10-QPeriod: Q2 FY2018

AMERICAN TOWER CORP /MA/ Quarterly Report for Q2 Ended Jun 30, 2018

Filed July 31, 2018For Securities:AMT

Summary

AMERICAN TOWER CORP /MA/ (AMT) reported its second-quarter 2018 financial results, showcasing continued revenue growth driven by its global tower operations. Total revenues increased by 7% year-over-year to $1.78 billion for the quarter, and 7% for the six months ended June 30, 2018, reaching $3.52 billion. This growth was primarily fueled by increases in tenant billings, new site acquisitions, and contractual escalations across its U.S., Asia, EMEA, and Latin America property segments. The company also experienced a significant increase in operating expenses, notably in depreciation, amortization, and accretion, as well as other operating expenses, which included substantial impairment charges in the Asia segment ($180.6 million year-to-date). Despite these increased costs and a $17.1 million foreign currency loss for the six-month period, Adjusted EBITDA grew by 6% to $1.08 billion for the quarter and by 6% to $2.15 billion for the six months, indicating operational strength. Net income, however, saw a decline of 19% to $314.4 million for the quarter and 15% to $594.7 million for the six months, largely due to these higher expenses and impairment charges.

Financial Highlights

53 data points
Beta

Revenue

$1.78B

99.3% Gross Margin

Net Income

$306.70M

17.2% Net Margin

EPS (Diluted)

$0.69

Total Assets

$33.21B

Cash & Equivalents

$834.50M

Free Cash Flow

$940.00M

Financial Statements
Beta
Revenue$1.78B
Cost of Revenue$13.10M
Gross Profit$1.77B
SG&A Expenses$157.90M
Operating Expenses$1.23B
Operating Income$546.00M
Interest Expense$207.90M
Net Income$306.70M
EPS (Basic)$0.69
EPS (Diluted)$0.69
Shares Outstanding (Basic)441.50M
Shares Outstanding (Diluted)444.36M

Key Highlights

  • 1Total revenues increased by 7% to $1.78 billion in Q2 2018 compared to Q2 2017, and by 7% to $3.52 billion for the first six months of 2018.
  • 2The Asia property segment experienced significant impairment charges totaling $176.3 million year-to-date, primarily due to Aircel's bankruptcy and carrier consolidation in India.
  • 3Adjusted EBITDA grew by 6% year-over-year to $1.08 billion for the quarter and by 6% to $2.15 billion for the first six months of 2018.
  • 4Net income decreased by 19% to $314.4 million for the quarter and by 15% to $594.7 million for the six months, impacted by higher operating expenses and impairment charges.
  • 5The company completed significant acquisitions in India during the period, including Idea Cellular Infrastructure Services Limited for approximately $635.5 million and Vodafone India Limited for approximately $587.9 million.
  • 6Long-term obligations stood at $18.3 billion as of June 30, 2018, with a current portion of $2.8 billion, reflecting active debt management including new note offerings and repayments.
  • 7The company maintained strong liquidity with $3.97 billion in available resources as of June 30, 2018, comprising credit facilities and cash.

Frequently Asked Questions

Revenue growth was primarily driven by increases in tenant billings across all property segments (U.S., Asia, EMEA, and Latin America). This was attributed to colocations and amendments, contractual escalations, and revenue from newly acquired or constructed sites. The services segment also saw growth due to an increase in site acquisition projects.

The carrier consolidation in India has led to increased churn, negatively impacting consolidated property revenue by $62.1 million and gross margin by $38.8 million in the first six months of 2018. The company also recorded significant impairment charges totaling $176.3 million, primarily related to Aircel's bankruptcy filing and other consolidation-driven churn, impacting the Asia property segment's profitability.

American Tower Corp. actively managed its debt by issuing new notes and repaying existing indebtedness. They completed a €500.0 million (approximately $589.0 million) offering of 1.950% senior unsecured notes due 2026. As of June 30, 2018, the company had approximately $21.3 billion in outstanding principal indebtedness and maintained strong liquidity with $3.97 billion available, including credit facilities and cash.

The company continues to focus on growing its property operations through new tenant additions (colocations) and lease amendments on existing sites, as well as selectively developing or acquiring new sites. They are also monitoring industry trends like increasing mobile data usage, network densification, and the deployment of next-generation technologies to drive future revenue opportunities.