its established tenant relationships, particularly with wireless service providers expanding their networks and capacity.

American Tower continues to expand its international presence, viewing it as a key growth area. The company operates in markets at various stages of network development. In less advanced markets (like India, Nigeria, Ghana), the focus is on initial voice and data network deployments. In more developed markets (like Germany, parts of Latin America), the focus is on 4G network build-outs to handle increasing data usage. The company believes its extensive international portfolio and strong relationships with multinational carriers position it well to benefit from long-term growth trends globally, expecting network technology migrations similar to those seen in the U.S. to occur internationally.