American Tower Corporation (REIT) (AMT)

AMT 
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American Tower Corporation (AMT)

Q2 2009 Earnings Call Transcript

July 29, 2009 8:30 am ET

Executives

Michael Powell – VP of IR

Tom Bartlett – EVP and CFO

Jim Taiclet – Chairman, President and CEO

Analysts

Jonathan Atkin – RBC Capital Markets

Steven Douglas – Banc of America

Scott Malat – Goldman Sachs

Chris Larsen – Piper Jaffray

Batya Levi – UBS

Gray Powell – Wells Fargo Securities

Ric Prentiss – Raymond James

Shaun Horn [ph] – Morgan Stanley

Presentation

Operator

Good morning. My name is Nikesha, and I will be your conference operator. At this time, I would like to welcome everyone to the American Tower second quarter 2009 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. (Operator instructions) I will now turn the conference over to Mr. Michael Powell, Vice President of Investor Relations. Sir, you may begin your conference.

Michael Powell

Thank you, Nikesha. Good morning everyone and thank you for joining American Tower’s conference call regarding our second quarter 2009 financial results. Please note that we’ve posted a brief presentation to accompany this morning’s call on our Web site which is www.americantower.com. If you have not done so already you may want to download this presentation as we will refer to it at various times during our prepared remarks. The agenda for this morning’s call will be as follows. I will provide an introduction and highlight certain key metrics from our second quarter 2009 financial results, following this Tom Bartlett, our Chief Financial Officer will go over our second quarter results in detail and provide additional color on 2009 outlook, and finally he will turn things over to Jim Taiclet, our Chairman, President and Chief Executive Officer who will then give closing remarks, including his current thoughts on key business trends. After these comments we will, of course, open up the call to your questions.

Before I begin, I would 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 statements regarding our 2009 outlook, our stock repurchase program, foreign currency exchange rates, credit markets 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 and those set forth in our Form 10-Q for the quarter ended March 31, 2009, 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 on this call to reflect subsequent events or circumstances.

And with that I will begin the call and highlight some of our results.

Please turn to slide 4 of the presentation for a summary of our second quarter 2009 results compared against the same quarter in 2008. The company reported total revenues of approximately $423 million reflecting a 7.5% growth rate from the year-ago period. The company’s adjusted EBITDA for the quarter was approximately $287 million, which is a 5.5% increase from the five-year period.

Our operating income for the quarter increased 7.5% to approximately $166 million, and finally our income from continuing operations was up 1.3% to approximately $51 million. Our income from continuing operations was negatively impacted by certain discrete items in the company’s tax provision, which resulted in the effective tax rate for the quarter of approximately 50%. Please note that despite these discrete items we are still on plan for our outlook for income from continuing operations and we continue to project cash tax to be approximately $35 million to $40 million for the full-year 2009.

And with that I will turn things over to Tom, who will discuss the results in more detail.

Tom Bartlett

Thanks Michael and good morning everyone. I am pleased to report that American Tower continued its track record of consistently delivering strong revenue and cash flow growth during the second quarter of 2009.

Please turn to slide 5, and let us review some of the highlights. Our core growth rate for tower revenue, which excludes the impacts of foreign currency exchange rate fluctuations and straight line lease accounting, was 9.5% relative to the second quarter of 2008. We also experienced nearly $11 million of sequential growth in our tower revenue from first quarter of 2009, which reflects the impacts of favorable exchange rate fluctuations, a welcome change after experiencing large negative impacts on our reported revenue from FX in the previous two quarters.

We had strong free cash flow generation in the quarter of approximately $140 million or about $0.34 per diluted share, which represents a 17% increase over the prior year and includes the impact of a 22% increase in CapEx. As we seek to maximize returns on our invested capital we remain focused but disciplined as we evaluate growth opportunities. During the quarter we completed the construction of 212 sites, which was approximately three times in number that we completed in the second quarter of 2008 and our development pipeline remained robust within the US and other markets.

We closed the acquisition of XCEL Telecom in India which added 1,657 towers to our portfolio and subsequent to the end of the quarter we purchased 230 sites in Brazil, and we also redeployed over $60 million of our excess cash flow back to shareholders through our share repurchase program, which brings the total purchases over the past 12 months to nearly $0.5 billion.

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