American Tower Corporation Reports Fourth Quarter and Full Year 2018 Financial Results

CONSOLIDATED HIGHLIGHTS

Fourth Quarter 2018           

  • Total revenue increased 25.1% to $2,132 million             
  • Property revenue increased 25.3% to $2,103 million                  
  • Net income increased 50.3% to $293 million                  
  • Adjusted EBITDA increased 38.2% to $1,425 million          
  • Consolidated AFFO increased 50.8% to $1,067 million                   

Full Year 2018

  • Total revenue increased 11.6% to $7,440 million
  •  Property revenue increased 11.4% to $7,315 million
  •  Net income increased 3.2% to $1,265 million
  •  Adjusted EBITDA increased 14.1% to $4,667 million
  •  Consolidated AFFO increased 22.0% to $3,539 million

BOSTON–(BUSINESS WIRE)–American Tower Corporation (NYSE: AMT) today reported financial results
for the quarter and full year ended December 31, 2018.

Jim Taiclet, American Tower’s Chief Executive Officer stated, “We were
pleased to conclude the first year of our Stand and Deliver strategy
with a strong quarter, particularly in the U.S. where Organic Tenant
Billings Growth reached 8.0% for the first time since 2014. We continued
to deploy capital using our proven methodology throughout 2018, adding
over 24,000 sites to our portfolio, increasing our dividend by 20% and
repurchasing more than $230 million in stock, all while growing our
Consolidated AFFO per Share by double digits for the 11th consecutive
year.

Our outlook for 2019 implies another year of record new business
contributions in the U.S. and strong underlying performance
internationally, supported by continued global secular growth in mobile
data usage.”

CONSOLIDATED OPERATING RESULTS OVERVIEW

American Tower generated the following operating results for the quarter
and year ended December 31, 2018 (all comparative information is
presented against the quarter and year ended December 31, 2017,
respectively).

             
($ in millions, except per share amounts.)   Q4 2018(1)

Growth
Rate

FY 2018(1)

Growth
Rate

Total revenue $ 2,132 25.1 % $ 7,440 11.6 %
Total property revenue $ 2,103 25.3 % $ 7,315 11.4 %
Total Tenant Billings Growth $ 113 8.3 % $ 460 8.6 %
Organic Tenant Billings Growth $ 52 3.9 % $ 275 5.2 %
Property Gross Margin $ 1,573 35.1 % $ 5,188 13.9 %
Property Gross Margin % 74.8 % 70.9 %
Net income(2) $ 293 50.3 % $ 1,265 3.2 %
Net income attributable to AMT common stockholders(2) $ 278 26.4 % $ 1,227 6.6 %
Net income attributable to AMT common stockholders per diluted share(2) $ 0.62 21.6 % $ 2.77 3.7 %
Adjusted EBITDA $ 1,425 38.2 % $ 4,667 14.1 %
Adjusted EBITDA Margin % 66.8 % 62.7 %
 
Nareit Funds From Operations (FFO) attributable to AMT common
stockholders
$ 1,002 40.1 % $ 3,209 19.0 %
Consolidated AFFO $ 1,067 50.8 % $ 3,539 22.0 %
Consolidated AFFO per Share $ 2.40 46.3 % $ 7.99 18.9 %
AFFO attributable to AMT common stockholders $ 877 27.4 % $ 3,191 15.8 %
AFFO attributable to AMT common stockholders per Share $ 1.97 23.9 % $ 7.20 12.9 %
 
Cash provided by operating activities $ 1,263 59.1 % $ 3,748 28.1 %
Less: total cash capital expenditures(3) $ 311   26.2 % $ 937   13.7 %
Free Cash Flow $ 953 74.0 % $ 2,811 33.8 %

_______________

(1)

   

Inclusive of the negative impacts of Indian Carrier
Consolidation-Driven Churn (ICCC) and the positive impacts of the
Company’s settlement with Tata. For reconciliations of these
impacts on key metrics, please see tables below.

(2)

Q4 2018 and FY 2018 reflect impairment charges of approximately
$212 million and $394 million, respectively, primarily associated
with assets in India, partially offset by income tax benefits,
also primarily in India. The net impact of these items
attributable to AMT common stockholders for Q4 2018 and FY 2018
was approximately $100 million and $177 million, respectively.

(3)

Q4 2018 and FY 2018 cash capital expenditures include $9.6 million
and $32.0 million, respectively, of payments on capital leases of
property and equipment, which are presented in the condensed
consolidated statements of cash flows included herein under
Repayments of notes payable, credit facilities, term loan, senior
notes, secured debt and capital leases.

 

Certain wireless carriers in India are in the process of, or have
recently concluded, merging their operations or exiting the marketplace.
The Company’s operational and financial results during the fourth
quarter and full year 2018 were impacted by churn driven by this carrier
consolidation process (Indian Carrier Consolidation-Driven Churn,
“ICCC”) as well as the Company’s settlement with Tata. This settlement
resulted in a net positive impact of $334 million to property revenue,
$327 million to Adjusted EBITDA and $313 million to Consolidated AFFO.
We are disclosing the additional financial metrics below to provide
insight into the underlying long-term trends across the Company’s
business excluding these impacts. We expect ICCC to impact our
operational and financial results at varying rates throughout 2019 and
to result in an overall reduction in Indian contracted tenant revenue.
The impacts of ICCC and the Tata settlement on net income are not
provided, as the impact on all components of the net income measure
cannot be reasonably calculated.

 

Reconciliation of Indian Carrier Consolidation-Driven Churn
Impact to Operating Results:

($ in millions, except per share amounts. Totals may not add
due to rounding.)

     
Q4 2018 Results Q4 2017 Results Growth Rates vs. Prior Year
            Impact of  
Impact of ICCC and
Tata Impact of Impact of Tata
($ in millions) As Reported

Settlement(1)

ICCC Normalized As Reported ICCC Normalized As Reported Settlement Normalized
Total property revenue $ 2,103 $ (334 ) $ 79 $ 1,849 $ 1,678 $ 7 $ 1,686 25.3 % (15.6 )% 9.7 %
Adjusted EBITDA 1,425 (327 ) 54 1,152 1,031 7 1,038 38.2 % (27.2 )% 11.0 %
Consolidated AFFO 1,067 (313 ) 43 796 707 5 712 50.8 % (39.1 )% 11.7 %
Consolidated AFFO per Share $ 2.40 $ (0.71 ) $ 0.10 $ 1.79 $ 1.64 $ 0.01 $ 1.65 46.3 % (37.8 )% 8.5 %
Consolidated Organic Tenant Billings 52

 

58 111 77 7 84 3.9 % 4.2 % 8.1 %
International Organic Tenant Billings (16 )

 

58 42 30 7 37 (3.1 )% 11.4 % 8.3 %
 
 
FY 2018 Results FY 2017 Results Growth Rates vs. Prior Year
Impact of
Impact of ICCC and
Tata Impact of Impact of Tata
($ in millions) As Reported

Settlement(1)

ICCC Normalized As Reported ICCC Normalized As Reported Settlement Normalized
Total property revenue $ 7,315 $ (334 ) $ 189 $ 7,170 $ 6,566 $ 9 $ 6,575 11.4 % (2.4 )% 9.0 %
Adjusted EBITDA 4,667 (327 ) 120 4,459 4,090 9 4,098 14.1 % (5.3 )% 8.8 %
Consolidated AFFO 3,539 (313 ) 96 3,322 2,902 7 2,909 22.0 % (7.8 )% 14.2 %
Consolidated AFFO per Share $ 7.99 $ (0.71 ) $ 0.22 $ 7.50 $ 6.72 $ 0.02 $ 6.74 18.9 % (7.6 )% 11.3 %
Consolidated Organic Tenant Billings 275

 

128 403 347 9 356 5.2 % 2.4 % 7.5 %
International Organic Tenant Billings 32

 

128 160 152 9 161 1.6 % 6.4 % 8.0 %

_______________

(1)

   

Includes the one-time net positive impacts to 2018 property
revenue, Adjusted EBITDA and Consolidated AFFO related to the
Company’s settlement with Tata. Churn associated with the
settlement is reflected in the ICCC column.

 

Please refer to “Non-GAAP and Defined Financial Measures” below for
definitions and other information regarding the Company’s use of
non-GAAP measures. For financial information and reconciliations to GAAP
measures, please refer to the “Unaudited Selected Consolidated Financial
Information” below.

CAPITAL ALLOCATION OVERVIEW

Distributions – During the quarter and full year ended
December 31, 2018, the Company declared the following regular cash
distributions to its common stockholders:

           
Common Stock Distributions   Q4 2018(1) FY 2018
Distributions per share $ 0.84 $ 3.15
Aggregate amount (in millions) $ 371 $ 1,390
Year-over-year per share growth 20.0 % 20.2 %

_______________

(1)

    The distribution declared was paid in the first quarter of 2019 to
stockholders of record as of the close of business on December 27,
2018.
 

Stock Repurchase Program – The Company repurchased a total
of 0.3 million shares of its common stock for $44 million during Q4 2018
and 1.6 million shares of its common stock for $233 million during the
full year 2018. As of December 31, 2018, there was $2.1 billion
remaining under the Company’s existing stock repurchase programs.

Capital Expenditures During the fourth quarter of
2018, total capital expenditures were $311 million, of which $58 million
was for non-discretionary capital improvements and corporate capital
expenditures. For the full year, total capital expenditures were $937
million, of which $159 million was for non-discretionary capital
improvements and corporate capital expenditures. For additional capital
expenditure details, please refer to the supplemental disclosure package
available on the Company’s website.

Acquisitions During the fourth quarter of 2018,
the Company spent $444 million to acquire 936 communications sites,
including 106 sites in the United States, 830 sites in international
markets, primarily in Kenya as part of its previously disclosed
transaction with Telkom Kenya Limited and other communications
infrastructure assets. For the full year 2018, the Company spent
approximately $1.9 billion to acquire over 22,000 communications sites
and other communications infrastructure assets.

Other Events – As previously disclosed, during the fourth
quarter of 2018, the Company entered into agreements for a settlement
and release of certain contractual lease obligations of Tata
Teleservices and related entities (Tata), which had previously been a
major tenant. As part of this arrangement, the Company received a cash
payment of approximately $346 million in Q4 2018. After accounting for
certain other adjustments, this settlement resulted in a net positive
impact of $334 million to property revenue, $327 million to Adjusted
EBITDA and $313 million to Consolidated AFFO. The impact of the
settlement on net income is not provided, as the impact on all
components of the net income measure cannot be reasonably calculated. In
the fourth quarter, the Company also recorded an impairment charge of
approximately $164 million for sites that it intends to decommission as
a result of the settlement. The Company expects to realize ongoing
operational expense savings attributable to the decommissioning of these
sites.

Also as previously disclosed, the Company has received notice from Tata
Teleservices of its exercise of put options with respect to 50% of its
holdings of the Company’s Indian subsidiary, ATC Telecom Infrastructure
Private Limited (ATC TIPL). The Company has also received notice from
Infrastructure Development Finance Company (IDFC) of its exercise of put
options with respect to 100% of its holdings of ATC TIPL. The Company
expects to complete the redemption of the ATC TIPL shares pursuant to
these put rights in the first half of 2019 for total consideration of
approximately INR 29.4 billion (approximately $420 million as of
December 31, 2018), subject to regulatory approval. Pro forma for this
redemption, the Company will hold an ownership interest of approximately
79% in ATC TIPL.

LEVERAGE AND FINANCING OVERVIEW

Leverage For the quarter ended December 31, 2018,
the Company’s Net Leverage Ratio was 3.5x net debt (total debt less cash
and cash equivalents) to fourth quarter 2018 annualized Adjusted EBITDA.
This ratio was positively impacted by the Company’s settlement with Tata
as reconciled below.

   
Calculation of Net Leverage Ratio As of December 31, 2018
($ in millions, totals may not add due to rounding) As Reported    

Tata Settlement
Impact

      Normalized
Total debt $ 21,160 $

$ 21,160
Less: Cash and cash equivalents 1,209 (346 ) 863
Net Debt 19,951 346   20,297
Divided By: Fourth quarter annualized Adjusted EBITDA(1) 5,699 (1,308 ) 4,391
Net Leverage Ratio 3.5x 1.1x   4.6x

_______________

(1)

    Q4 2018 Adjusted EBITDA multiplied by four.
 

Liquidity As of December 31, 2018, the Company
had $4.3 billion of total liquidity, consisting of $1.2 billion in cash
and cash equivalents plus the ability to borrow an aggregate of $3.1
billion under its revolving credit facilities, net of any outstanding
letters of credit.

On February 14, 2019, the Company entered into a loan agreement for a
new $1.3 billion unsecured term loan. The Company used the net proceeds
of this new term loan, together with cash on hand, to repay existing
indebtedness under its 2018 term loan.

FULL YEAR 2019 OUTLOOK

The following full year 2019 financial and operational estimates are
based on a number of assumptions that management believes to be
reasonable and reflect the Company’s expectations as of February 27,
2019. Actual results may differ materially from these estimates as a
result of various factors, and the Company refers you to the cautionary
language regarding “forward-looking” statements included in this press
release when considering this information.

The Company’s outlook is based on the following average foreign currency
exchange rates to 1.00 U.S. Dollar for February 27, 2019 through
December 31, 2019: (a) 39.70 Argentinean Pesos; (b) 3.75 Brazilian
Reais; (c) 665 Chilean Pesos; (d) 3,130 Colombian Pesos; (e) 0.88 Euros;
(f) 5.05 Ghanaian Cedi; (g) 71.20 Indian Rupees; (h) 102 Kenyan
Shillings; (i) 19.20 Mexican Pesos; (j) 360 Nigerian Naira; (k) 6,050
Paraguayan Guarani; (l) 3.35 Peruvian Soles; (m) 13.70 South African
Rand; and (n) 3,730 Ugandan Shillings.

The Company’s outlook reflects estimated unfavorable impacts of foreign
currency exchange rate fluctuations to property revenue, Adjusted EBITDA
and Consolidated AFFO, of approximately $105 million, $45 million and
$35 million, respectively, relative to the Company’s 2018 operating
results. The impact of foreign currency exchange rate fluctuations on
net income is not provided, as the impact on all components of the net
income measure cannot be calculated without unreasonable effort.

The Company’s full year 2019 outlook also reflects estimated cumulative
unfavorable impacts of ICCC on property revenue, Adjusted EBITDA and
Consolidated AFFO of approximately $380 million, $268 million and $214
million, respectively, inclusive of an expected reduction in
pass-through revenue of approximately $83 million. These impacts include
consolidation churn experienced through the end of 2018, as well as the
incremental expected impacts of ICCC in 2019. The 2019-specific impacts
of ICCC to property revenue, Adjusted EBITDA and Consolidated AFFO are
$191 million, $148 million and $118 million, respectively, including $22
million in lower pass-through revenue. At this time, the Company expects
the impacts of ICCC to last throughout 2019 and anticipates that churn
rates in India will return to lower levels in 2020 and beyond. The
Company is providing key outlook measures adjusted to quantify the
impacts of ICCC and the Tata settlement on such measures as it believes
that these adjusted measures better reflect the long-term trajectory of
its recurring business and provide investors with a more comprehensive
analysis of the Company’s operations. The impacts of ICCC and the Tata
settlement on net income are not provided, as the impact on all
components of the net income measure cannot be calculated without
unreasonable effort.

Additional information pertaining to the impact of foreign currency,
London Interbank Offered Rate (LIBOR) fluctuations and ICCC on the
Company’s outlook has been provided in the supplemental disclosure
package available on the Company’s website.

         
2019 Outlook ($ in millions) Full Year 2019 Midpoint

Growth

Total property revenue(1) $ 7,125     to   $ 7,295 (1.4)%
Net income 1,510 to 1,620 23.7%
Adjusted EBITDA 4,415 to 4,525 (4.2)%
Consolidated AFFO 3,370 to 3,480 (3.2)%

_______________

(1)

    Includes U.S. property revenue of $3,915 million to $4,005 million
and international property revenue of $3,210 million to $3,290
million, reflecting midpoint growth rates of 3.6% and (6.9)%,
respectively. The U.S. growth rate includes a negative impact of
nearly 3% associated with a decrease in non-cash straight-line
revenue recognition. The international growth rate includes
estimated negative impacts of approximately 15% attributable to ICCC
and the non-recurrence of the Tata settlement, and approximately 3%
from the translational effects of foreign currency exchange rate
fluctuations. International property revenue reflects the Company’s
Latin America, EMEA and Asia segments.
 
         

2019 Outlook for Total Property revenue, at the midpoint,
includes the

following components(1):
($ in millions, totals may not add due to rounding.)

U.S. Property

International
Property(2)

Total Property
International pass-through revenue N/A $ 975 $ 975
Straight-line revenue (32) 35 3

_______________

 

(1)

    For additional discussion regarding these components, please refer
to “Revenue Components” below.

(2)

International property revenue reflects the Company’s Latin America,
EMEA and Asia segments.
 
         

2019 Outlook for Total Tenant Billings Growth, at the midpoint,
includes the

following components(1):
(Totals may not add due to rounding.)

U.S. Property

International
Property(2)

Total Property
Organic Tenant Billings ~7% (~2)% ~3-4%
New Site Tenant Billings <0.5% ~5-6% >2%
Total Tenant Billings Growth >7% ~3-4% ~5-6%

_______________

(1)

    For additional discussion regarding the component growth rates,
please refer to “Revenue Components” below.

(2)

International property revenue reflects the Company’s Latin America,
EMEA and Asia segments.
 
 
Reconciliation of Indian Carrier Consolidation-Driven Churn
Impact to 2019 Outlook:

($ in millions, except per share amounts. Totals may not add
due to rounding.)

 
  FY 2018 Results     2019 Outlook, at the Midpoint  

Midpoint Growth Rates
vs. Prior Year

($ in millions) As Reported  

Impact of
Tata
Settlement(1)

  Impact of ICCC   Normalized As Reported   Impact of ICCC(2)   Normalized As Reported  

Impact of
ICCC and
Tata
Settlement(3)

  Normalized
Total property revenue(4) $ 7,315 $ (334 ) $ 189 $ 7,170 $ 7,210 $ 380 $ 7,590 (1.4 )% 7.3 % 5.9 %
Adjusted EBITDA 4,667 (327 ) 120 $ 4,459 $ 4,470 $ 268 $ 4,738 (4.2 )% 10.5 % 6.2 %
Consolidated AFFO 3,539 (313 ) 96 $ 3,322 $ 3,425 $ 214 $ 3,639 (3.2 )% 12.8 % 9.6 %
Consolidated AFFO per Share(5) $ 7.99 $ (0.71 ) $ 0.22 $ 7.50 $ 7.70 $ 0.48 $ 8.18 (3.6 )% 12.7 % 9.1 %
Consolidated Organic Tenant Billings 275

128 403 204 211 416

~3-4

%

~3.5

%

~7

%

International Organic Tenant Billings 32

128 160 (46 ) 211 166

(~2)

%

~9-10

%

~7-8

%

_______________

(1)

  Includes the one-time net positive impacts to 2018 property revenue,
Adjusted EBITDA and Consolidated AFFO related to the Company’s
settlement with Tata. Churn associated with the settlement is
reflected in the ICCC column.

(2)

Reflects the cumulative impacts of ICCC from 2017 through 2019.

(3)

Reflects the cumulative impacts of ICCC from 2017 through 2019 and
the 2018 impacts of the Tata settlement.

(4)

Expected consolidation impacts include a cumulative decline of
approximately $61 million and $83 million in pass-through revenue
for 2018 and 2019, respectively.

(5)

Assuming 2019 weighted average diluted share count of 445 million
shares.
 
           

Outlook for Capital Expenditures:
($ in millions,
totals may not add due to rounding.)

Full Year 2019
Discretionary capital projects(1) $ 265 to $ 305
Ground lease purchases 150 to 160
Start-up capital projects 70 to 90
Redevelopment 255 to 265
Capital improvement 150 to 170
Corporate 10  

10

Total

$ 900   to $ 1,000

_______________

(1)

  Includes the construction of approximately 2,500 to 3,500
communications sites globally.
 
           

Reconciliation of Outlook for Adjusted EBITDA to Net income:
($
in millions, totals may not add due to rounding.)

Full Year 2019
Net income $ 1,510 to $ 1,620
Interest expense 845 to 855
Depreciation, amortization and accretion 1,780 to 1,820
Income tax provision 135 to 115
Stock-based compensation expense 115 to 125

Other, including other operating expenses, interest income, gain
(loss) on retirement of long-term
obligations and other
income (expense)

30   to (10 )
Adjusted EBITDA $ 4,415   to $ 4,525  
 
             
Reconciliation of Outlook for Consolidated AFFO to Net income: ($
in millions, totals may not add due to rounding.)
Full Year 2019
Net income $ 1,510

to

$ 1,620
Straight-line revenue (3 )

(3 )
Straight-line expense 31

31
Depreciation, amortization and accretion 1,780 to 1,820
Stock-based compensation expense 115 to 125
Deferred portion of income tax 10 to (8 )

Other, including other operating expense, amortization of deferred
financing costs, capitalized
interest, debt discounts and
premiums, gain (loss) on retirement of long-term obligations, other
income
(expense), long-term deferred interest charges and distributions
to minority interests

87 to 75
Capital improvement capital expenditures (150 ) to (170 )
Corporate capital expenditures (10 )

(10 )

Consolidated AFFO

$ 3,370   to $ 3,480  
 

Conference Call Information

American Tower will host a conference call today at 8:30 a.m. ET to
discuss its financial results for the quarter and full year ended
December 31, 2018 and its outlook for 2019. Supplemental materials for
the call will be available on the Company’s website, www.americantower.com.
The conference call dial-in numbers are as follows:

U.S./Canada dial-in: (800) 260-0712
International dial-in: (612)
288-0318
Passcode: 462631

When available, a replay of the call can be accessed until 11:59 p.m. ET
on March 13, 2019. The replay dial-in numbers are as follows:

U.S./Canada dial-in: (800) 475-6701
International dial-in: (320)
365-3844
Passcode: 462631

American Tower will also sponsor a live simulcast and replay of the call
on its website, www.americantower.com.

About American Tower

American Tower, one of the largest global REITs, is a leading
independent owner, operator and developer of multitenant communications
real estate with a portfolio of approximately 171,000 communications
sites. For more information about American Tower, please visit the
“Earnings Materials” and “Company & Industry Resources” sections of our
investor relations website at www.americantower.com.

Non-GAAP and Defined Financial Measures

In addition to the results prepared in accordance with generally
accepted accounting principles in the United States (GAAP) provided
throughout this press release, the Company has presented the following
Non-GAAP and Defined Financial Measures: Gross Margin, Operating Profit,
Operating Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Nareit
Funds From Operations (FFO) attributable to American Tower Corporation
common stockholders, Consolidated Adjusted Funds From Operations (AFFO),
AFFO attributable to American Tower Corporation common stockholders,
Consolidated AFFO per Share, AFFO attributable to American Tower
Corporation common stockholders per Share, Free Cash Flow, Net Debt, Net
Leverage Ratio and Indian Carrier Consolidation-Driven Churn (ICCC). In
addition, the Company presents: Tenant Billings, Tenant Billings Growth,
Organic Tenant Billings Growth and New Site Tenant Billings Growth.

These measures are not intended to replace financial performance
measures determined in accordance with GAAP. Rather, they are presented
as additional information because management believes they are useful
indicators of the current financial performance of the Company’s core
businesses and are commonly used across its industry peer group. As
outlined in detail below, the Company believes that these measures can
assist in comparing company performance on a consistent basis
irrespective of depreciation and amortization or capital structure,
while also providing valuable incremental insight into the underlying
operating trends of its business.

Depreciation and amortization can vary significantly among companies
depending on accounting methods, particularly where acquisitions or
non-operating factors, including historical cost basis, are involved.

Contacts

Contact: Igor Khislavsky
Senior Director, Investor Relations
Telephone:
(617) 375-7500

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