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American Tower (AMT)
Q2 2011 Earnings Call
August 02, 2011 8:00 am ET
Leah Stearns -
Thomas Bartlett - Chief Financial Officer and Executive Vice President
James Taiclet - Executive Chairman, Chief Executive Officer and President
Gray Powell - Wells Fargo Securities, LLC
Philip Cusick - JP Morgan Chase & Co
Batya Levi - UBS Investment Bank
Jonathan Atkin - RBC Capital Markets, LLC
Richard Prentiss - Raymond James & Associates, Inc.
Simon Flannery - Morgan Stanley
Clayton Moran - The Benchmark Company, LLC
Jason Armstrong - Goldman Sachs Group Inc.
Previous Statements by AMT
» American Tower's CEO Discusses Q1 2011 Results - Earnings Call Transcript
» American Tower's CEO Discusses Q4 2010 Results - Earnings Call Transcript
» American Tower CEO Discusses Q3 2010 Results - Earnings Call Transcript
Thank you, Brooke, and good morning, everyone. Thank you for joining American Tower's Second Quarter 2011 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 second quarter results. Then Tom Bartlett, our Executive Vice President and CFO, will review our financial and operational performance for the quarter. And finally, Jim Taiclet, our Chairman, President and CEO, will provide closing remarks. After these comments, we will open up the call for 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 those regarding our 2011 outlook, our pending acquisitions, our consideration to elect real estate investment trust status, our stock repurchase program 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-Q for the quarter ended March 31, 2011, our Amendment #1 to our form S-4 filed on July 18, 2011, 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 second quarter 2011 results. During the quarter, our rental and management business accounted for over 97% of total revenues, which are generated from leasing income producing real estate primarily to investment grade corporate tenant. This revenue grew 28% to nearly $584 million from the second quarter of 2010. In addition, our adjusted EBITDA increased 21% to $389 million, operating income increased 20% to $226 million, and finally, income from continuing operations increased to $113 million or $0.29 per basic and diluted common share. And with that, I would like to turn the call over to Tom who will discuss our results in more detail.
Thanks, Leah, and good morning, everyone. I'm pleased to report that our business produced solid results during the second quarter with our recent acquisitions in Latin America and EMEA further diversifying our overall revenue stream. As a result of our year-to-date performance and further certainty as to the timing of some specific international acquisition closings, we have raised our revenue and adjusted EBITDA outlook for the year. If you please turn to Slide 5, you will see that for the second quarter, our total rental and management revenue increased by approximately 28% to $584 million. And for the quarter, our core growth increased 24.4% and was generated by core same tower revenue growth which is comprised of escalators, new lease up and amendment activity less than churn of 8%, and core growth from the construction and acquisition of new towers of 16.4%. The key drivers of our core same tower growth during the second quarter include new business commencements in the U.S., which have been trending at comparable levels to 2010, with AT&T and Verizon's LTE network investments driving the majority of our U.S. leasing volume. And in Latin America, we've seen recent 3G spectrum auctions increase demand for our legacy sites as our customers plan their next generation network deployments, driving an expected improvement in consolidated leasing volumes for the first half of the year versus the same period last year.
Our growth from new sites reflects the impact of our acquisition, our construction of over 10,000 sites since the beginning of the second quarter of 2010. Over 90% of these new sites are located in our international markets where we have found -- where we have focused on diversifying our portfolio across 3 key regions: Latin America, Asia and EMEA. And our growth from new sites also reflects the increase in our international passthrough revenues which has doubled from the year ago period to $40 million.
Turning to Slide 6. During the second quarter, our domestic rental and management segment was right on plan with revenue growth driven primarily by new cash leasing revenue from our legacy towers. For the quarter, our domestic rental and management segment revenue grew 13.4% to nearly $425 million, with core growth of 11%. Year-to-date and as expected, both our signed and commenced new leasing activity in the U.S. has been comparable with 2010 levels and has been primarily generated by 2 of our largest customers as they focus on deploying their 4G LTE networks nationwide.