American Tower Corporation (REIT) (AMT)

AMT 
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American Tower (AMT)

Q3 2010 Earnings Call

November 05, 2010 8:30 am ET

Executives

Leah Stearns -

Thomas Bartlett - Chief Financial Officer and Executive Vice President

James Taiclet - Executive Chairman, Chief Executive Officer and President

Analysts

Jonathan Atkin - RBC Capital Markets Corporation

Gray Powell - Wells Fargo Securities, LLC

James Ratcliffe - Barclays Capital

Michael Rollins - Citigroup Inc

Simon Flannery - Morgan Stanley

David Barden

Brett Feldman - Deutsche Bank AG

Jonathan Hong

Richard Prentiss - Raymond James & Associates

Presentation

Operator

Good morning. My name is Christy, and I will be your conference operator. At this time, I would like to welcome everyone to the American Tower Third Quarter 2010 Earnings Conference Call. [Operator Instructions] I will now turn today's conference over to Ms. Leah Stearns, Director of Investor Relations.

Leah Stearns

Thank you, and good morning, everyone. Thanks for joining American Tower's conference call regarding our third quarter 2010 financial results. Please note that we've posted a brief presentation to accompany this morning's call on our website at www.americantower.com. If you haven't done so already, you may want to download the 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 will provide a brief introduction and highlight certain key metrics from our third quarter financial results. Following this, Tom Bartlett, our Executive Vice President and Chief Financial Officer, will discuss our financial results and provide an overview of our expectation for the remainder of 2010. And finally, Jim Taiclet, our Chairman, President and Chief Executive Officer, will give closing remarks, including his current thoughts on key industry trends. After these comments, we will open up the call for your questions.

[Operator Instructions] 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 2010 outlook, our stock repurchase program, 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 our 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 June 30, 2010, and in our other fillings 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, I'd like to begin the call with some highlights from our third quarter results. Please turn to Slide 4 of the presentation, which provides a summary of our results compared against the prior year period. We reported total revenues of approximately $513 million, reflecting growth of over 15% from the prior year period. Tom will provide additional color on the core growth of our Rental and Management segment, which excludes the impact of foreign currency, straight-line lease accounting and a onetime gain from the prior year period. Our adjusted EBITDA for the quarter was approximately $350 million, which is, an increase of over 15% from the prior year. Additionally, our operating income for the quarter increased over 19% to approximately $213 million.

Income from continuing operations, including income from noncontrolling interest, was approximately $94 million or $0.23 per basic and diluted common share. And now I would like to turn the call over to Tom, who will discuss our results in more detail.

Thomas Bartlett

Thanks, Leah, and good morning, everyone. I'm pleased to report that our third quarter 2010 results came in ahead of plan as we continue to execute and close out on our strategic priorities for the year.

If you please turn to Slide 5, I'd like to begin with some highlights from our Rental and Management segment. Overall, we reported Rental and Management segment revenue growth of 16.1%. Core growth in Rental and Management segment revenue was 11.6% relative to the third quarter of 2009, which excludes the impact of foreign exchange, which positively impacted our reported results by 0.8%, straight-line, which positively impacted our reported results by 5.7% and a onetime gain from the third quarter of 2009, which is related to a onetime termination fee, which we received from one of our broadcast customers.

Additionally and as I highlighted on our last call, three discrete items continue to impact our results during 2010. These items include the impact of broadcast analog churn, the completion of a customer take-or-pay agreement and a customer settlement, which combined, negatively impacted our reported revenue by approximately 1.7%. Excluding the impact of these items, our core growth would have been over 13%.

Excluding the impact of these discrete items, core Tower revenue growth in the United States was 10.3%, of which 7.8% was generated from sites owned during the full comparable period, and 2.5% was generated from new sites acquired or constructed since the beginning of the third quarter of 2009. In addition, during the quarter, our U.S. division continue to experience a strong leasing environment with total signed new business up by approximately 18% relative to the same quarter of 2009. Furthermore, amendment activity continued to increase, accounting for approximately 45% of our signed new business in the quarter.

Our solid performance in the U.S. was complemented by core growth of 27% in revenues from our international markets, which reflects our acquisition of towers from Essar, which contributed nearly $15 million or approximately 3.5% to our total revenue growth for the quarter. And as a result of our international expansion, our pass-through revenue, which represents principally land and fuel expenses that we incur and are able to get reimbursed by our customers, has increased by approximately $9 million from the year ago period, which is primarily attributable to our growth in India.

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