American Tower Corporation (REIT) (AMT)

AMT 
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American Tower Corporation (AMT)

Q3 2009 Earnings Call

November 3, 2009; 8:30 am ET

Executives

Jim Taiclet - Chairman, President & Chief Executive Officer

Tom Bartlett - Chief Financial Officer

Michael Powell - Vice President of Investor Relations

Analysts

David Barden - Bank of America

Jonathan Atkin - RBC capital

Jason Armstrong - Goldman Sachs

Mike McCormack - JP Morgan

Rick Prentiss - Raymond James

Simon Flannery - Morgan Stanley

Jonathan Schildkraut - Jefferies

Philip Cusick - Macquarie

Gray Powell - Wells Fargo Securities

Michael Rollins - Citi

Presentation

Operator

Good morning. My name is Tracy and I’ll be your conference operator today. At this time, I would like to welcome everyone to the American Tower third quarter 2009 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)

I’d you now like to turn the call over to your host, Mr. Michael Powell, the Vice President of Investor Relations; please go ahead.

Michael Powell

Thanks, Tracy. Good morning everyone and thank you for joining American Tower’s conference call regarding our third quarter 2009 financial results. Please note that we posted a brief presentation to accompany this morning’s call on our website, which is www.americantower.com. If you haven’t done so already you may want to download this presentation as we will refer to it at various times throughout our prepared remarks.

The agenda for this morning’s call will be as follows. I’ll provide an introduction and highlight certain key metrics from our third quarter 2009 financial results. Following this, Tom Bartlett, our Chief Financial Officer, will go over our third quarter results in detail. Finally, Jim Taiclet, our Chairman, President and Chief Executive Officer will then give closing remarks, including his thoughts on current key business trends and of course, after these comments, we will open the call to 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 statements regarding our 2009 outlook, our stock repurchase program, 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 results to be materially different than 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 June 30, 2009 and 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. With that, I’ll begin the call with some of the highlights of our results.

Please turn to slide four of the presentation for a summary of our third quarter 2009 results, compared against the third quarter of 2008. You’ll note that we reported total revenues of approximately $444 million, reflecting growth of 8.5% from the year ago period. Our results for the third quarter 2009 include a $6.7 million net one time revenue item within our rental and management segment related to a termination agreement with one of our U.S. broadcast customers.

Tom will provide additional color on our core growth for the business excluding this one time item and the impact of foreign exchange, rate fluctuations and straight line accounting. Our adjusted EBITDA for the quarter was $304 million which is a $9.6 million increase from the prior year period. Our operating income for the quarter increased 16% to approximately $179 million and finally, income from continuing operations was up 11.5% to approximately $68 million or approximately $0.17 on a per share basis.

Now Tom, I’d like to turn things over to you at this time.

Tom Bartlett

Thanks, Michael and good morning everyone. I’m again pleased to report that American Tower continued its track record of consistently delivering strong revenue and adjusted EBITDA growth during the third quarter of 2009.

Please turn to slide five to review some of the highlights. Our core growth rate for tower revenue which excludes the impact of foreign currency exchange rate fluctuations, straight line lease accounting and a $6.7 million one time termination agreement with one of our U.S. broadcast customers was 10.3%, relative to the third quarter of 2008. We continue to generate an industry leading adjusted EBITDA margin of 68.5%.

I’d like to highlight that we have maintained this margin level, while doubling the size of our portfolio in Brazil and launching our India operations. We remained focused and disciplined while evaluating opportunities to selectively deploy our capital. We believe these investments will not only drive a core growth in our portfolio, but also enhance our return on invested capital.

Highlights during the quarter and to-date include the construction of 267 sites across our portfolio, the acquisition of 230 communication sites in Brazil and 74 in the United States, and the purchase of 326 sites in India, which closed just subsequent to the end of the quarter. All told, just under 900 sites added over the last 90 days for about $120 million. In addition, we also redeployed approximately $118 million of our excess cash flow back to shareholders through our share repurchase program.

In fact, we purchased back almost $900 million since the beginning of 2008. In addition, our balance sheet remains in a solid position and the strongest in the industry. Net leverage for the quarter was 3.3 times. The reduction from the second quarter is primarily a result of nearly all of our 3% convertible note holders exercising their option to convert their notes into common stock upon our redemption of the notes. We have nearly $850 million of available liquidity, which included over $225 million of cash and cash equivalents, and nearly $625 million of availability under our revolving credit facility.

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