American tower corporation reports third
quarter 2011 financial results
Boston--(business wire)--american tower corporation (nyse: amt) today reported financial results for the quarter ended september 30, 2011. jim taiclet, american tower’s chief executive officer stated, “our company strives to be world class in two core competencies: operating communications real estate assets to maximize growth and efficiency and evaluating and successfully acquiring, constructing, and integrating these types of assets on a global basis. our third quarter results again demonstrate our competitive advantage in both of these areas. we delivered over 9% core organic leasing growth on both of our domestic and international assets while adding 15% growth due to the more than 12,000 sites we have added in nine countries on four continents. to further enhance our value to investors, we are preparing for the final steps in our plan to reorganize the company to qualify as a real estate investment trust (reit) for u.s. federal income tax purposes. between now and year end, we plan to hold our special meeting of stockholders to approve the reorganization, complete the distribution of our accumulated earnings and profits, continue our communications outreach to reit investors, and prepare to introduce a quarterly dividend to begin in early 2012.” third quarter 2011 operating results overview american tower generated the following operating results for the quarter ended september 30, 2011 (unless otherwise indicated, all comparative information is presented against the quarter ended september 30, 2010). total revenue increased 22.8% to $630.4 million and total rental and management revenue increased 23.0% to $614.8 million. total rental and management gross margin increased 18.3% to $458.9 million. adjusted ebitda increased 14.5% to $400.6 million, and the adjusted ebitda margin was 64%. total rental and management revenue core growth was 24.2%, which excludes the positive impact of approximately 1.1% due to foreign currency exchange rate fluctuations and the negative impact of approximately 2.3% due to straight-line revenue recognition. core growth in adjusted ebitda was 16.5%, which excludes the positive impact of approximately 0.9% due to foreign currency exchange rate fluctuations and the negative impact of approximately 3.0% due to straight-line revenue and expense recognition. operating income increased 7.0% to $228.3 million. net loss attributable to american tower corporation was $15.7 million, and net loss attributable to american tower corporation per basic and diluted common share were both $0.04. net loss attributable to american tower corporation was negatively impacted as a result of unrealized non-cash losses of $145.1 million associated with fluctuations in foreign currency exchange rates related to the company's intercompany loans and similar unaffiliated balances. recurring free cash flow increased 5.1% to $240.4 million and recurring free cash flow per share increased 7.0% to $0.61. the company is introducing the following metrics, which are widely recognized by reit investors: funds from operations and adjusted funds from operations. these measures have been provided on a pro forma basis as if the reit conversion had occurred on january 1, 2010. during the quarter, pro forma funds from operations would have been $112.5 million and pro forma adjusted funds from operations would have been $262.0 million. cash provided by operating activities increased 12.6% to $290.7 million. segment results domestic rental and management segment – domestic rental and management segment revenue increased 9.1% to $436.8 million, which represented 69% of total revenues. in addition, domestic rental and management segment gross margin increased 8.8% to $345.7 million, while domestic rental and management segment operating profit increased 7.1% to $325.2 million. international rental and management segment – international rental and management segment revenue increased 78.9% to $178.0 million, which represented 28% of total revenues. in addition, international rental and management segment gross margin increased 61.4% to $113.2 million, while international rental and management segment operating profit increased 60.2% to $91.5 million. network development services segment – network development services segment revenue was $15.6 million, which represented 3% of total revenues. network development services segment gross margin was $7.8 million, and network development services segment operating profit was $5.9 million. year to date 2011 operating results overview american tower generated the following operating results for the nine months ended september 30, 2011 (unless otherwise indicated, all comparative information is presented against the nine months ended september 30, 2010). total revenue increased 24.5% to $1,790.3 million and total rental and management revenue increased 24.7% to $1,745.3 million. total rental and management gross margin increased 21.6% to $1,324.3 million. adjusted ebitda increased 18.8% to $1,166.8 million, and the adjusted ebitda margin was 65%. operating income increased 15.7% to $672.4 million. net income attributable to american tower corporation was $191.4 million and net income attributable to american tower corporation per basic and diluted common share were $0.48. as previously noted, net income attributable to american tower corporation was negatively impacted as a result of unrealized non-cash losses of $101.5 million associated with fluctuations in foreign currency exchange rates related to the company's intercompany loans and similar unaffiliated balances. recurring free cash flow increased 6.2% to $733.4 million and recurring free cash flow per share increased 7.6% to $1.83. pro forma funds from operations would have been $665.8 million and pro forma adjusted funds from operations would have been $789.2 million. cash provided by operating activities increased 9.7% to $850.0 million. segment results domestic rental and management segment – domestic rental and management segment revenue increased 11.7% to $1,279.3 million, which represented 71% of total revenues. in addition, domestic rental and management segment gross margin increased 12.5% to $1,017.5 million, while domestic rental and management segment operating profit increased 11.4% to $960.9 million. international rental and management segment – international rental and management segment revenue increased 82.6% to $466.0 million, which represented 26% of total revenues. in addition, international rental and management segment gross margin increased 66.2% to $306.8 million, while international rental and management segment operating profit increased 61.2% to $246.2 million. network development services segment – network development services segment revenue was $45.0 million, which represented 3% of total revenues. network development services segment gross margin was $23.1 million, and network development services segment operating profit was $17.9 million. please refer to non-gaap and defined financial measures on page 6 for definitions of gross margin, operating profit, adjusted ebitda, adjusted ebitda margin, recurring free cash flow, recurring free cash flow per share, funds from operations, adjusted funds from operations and core growth. for additional financial information, including reconciliations to gaap measures, please refer to the supplemental schedules of selected financial information on pages 12 through 17. third quarter 2011 investing overview cash paid for capital expenditures – during the third quarter of 2011, total capital expenditures of $160.5 million included $89.9 million for capital projects, including spending to complete the construction of 57 communications sites domestically, 625 communications sites internationally, and the installation of shared generators; $31.7 million to purchase land under our towers; $14.4 million for the redevelopment of existing communications sites to accommodate new customer equipment; and $24.5 million for capital improvements and corporate capital expenditures. cash paid for acquisitions – during the third quarter of 2011, total payments for acquisitions were approximately $328.0 million, which included the purchase of 56 communications sites domestically and 1,164 communications sites internationally. stock repurchase programs – during the third quarter of 2011, the company repurchased a total of 3.2 million shares of its class a common stock for approximately $168.4 million pursuant to its previously announced stock repurchase programs. between october 1, 2011 and october 21, 2011, the company repurchased an additional 0.5 million shares of its class a common stock for an aggregate of $26.5 million. subsequent event - subsequent to the end of the third quarter, the company entered into a transaction to purchase property interests under certain of its existing communications sites in the united states for a total consideration of up to $86.0 million, subject to customary closing conditions. the purchase of the property interests is in accordance with its current land purchase program. year to date 2011 investing overview cash paid for capital expenditures – during the nine months ended september 30, 2011, total capital expenditures of $397.1 million included $221.9 million for capital projects, including spending to complete the construction of 204 communications sites domestically, 946 communications sites internationally, and the installation of shared generators; $80.3 million to purchase land under our towers; $37.3 million for the redevelopment of existing communications sites to accommodate new customer equipment; and $57.6 million for capital improvements and corporate capital expenditures. cash paid for acquisitions – during the nine months ended september 30, 2011, total payments for acquisitions were approximately $1,220.6 million, which included the purchase of 135 communications sites domestically and 3,614 communications sites internationally. stock repurchase programs – during the nine months ended september 30, 2011, the company repurchased a total of 7.6 million shares of its class a common stock for approximately $393.1 million pursuant to its previously announced stock repurchase programs. investment update on september 3, 2011, the company entered into an agreement to acquire interests in companies holding a portfolio of property interests under approximately 1,800 communications sites in the united states. the acquisition includes property interests under the company’s existing communications sites in accordance with its current land purchase program, as well as property interests under carrier customer and other third-party communications sites providing complementary leasing and recurring cash flow. the acquisition closed on october 14, 2011 for an aggregate purchase price of approximately $500.0 million, which included the assumption of approximately $200.0 million of existing indebtedness. the company has the following pending acquisitions: approximately 700 additional towers in connection with the company’s joint venture in ghana, which are expected to close by year end, subject to customary closing conditions; approximately 1,000 towers in connection with the company’s joint venture in colombia, which are expected to close by year end, with the balance of approximately 1,100 towers expected to close throughout 2012, subject to customary closing conditions; and approximately 80 existing towers from the south africa transaction, which are expected to close in december 2011, and up to approximately 1,800 additional towers that may be constructed over the next two years, subject to customary closing conditions. real estate investment trust update the company continues to be on track to elect reit status for the taxable year beginning january 1, 2012. on september 22, 2011, the company announced that its registration statement, which outlines its plan to merge into american tower reit, inc., was declared effective by the securities and exchange commission. the company also announced that it will hold a special meeting of stockholders on november 29, 2011 to vote on the proposed merger. stockholders of record as of october 3, 2011 will be entitled to vote at the special meeting. the company continues to focus its reit readiness efforts on two remaining work streams. first, the company continues to make progress with respect to finalizing the amount of its earnings and profits (e&p), and continues to anticipate it will distribute up to $200 million to stockholders using cash on hand during the fourth quarter of 2011. second, the company continues to make substantial progress on its operational readiness initiatives, which include finalizing systems and process changes by year end. the determination to elect reit status is subject to final approval by the company’s board of directors. there is no certainty as to the timing of a reit election or whether the company will make a reit election at all. full year 2011 outlook the following estimates are based on a number of assumptions that management believes to be reasonable and reflect the company’s expectations as of november 1, 2011. these estimates include the impact of the company’s recent land acquisitions, the construction of 450 to 650 sites in the fourth quarter and a new master lease agreement with one of the company's major u.s. customers. actual results may differ materially from these estimates as a result of various factors, and the company refers you to the cautionary language regarding “forward-looking” statements included in this press release when considering this information. total rental and management revenue growth is expected to be approximately 22.7% based on the midpoint, and total rental and management revenue core growth, which excludes the effect of non-cash straight-line revenue recognition, fluctuations in foreign currency exchange rates and material one-time items, is expected to be approximately 21.8%, based on the midpoint. adjusted ebitda growth is expected to be approximately 18.0% based on the midpoint, and adjusted ebitda core growth, which excludes the effect of non-cash straight-line revenue and expense recognition, fluctuations in foreign currency exchange rates and material one-time items, is expected to be approximately 16.0%, based on the midpoint. ___ conference call information american tower will host a conference call today at 8:00 a.m. et to discuss its financial results for the third quarter ended september 30, 2011 and its outlook for the remainder of 2011. supplemental materials for the call will be available on the company’s website, www.americantower.com. the conference call dial-in numbers are as follows: when available, a replay of the call can be accessed until 11:59 p.m. et on november 15, 2011. the replay dial-in numbers are as follows: american tower will also sponsor a live simulcast and replay of the call on its website, www.americantower.com. about american tower american tower is a leading independent owner, operator and developer of broadcast and wireless communications sites. american tower currently owns and operates approximately 40,000 communications sites in the united states, brazil, chile, colombia, ghana, india, mexico, peru and south africa. for more information about american tower, please visit www.americantower.com. non-gaap and defined financial measures in addition to the results prepared in accordance with generally accepted accounting principles in the united states (gaap) provided throughout this press release, the company has presented the following non-gaap and defined financial measures: gross margin, operating profit, adjusted ebitda, adjusted ebitda margin, recurring free cash flow, recurring free cash flow per share, funds from operations, adjusted funds from operations and core growth. the company defines gross margin as revenues less operating expenses, excluding stock-based compensation expense. the company defines operating profit as gross margin less selling, general, administrative and development expense, excluding stock-based compensation expense and corporate expenses. for reporting purposes, the international rental and management segment operating profit and gross margin also include interest income, tv azteca, net. these measures of gross margin and operating profit are also before interest income, interest expense, loss on retirement of long-term obligations, other income (expense), net income attributable to non-controlling interest, income (loss) on equity method investments, income taxes and discontinued operations. the company defines adjusted ebitda as net income before income (loss) from discontinued operations, net, income from equity method investments, income tax provision (benefit), other income (expense), loss on retirement of long-term obligations, interest expense, interest income, other operating expenses, depreciation, amortization and accretion, and stock-based compensation expense. the company defines adjusted ebitda margin as the percentage that results from dividing adjusted ebitda by total revenue. the company defines recurring free cash flow as adjusted ebitda before straight-line revenue and expense, plus interest income, less interest expense, cash paid for income taxes and cash payments related to redevelopment, capital improvement and corporate capital expenditures. the company defines recurring free cash flow per share as recurring free cash flow divided by the diluted weighted average common shares outstanding. the company defines funds from operations as net income before real estate related depreciation, amortization and accretion. the company defines adjusted funds from operations as funds from operations before straight-line (revenue) expense, stock-based compensation expense, non-real estate related depreciation, amortization and accretion, amortization of deferred financing costs, debt discounts and capitalized interest, other (income) expense, loss on retirement of long-term obligations, other operating expense, less capital improvement capital expenditures, and corporate capital expenditures. the company defines core growth in total rental and management revenue and adjusted ebitda as the increase or decrease, expressed as a percentage, resulting from a comparison of financial results for a current period with corresponding financial results for the corresponding period in a prior year, in each case, excluding the impact of straight-line revenue and expense recognition, foreign currency exchange rate fluctuations, and material one-time items. these measures are not intended to replace financial performance measures determined in accordance with gaap. rather, they are presented as additional information because management believes they are useful indicators of the current financial performance of the company’s core businesses. the company believes that these measures can assist in comparing company performances on a consistent basis irrespective of depreciation and amortization or capital structure. depreciation and amortization can vary significantly among companies depending on accounting methods, particularly where acquisitions or non-operating factors, including historical cost bases, are involved. notwithstanding the foregoing, the company’s measures of gross margin, operating profit, adjusted ebitda, adjusted ebitda margin, recurring free cash flow, recurring free cash flow per share, funds from operations, adjusted funds from operations, and core growth may not be comparable to similarly titled measures used by other companies. cautionary language regarding forward-looking statements this press release contains "forward-looking statements" concerning our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not necessarily based on historical facts. examples of these statements include, but are not limited to statements regarding our full year 2011 outlook, our pending acquisitions, including anticipated closing dates and expected purchase prices, foreign currency exchange rates, our expected election of real estate investment trust status and related preparation, the timing and effect of that election, the form, timing, and amount of the special e&p distribution and our expectation regarding the declaration of quarterly distributions. actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (1) decrease in demand for our communications sites would materially and adversely affect our operating results and we cannot control that demand; (2) if our tenants consolidate or merge with each other to a significant degree, our growth, revenue and ability to generate positive cash flows could be materially and adversely affected; (3) new technologies or changes in a tenant’s business model could make our tower leasing business less desirable and result in decreasing revenues; (4) our expansion initiatives may disrupt our operations or expose us to additional risk if we are not able to successfully integrate operations, assets and personnel; (5) we could suffer adverse tax and other financial consequences if taxing authorities do not agree with our tax positions; (6) due to the long-term expectations of revenue from tenant leases, we are sensitive to changes in the creditworthiness and financial strength of our tenants; (7) our foreign operations are subject to economic, political and other risks that could materially and adversely affect our revenues or financial position, including risks associated with fluctuations in foreign currency exchange rates; (8) we anticipate that we may need additional financing to fund capital expenditures, to fund future growth and expansion initiatives and to return capital to our stockholders; (9) a substantial portion of our revenue is derived from a small number of customers; (10) increasing competition in the tower industry may create pricing pressures that may materially and adversely affect us; (11) our business is subject to government regulations and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do; (12) if we are unable or choose not to exercise our rights to purchase towers that are subject to lease and sublease agreements at the end of the applicable period, our cash flows derived from such towers would be eliminated; (13) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (14) our leverage and debt service obligations may materially and adversely affect us; (15) restrictive covenants in the loan agreements related to our securitization, the loan agreements for the credit facilities and the indentures governing our debt securities could materially and adversely affect our business by limiting flexibility; (16) we could have liability under environmental laws; (17) our towers or data centers may be affected by natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage; (18) our costs could increase and our revenues could decrease due to perceived health risks from radio emissions, especially if these perceived risks are substantiated; (19) if we fail to qualify as a reit or fail to remain qualified as a reit, we would be subject to tax at corporate income tax rates and would not be able to deduct distributions to stockholders when computing our taxable income; (20) we may not realize the anticipated tax benefits from the reit conversion effective january 1, 2012 because the timing of the reit conversion is not certain; (21) as a reit, failure to make required distributions would subject us to federal corporate income tax; (22) covenants specified in our existing and future debt instruments may limit our ability to make required reit distributions; (23) our cash distributions may fluctuate; (24) there are uncertainties relating to the estimate of our special e&p distribution; (25) even if we qualify as a reit, certain of our business activities will be subject to corporate level income tax and foreign taxes, which will continue to reduce our cash flows, and we will have potential deferred and contingent tax liabilities; (26) we may be required to borrow funds, sell assets or raise equity to satisfy our reit distribution requirements or maintain the asset ownership tests; (27) complying with reit requirements may limit our flexibility or cause us to forego otherwise attractive opportunities; (28) as a reit, we will be limited in our ability to fund distribution payments using cash generated through our taxable reit subsidiaries (trss); (29) our planned extensive use of trss, in particular for our international operations, may cause us to fail to qualify as a reit; (30) complying with reit requirements may limit our ability to hedge effectively and increase the cost of our hedging, and may cause us to incur tax liabilities; (31) the current market price of our common stock may not be indicative of the market price of american tower reit common stock following the reit conversion and the special e&p distribution; (32) we have no experience operating as a reit, which may adversely affect our financial condition, results of operations, cash flow, per share trading price of american tower reit common stock and ability to satisfy debt service obligations; and (33) legislative or other actions affecting reits could have a negative effect on us or our stockholders. for additional information regarding factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the information contained in item 1a of our form 10-q for the six months ended june 30, 2011 and our definitive proxy statement filed on october 11, 2011 under the caption "risk factors." we undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances. additional information and cautionary statement this communication does not constitute an offer to sell or the solicitation of an offer to buy securities or a solicitation of any vote or approval. american tower reit, inc. has filed with the securities and exchange commission (sec) a registration statement on form s-4/a containing a proxy statement of american tower corporation and a prospectus of american tower reit, inc. with respect to the proposed merger. the registration statement was declared effective by the sec on september 22, 2011. on october 11, 2011, notice of a special meeting and a definitive proxy statement/prospectus were mailed to stockholders of american tower corporation who held shares of class a common stock of american tower corporation on october 3, 2011. investors are urged to read the form s-4/a and proxy statement (including all amendments and supplements thereto) and any other relevant documents that are filed with the sec because they will contain important information about the proposed merger. you may obtain documents free of charge at the website maintained by the sec at www.sec.gov. in addition, you may obtain documents filed with the sec by american tower corporation free of charge by contacting corporate secretary, 116 huntington avenue boston, massachusetts 02116. american tower, its directors and executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies from american tower's stockholders in connection with the merger. information regarding the persons who may, under the rules of the sec, be considered participants in the solicitation of proxies in connection with the merger is included in the form s-4/a and proxy statement. information about the directors and executive officers of american tower and their ownership of american tower stock is set forth in the proxy statement for american tower's 2011 annual meeting of stockholders. investors may obtain additional information regarding the interests of such participants by reading the form s-4/a and proxy statement for the merger. investors should read the form s-4/a and proxy statement carefully before making any voting or investment decisions. 2010 (1) (1) december 31, 2010 balances have been revised to reflect purchase accounting measurement period adjustments. other (expense) income (including unrealized foreign currency (losses) gains of $(145,144),$8,933, $(101,505) and $5,531, respectively) networkdevelopmentservices total networkdevelopmentservices networkdevelopmentservices networkdevelopmentservices $ $ $ unaudited selected financial information unaudited reconciliations to gaap measures and the calculation of defined financial measures
