American Tower Corporation (REIT) (AMT)

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American Tower (AMT)

Q1 2011 Earnings Call

May 03, 2011 8:30 am ET


Thomas Bartlett - Chief Financial Officer and Executive Vice President

Garth Williams -

James Taiclet - Executive Chairman, Chief Executive Officer and President


Richard Choe - JP Morgan Chase & Co

James Ratcliffe - Barclays Capital

Michael Rollins - Citigroup Inc

Philip Cusick - Macquarie

Simon Flannery - Morgan Stanley

Richard Prentiss - Raymond James & Associates, Inc.

David Barden

Jason Armstrong - Goldman Sachs Group Inc.

Scott Malat - Goldman Sachs



Good morning. My name is Geneva, and I will be your conference operator today. At this time, I would like to welcome everyone to the

[Technical Difficulty]

Garth Williams

I will provide a brief overview of our first quarter results. Tom Bartlett, our Executive Vice President and CFO, will review our performance for the quarter and provide an update of our expectations for 2011. Finally, Jim Taiclet, our Chairman, President and CEO, will provide closing remarks. After these comments, we will open up the call for 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 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, those set forth in our Form 10-K for the year ended December 31, 2011, 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, please turn to Slide 4 of the presentation, which provides the summary of our first quarter 2011 results. Highlights from the first quarter included a 23.2% growth in total Rental and Management revenues to $546.7 million, adjusted EBITDA growth of 21.1% to $377.1 million, operating income growth of 22.1% to $218.3 million and a 4.7% decrease in our income from continuing operations to $92 million or $0.23 per basic and diluted common share.

The decrease in net income was primarily due to an increase in the effective tax rate this quarter. During the first quarter of 2010, our tax provision was reduced by approximately $33 million as a result of one-time restructuring activities in Latin America.

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

Thomas Bartlett

Thanks, Garth, and good morning, everyone. I'm pleased to report that our business produced solid results in the first quarter.

If you please turn to Slide 5, you will see that for the first quarter, our total Rental and Management revenue increased 23.2% to $547 million. Adjusting for the impact of FX straight line and a couple of one-time items accumulating to $1.6 million in revenue that occurred during the first quarter, core growth in total Rental and Management revenues was approximately 18.5%.

Turning to Slide 6. I thought it'd be helpful to highlight some of the specific items that generated the growth in our first quarter versus last year. Contractual escalations accounted for approximately $18 million of incremental revenue or about 4% of the Rental and Management revenue growth for the quarter. The base rents under an MLA were escalated last year when one contract was executed and the annual escalator was moved forward to January of each year.

Organic growth in our existing Tower portfolio, as a result of new colocation and amendment activity, accounted for about $24 million of incremental revenues in the quarter. And between the fourth quarter of 2009 and the end of the first quarter of 2011, we added over 9,900 new sites. New run rate revenue from these sites in the quarter accounted for about $47 million. And as expected, our turn was approximately $12 million.

Finally, the U.S. dollar has weakened against most of the currencies in the markets in which we operate, and our straight-line revenue increased as a result of the new MLA we signed. These factors, combined with other items, generated a benefit of approximately $26 million, so around $103 million of incremental revenue in the quarter. I hope that detail was helpful.

Turning to Slide 7, continuing with some highlights relative to our Domestic Rental and Management segment for the first quarter of 2011. Revenue increased 12.9% to just under $418 million. For the first quarter, our Domestic Rental and Management segment gross margin increased $41.8 million or 14.3%, which reflects a year-over-year conversion rate of approximately 88%. And excluding the impact of FX, straight-line lease accounting and one-time items, our core growth and revenue was 10.1%. And as you can see, our profit margin in our Domestic segment increased 76%.

Turning to Slide 8. As expected, our International Rental and Management segment also produced strong results during the first quarter of 2011, generating year-over-year revenue growth of 75%. Between the fourth quarter of 2009 and the end of the first quarter, we have added over 8,900 towers to our international site portfolio, including 5,320 in India, 2,643 in Latin America and 959 sites in South Africa.

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