10-QPeriod: Q1 FY2019

AMERICAN TOWER CORP /MA/ Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 3, 2019For Securities:AMT

Summary

American Tower Corporation (AMT) reported its first quarter 2019 results, showcasing solid revenue growth driven primarily by its U.S. property segment, bolstered by new tenant additions and contractual escalations. While overall revenues saw a modest 4% increase year-over-year, the company highlighted significant carrier consolidation impacts in India, which negatively affected segment revenue and gross margin. Despite these regional challenges, AMT demonstrated strong operational execution, leading to a notable 45% increase in net income and a 5% rise in Adjusted EBITDA. The company actively managed its balance sheet, issuing new senior notes to refinance existing debt and strengthening its liquidity position. The adoption of new lease accounting standards did not materially impact the company's consolidated statement of operations but resulted in the recognition of significant right-of-use assets and lease liabilities. Management expressed confidence in the company's ability to fund operations, capital expenditures, and distribution requirements through a combination of operating cash flow and available credit facilities.

Financial Statements
Beta
Revenue$1.81B
Cost of Revenue$10.40M
Gross Profit$1.80B
SG&A Expenses$198.10M
Operating Expenses$1.20B
Operating Income$614.90M
Interest Expense$207.50M
Net Income$397.40M
EPS (Basic)$0.90
EPS (Diluted)$0.89
Shares Outstanding (Basic)441.35M
Shares Outstanding (Diluted)444.62M

Key Highlights

  • 1Total revenues increased by 4% to $1.81 billion, driven by a 4% increase in property revenue, primarily in the U.S. segment.
  • 2Net income attributable to common stockholders surged by 45% to $397.4 million, or $0.89 per diluted share, compared to $275.8 million, or $0.63 per diluted share, in the prior year quarter.
  • 3Adjusted EBITDA grew by 5% to $1.11 billion, indicating strong operational performance and cost management.
  • 4The company experienced significant impacts from carrier consolidation in India, leading to a $61.5 million reduction in gross margin for the Asia property segment and negatively impacting consolidated property revenue by $89.2 million for the quarter.
  • 5AMT completed a public offering of $1.24 billion in senior notes in March 2019 to repay existing debt and strengthen its financial position.
  • 6The company adopted new lease accounting standards on January 1, 2019, resulting in the recognition of $6.8 billion in operating lease liabilities and a corresponding $7.1 billion in right-of-use assets.
  • 7As of March 31, 2019, total liquidity was $3.6 billion, comprising $1.0 billion in cash and cash equivalents and $2.6 billion in available credit facilities.

Frequently Asked Questions

Revenue growth was primarily driven by the U.S. property segment, which saw increases from tenant billings due to leasing additional space (colocations), contractual escalations, and newly acquired or constructed sites.

The carrier consolidation in India had a significant negative impact, particularly on the Asia property segment. It resulted in higher churn, reducing consolidated property revenue by $89.2 million and gross margin by $61.5 million for the quarter. The company anticipates this trend to continue impacting revenues and operating profit through 2019.

American Tower adopted the new lease accounting standard (ASC 842) effective January 1, 2019. This resulted in the recognition of a significant operating lease liability of $6.8 billion and a corresponding right-of-use asset of $7.1 billion on the balance sheet, primarily related to ground leases for its communications sites. While it impacts the balance sheet significantly, the company noted no material change to its consolidated statement of operations.

The company actively manages its debt through refinancing and new issuances. In March 2019, it issued $1.24 billion in senior notes to repay existing indebtedness. As of March 31, 2019, AMT had $1.0 billion in cash and cash equivalents and $2.6 billion in available credit facilities, indicating a strong liquidity position to fund operations, capital expenditures, and distributions.