American Tower Corporation (REIT) (AMT)

AMT 
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American Tower Corporation (AMT)

Q3 2013 Earnings Call

October 30, 2013, 8:30 AM ET

Executives

Leah Stearns - Vice President, Investor Relations and Capital Markets

Thomas Bartlett - Executive Vice President, Chief Financial Officer and Treasurer

James Taiclet - Chairman, President and Chief Executive Officer

Analysts

Ric Prentiss - Raymond James

Jonathan Atkin - RBC

Batya Levi - UBS

Michael Bowen - Pacific Crest

David Barden - Bank of America

Amir Rozwadowski - Barclays

Jonathan Schildkraut - Evercore

Simon Flannery - Morgan Stanley

Presentation

Operator

Good morning. My name is Tekitria, and I will be your conference operator today. At this time, I would like to welcome everyone to the American Tower third quarter 2013 earnings call. (Operator Instructions) I would now like to turn the call over to Ms. Leah Stearns, Vice President of Investor Relations and Capital Markets. You may begin.

Leah Stearns

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

Our agenda for this morning's call will be as follows. First, I will provide a brief overview of our third quarter and year-to-date results, then Tom Bartlett, our Executive Vice President, CFO 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 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 will call 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 pending acquisitions 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 June 30, 2013, 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 third quarter and year-to-date 2013 results. During the quarter, our rental and management business accounted for approximately 99% of our total revenues, which were generated from leasing income producing real estate, primarily to investment grade corporate tenants. This revenue grew 14.2% to approximately $797 million.

In addition, our adjusted EBITDA increased 13.9% to approximately $528 million. Operating income increased 4.5% to approximately $309 million, and net income attributable to American Tower Corporation declined to approximately $180 million or $0.46 per basic and $0.45 per diluted common share. The decline was primarily related to unrealized non-cash losses attributable to our intercompany loans.

Turning to our year-to-date 2013 results. Our rental and management revenue grew 14.5% to over $2.36 billion. In addition, our adjusted EBITDA increased 13.3% to nearly $1.58 billion. Operating income increased 9.6% to approximately $921 million and net income attributable to American Tower Corporation was approximately $451 million or $1.14 per basic and $1.13 per diluted common share.

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

Thomas Bartlett

Thanks, Leah, and good morning, everyone. Our team has delivered another solid quarter results in Q3, which was a direct result of nearly 11% core organic revenue growth generated on our existing properties. Over the last year, we've also added just under 8,000 tower sites across our global footprint, driving an additional 8% of revenue growth.

During the quarter, we also announced two acquisitions, which will expand our portfolio of properties across the U.S., Mexico and Brazil. We completed our acquisition of GTP on October 1, which included over 5,000 tower sites in the U.S., a well-positioned network of managed rooftops and an established presence in Central America.

In Latin America, our acquisition of sites from Nextel International is expected to close during the fourth quarter and deepens our scale in the rapidly growing Mexican and Brazilian wireless markets. We continue to experience excellent organic growth overseas and anticipate these sites will positions us well. We believe that our legacy businesses strong organic growth coupled with these acquisitions will position us to continue to deliver significant value to our shareholders in 2014 and beyond.

If you please turn to Slide 6, our total rental and management revenue in the quarter increased by over 14% to $797 million. On a core basis, which we'll reference throughout this presentation as reported results, excluding the impacts of foreign currency exchange rate fluctuations, non-cash straight-line lease accounting and significant one-time items, our total rental and management revenue growth was over 18%. Of this core growth, nearly 11% was organic, with the balance attributable to new sites.

Our organic revenue growth in the U.S. continue to be driven primarily by our tenants network investments, largely in the form of lease amendments. We anticipate that over the next 12 to 18 months, our tenants will gradually shift their focus from coverage to capacity-driven network investments, leading to an increase in new tenant co-lo's. As a result, we continue to target core organic growth at or above the high end of our long-term 6% to 8% range.

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