American Tower Corporation (REIT) (AMT)

AMT 
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American Tower Corporation (AMT)

Q1 2013 Earnings Conference Call

May 1, 2013 08:30 AM ET

Executives

James D. Taiclet, Jr - Chairman, President and CEO

Tom Bartlett - EVP and CFO

Leah Stearns - VP, Investor Relations & Capital Markets

Analysts

Simon Flannery - Morgan Stanley

Richard Prentiss - Raymond James & Associates, Inc.

Tim Horan - Oppenheimer & Co.

Colby Synesael - Cowen and Company

Jonathan Atkin - RBC Capital Markets, LLC

Michael Rollins - Citigroup Inc

Richard Choe - JP Morgan Chase & Co.

Jason Armstrong - Goldman Sachs Group Inc.

Brett Feldman - Deutsche Bank AG

Presentation

Operator

Good morning, my name is Derek, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Tower First Quarter 2013 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions)

Thank you. I will now like to hand the call over to Ms. Leah Stearns, Vice President of Investor Relations and Capital Markets. You may begin.

Leah Stearns

Thank you, Derrick. Good morning and thank you for joining American Tower's first quarter 2013 earnings conference call. We have posted a presentation, which we will refer to throughout our prepared remarks, under the Investors tab on our website, www.americantower.com.

Our agenda for this morning's call will be as follows. First, I will provide a brief overview of our first quarter results, then Tom Bartlett, our Executive Vice President, Chief Financial Officer and Treasurer, will review our financial and operational performance for the quarter as well as our updated outlook for 2013. And finally, Jim Taiclet, our Chairman, President and Chief Executive Officer will provide closing remarks. After these comments, we’ll open up the call for your questions.

Before I begin, I’d like to remind you that this call will contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include those regarding our 2013 outlook and future operating performance, including AFFO growth and dividend per share growth; our capital allocation strategy, including our stock repurchase program and REIT distributions; and any other statements regarding matters that are not historical facts.

You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include the risk factors set forth in this morning's press release, those set forth in our Form 10-K for the quarter ended December 31, 2012, and in our other filings with the SEC. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances.

And with that, please turn to slide 4 of the presentation, which provides a summary of our first quarter 2013 results. During the quarter our Rental and Management business accounted for approximately 97% of our total revenue, which were generated from leasing income producing real estate primarily to investment grade corporate tenants. This revenue grew 13.7% to approximately $777 million from the first quarter of 2012.

In addition, our adjusted EBITDA increased 13.4% to approximately $524 million. Operating income increased 9.2% to approximately $300 million and net income attributable to American Tower Corporation was approximately $171 million or $0.43 per basic and diluted common share.

During the quarter, in connection with the refinancing of our 1.75 billion securitization, we recorded a $35 million loss on retirement of long-term obligation, which includes the write-off of deferred financing fees and an early prepayment consideration. In addition, during the quarter we recorded unrealized non-cash gains of approximately $22 million, due primarily to the impact of foreign currency exchange rate fluctuations related to our inter-company loan nominated in currencies other than the local currency.

For accounting purposes, at the end of each quarter these loans are re-measured based on the actual FX rate from the last day of the quarter end. As a result of the weaker U.S. dollar, as of March 31, 2013 compared to December 31, 2012, the re-measurement of these loans generated non-cash gains for accounting purposes.

And with that, I would like to turn the call over to Tom, who will discuss our results in more detail.

Tom Bartlett

Thanks, Leah. Good morning, everyone. As you can see from the results we released this morning, 2013 is off to a strong start with solid growth across all our key metrics, supported by continuing favorable demand trends across our entire global footprint. As expected it was another very strong quarter and commenced new business in the U.S. as carriers continue to invest heavily in initial 4G deployments.

We also experienced very positive leasing trends in our international operations as new spectrum is deployed and more advanced wireless services are extended to more and more people globally. While we continued our operational momentum, we nonetheless maintain our focus on enhancing the company's investment grade capital structure as he completed the refinancing of $1.75 billion securitization in March. This refinancing decreased the weighted average cost of our secured debt by nearly 300 basis points.

If you will please turn to slide 6, you will see that for the first quarter our total Rental and Management revenue increased by nearly 14% to $777 million. On a core basis, which we will reference throughout this presentation has reported the results excluding the impact of foreign currency exchange rate fluctuations, non-cash straight-line lease accounting and significant one-time items, our consolidated Rental and Management revenue growth was over 20%. Of this core growth nearly 10% was organic with a balance attributable to growth from new sites.

Our organic growth in the U.S. continue to be driven primarily by the [men in activity] resulting from all four of the major carriers aggressively deploying 4G indicative of their phase 1 network deployment initiatives. In fact while we have seen a substantial portion of our new business activity driven by amendments, we’ve also seen the average rate per amendment more than doubled from a year-ago period as our customers begin to add more than just initial 4G capabilities to their networks.

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