10-QPeriod: Q1 FY2018

AMERICAN TOWER CORP /MA/ Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 2, 2018For Securities:AMT

Summary

American Tower Corporation (AMT) reported solid financial results for the first quarter of 2018. The company experienced revenue growth across most of its property segments, driven by increased tenant billings through colocations, amendments, and contractual escalations. Notably, the EMEA and Latin America segments showed significant revenue increases, while the U.S. segment also demonstrated steady growth. The services segment also saw a substantial revenue increase, primarily due to a rise in site acquisition projects. Despite a revenue decrease in the Asia segment, largely attributed to carrier consolidation-driven churn and a significant impairment charge related to Aircel's bankruptcy, the overall financial performance remained robust. Adjusted EBITDA and AFFO (Attributable to Common Stockholders) showed healthy year-over-year increases, reflecting the company's ability to manage its costs and capitalize on its extensive tower portfolio. The company also maintained strong liquidity with significant availability under its credit facilities and a substantial cash balance, positioning it well for continued investment and shareholder distributions.

Financial Highlights

52 data points
Beta

Revenue

$1.74B

99.3% Gross Margin

Net Income

$285.20M

16.4% Net Margin

EPS (Diluted)

$0.63

Total Assets

$34.37B

Cash & Equivalents

$1.13B

Free Cash Flow

$791.80M

Financial Statements
Beta
Revenue$1.74B
Cost of Revenue$12.50M
Gross Profit$1.73B
SG&A Expenses$204.90M
Operating Expenses$1.34B
Operating Income$402.90M
Net Income$285.20M
EPS (Basic)$0.63
EPS (Diluted)$0.63
Shares Outstanding (Basic)435.12M
Shares Outstanding (Diluted)438.52M

Key Highlights

  • 1Total revenues increased by 8% to $1.74 billion compared to the prior year period.
  • 2U.S. property segment revenue grew 4% driven by tenant billing growth from colocations and amendments.
  • 3Significant revenue increases were seen in the EMEA (16%) and Latin America (20%) property segments, supported by new acquisitions and organic growth.
  • 4The Asia property segment experienced a 1% revenue decrease, primarily due to carrier consolidation-driven churn and a $147.4 million impairment charge related to Aircel's bankruptcy.
  • 5Adjusted EBITDA increased by 6% to $1.06 billion, indicating strong operational performance.
  • 6AFFO attributable to common stockholders grew 12% to $759.3 million, showcasing robust cash flow generation.
  • 7The company completed a $500 million securitization transaction and a $1.5 billion term loan to manage its debt obligations and fund operations.

Frequently Asked Questions

Carrier consolidation in the Asia segment, particularly in India, has led to increased churn, negatively impacting revenue by $19.8 million for the quarter and is expected to impact consolidated property revenue by approximately $190 million for the full year 2018. This consolidation also contributed to a decrease in gross margin and operating profit for the Asia segment. Furthermore, Aircel's bankruptcy filing resulted in a significant impairment charge of $147.4 million.

American Tower maintains a strong liquidity position with $3.62 billion in total liquidity as of March 31, 2018, including $1.13 billion in cash and cash equivalents and substantial availability under its credit facilities. The company recently completed a $500 million securitization transaction and a $1.5 billion term loan to refinance existing debt and support its operations. It also has significant capacity for additional debt under its covenants.

Key revenue growth drivers include new revenue from acquired or constructed sites, increased tenant billings through colocations (adding new tenants or equipment to existing sites) and lease amendments, and contractual rent escalations. The company also benefits from growing global demand for wireless services, the expansion of 4G/5G networks, increasing mobile data usage, and network densification efforts by wireless carriers.

The impairment charge of $147.4 million in the Asia segment (primarily related to India) is a direct result of Aircel Ltd.'s bankruptcy filing in February 2018. This charge reflects the write-down of tower, network, and tenant-related intangible assets associated with this tenant, highlighting the risks associated with tenant financial health in specific markets.