American Tower Corporation Reports Third Quarter 2020 Financial Results
CONSOLIDATED HIGHLIGHTS
Third Quarter 2020
- Total revenue increased 3.0% to $2,013 million
- Property revenue increased 3.4% to $1,988 million
- Net income decreased 8.4% to $463 million
- Adjusted EBITDA increased 5.6% to $1,298 million
- Consolidated AFFO increased 14.7% to $1,022 million
BOSTON–(BUSINESS WIRE)–American Tower Corporation (NYSE: AMT) today reported financial results for the quarter ended September 30, 2020.
Tom Bartlett, American Tower’s Chief Executive Officer, stated, “We saw strong demand across our global portfolio of communications real estate in the third quarter as our tenants deployed new technology, densified their networks and enhanced critical broadband connectivity for their customers during the ongoing pandemic. As a result, we drove Consolidated AFFO per Share growth of nearly 15% while again delivering solid growth in our dividend.
Looking forward, as 5G deployments in the U.S. accelerate and as wireless technology evolves globally, we believe that our macro tower-oriented footprint is well-positioned to generate consistent, recurring growth and attractive returns. In addition, to further broaden our tenant base and total addressable market, we are pursuing complementary opportunities to extend our communications real estate platform.”
CONSOLIDATED OPERATING RESULTS OVERVIEW
American Tower generated the following operating results for the quarter ended September 30, 2020 (all comparative information is presented against the quarter ended September 30, 2019).
|
($ in millions, except per share amounts.) |
|
Q3 2020 |
|
Growth Rate |
|||
|
Total revenue…………………………………………………………………………………………………………… |
|
$ |
2,013 |
|
|
3.0 |
% |
|
Total property revenue…………………………………………………………………………………………………………… |
|
$ |
1,988 |
|
|
3.4 |
% |
|
Total Tenant Billings Growth…………………………………………………………………………………………………………… |
|
$ |
136 |
|
|
9.1 |
% |
|
Organic Tenant Billings Growth…………………………………………………………………………………………………………… |
|
$ |
66 |
|
|
4.4 |
% |
|
Property Gross Margin…………………………………………………………………………………………………………… |
|
$ |
1,436 |
|
|
4.5 |
% |
|
Property Gross Margin %…………………………………………………………………………………………………………… |
|
72.2 |
% |
|
|
||
|
Net income…………………………………………………………………………………………………………… |
|
$ |
463 |
|
|
(8.4) |
% |
|
Net income attributable to AMT common stockholders…………………………………………………………………………………………………………… |
|
$ |
464 |
|
|
(6.9) |
% |
|
Net income attributable to AMT common stockholders per diluted share…………………………………………………………………………………………………………… |
|
$ |
1.04 |
|
|
(7.1) |
% |
|
Adjusted EBITDA…………………………………………………………………………………………………………… |
|
$ |
1,298 |
|
|
5.6 |
% |
|
Adjusted EBITDA Margin %…………………………………………………………………………………………………………… |
|
64.5 |
% |
|
|
||
|
|
|
|
|
|
|||
|
Nareit Funds From Operations (FFO) attributable to AMT common stockholders…………………………………………………………………………………………………………… |
|
$ |
874 |
|
|
(2.9) |
% |
|
Consolidated AFFO…………………………………………………………………………………………………………… |
|
$ |
1,022 |
|
|
14.7 |
% |
|
Consolidated AFFO per Share…………………………………………………………………………………………………………… |
|
$ |
2.29 |
|
|
14.5 |
% |
|
AFFO attributable to AMT common stockholders…………………………………………………………………………………………………………… |
|
$ |
997 |
|
|
15.8 |
% |
|
AFFO attributable to AMT common stockholders per Share…………………………………………………………………………………………………………… |
|
$ |
2.23 |
|
|
15.5 |
% |
|
|
|
|
|
|
|||
|
Cash provided by operating activities…………………………………………………………………………………………………………… |
|
$ |
960 |
|
|
2.5 |
% |
|
Less: total cash capital expenditures(1)…………………………………………………………………………………………………………… |
|
$ |
251 |
|
|
(9.4) |
% |
|
Free Cash Flow…………………………………………………………………………………………………………… |
|
$ |
710 |
|
|
7.5 |
% |
_______________
- Q3 2020 cash capital expenditures include $8.1 million of finance lease and perpetual land easement payments reported in cash flows from financing activities in the condensed consolidated statements of cash flows.
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 ended September 30, 2020, the Company declared the following regular cash distributions to its common stockholders:
|
Common Stock Distributions |
|
Q3 2020(1) |
||
|
Distributions per share…………………………………………………………………………………………………………………………. |
|
$ |
1.14 |
|
|
Aggregate amount (in millions)…………………………………………………………………………………………………………………………. |
|
$ |
506 |
|
|
Year-over-year per share growth…………………………………………………………………………………………………………………………. |
|
20.0 |
% |
|
_______________
(1) The distribution declared on September 10, 2020 was paid in the fourth quarter of 2020 to stockholders of record as of the close of business on September 28, 2020.
Capital Expenditures – During the third quarter of 2020, total capital expenditures were approximately $251 million, of which $29 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 third quarter of 2020, the Company spent approximately $101 million to acquire 305 communications sites, primarily in international markets, including 195 communications sites in France as part of its previously announced agreement with Orange S.A.
Other Events – In April 2019, Tata Teleservices Limited served notice of exercise of its put options with respect to 100% of its remaining combined holdings with Tata Sons in ATC Telecom Infrastructure Private Limited (“ATC TIPL”). The Company expects to pay INR 24.8 billion (approximately $336 million at the September 30, 2020 exchange rate) to redeem the put shares in the fourth quarter of 2020, subject to regulatory approval. After the completion of the redemption, the Company will hold an approximately 92% ownership interest in ATC TIPL.
Additionally, during the third quarter of 2020, the Company signed a new master lease agreement (“MLA”) with T-Mobile US, Inc. (“T-Mobile”). The Company’s third quarter 2020 results and revised full year 2020 outlook include impacts from the MLA.
LEVERAGE AND FINANCING OVERVIEW
Leverage – For the quarter ended September 30, 2020, the Company’s Net Leverage Ratio was 4.5x net debt (total debt less cash and cash equivalents) to third quarter 2020 annualized Adjusted EBITDA.
|
Calculation of Net Leverage Ratio |
|
As of September 30, 2020 |
||
|
Total debt…………………………………………………………………………………………… |
|
$ |
24,782 |
|
|
Less: Cash and cash equivalents……………………………………………………………… |
|
|
1,626 |
|
|
Net Debt……………………………………………………………………………………………. |
|
|
23,156 |
|
|
Divided By: Third quarter annualized Adjusted EBITDA(1)……………………………. |
|
|
5,194 |
|
|
Net Leverage Ratio………………………………………………………………………………. |
|
|
4.5 |
x |
_______________
- Q3 2020 Adjusted EBITDA multiplied by four.
Liquidity and Financing Activities – As of September 30, 2020, the Company had nearly $6.7 billion of total liquidity, consisting of $1.6 billion in cash and cash equivalents plus the ability to borrow an aggregate of approximately $5.1 billion under its revolving credit facilities, net of any outstanding letters of credit.
During the third quarter of 2020, the Company issued $1.1 billion in senior unsecured notes and an additional €1.4 billion in Euro-denominated senior unsecured notes (approximately $1.65 billion at the date of issuance). The net proceeds were used to repay existing indebtedness and for general corporate purposes.
On July 6, 2020, the Company completed its previously announced redemption of all of its outstanding 3.450% senior unsecured notes due 2021 and all of its outstanding 3.300% senior unsecured notes due 2021, for an aggregate principal amount of $1.4 billion.
Additionally, on August 5, 2020, the Company established an “at the market” stock offering program through which it may issue and sell shares of its common stock having an aggregate gross sales price of up to $1.0 billion. No shares have been issued under the program as of October 28, 2020.
FULL YEAR 2020 OUTLOOK
The following full year 2020 estimates are based on a number of assumptions that management believes to be reasonable and reflect the Company’s expectations as of October 29, 2020. 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.
As of October 29, 2020, based on currently available information and outside of foreign currency translation effects, the Company does not anticipate significant impacts to its underlying operating results in 2020 as a result of the coronavirus (“COVID-19”) pandemic. This is subject to change depending on future developments, which are highly uncertain and cannot be predicted at this time. Additional information pertaining to the impact of COVID-19 on the Company will be provided in our upcoming Form 10-Q for the nine months ended September 30, 2020.
The Company’s outlook is based on the following average foreign currency exchange rates to 1.00 U.S. Dollar for October 29, 2020 through December 31, 2020: (a) 80.90 Argentinean Pesos; (b) 5.50 Brazilian Reais; (c) 800 Chilean Pesos; (d) 3,810 Colombian Pesos; (e) 0.85 Euros; (f) 5.80 Ghanaian Cedis; (g) 73.50 Indian Rupees; (h) 110 Kenyan Shillings; (i) 22.20 Mexican Pesos; (j) 390 Nigerian Naira; (k) 6,990 Paraguayan Guarani; (l) 3.55 Peruvian Soles; (m) 4.00 Polish Zloty; (n) 17.25 South African Rand; (o) 3,700 Ugandan Shillings; and (p) 600 West African CFA Francs.
The Company is raising the midpoint of its full year 2020 outlook for property revenue, net income, Adjusted EBITDA and Consolidated AFFO by $165 million, $90 million, $170 million and $75 million, respectively. These revised expectations include approximately $105 million in straight-line revenue attributable to the Company’s new MLA with T-Mobile.
The Company’s outlook reflects estimated favorable impacts of foreign currency exchange rate fluctuations to property revenue, Adjusted EBITDA and Consolidated AFFO of approximately $15 million, $5 million and $5 million, respectively, as compared to the Company’s prior 2020 outlook. The impact of foreign currency exchange rate fluctuations on net income is not provided, as the impact on all components of the net income measure cannot be calculated without unreasonable effort.
Additional information pertaining to the impact of foreign currency and London Interbank Offered Rate (“LIBOR”) fluctuations on the Company’s outlook has been provided in the supplemental disclosure package available on the Company’s website.
|
2020 Outlook ($ in millions) |
Full Year 2020 |
|
Midpoint Growth Rates |
|||||||
|
Total property revenue(1)………………………………………………………………………………………… |
$ |
7,855 |
|
to |
$ |
7,915 |
|
|
5.6% |
|
|
Net income………………………………………………………………………………………… |
1,855 |
|
to |
1,905 |
|
|
(1.9)% |
|||
|
Adjusted EBITDA………………………………………………………………………………………… |
5,075 |
|
to |
5,125 |
|
|
7.5% |
|||
|
Consolidated AFFO………………………………………………………………………………………… |
3,720 |
|
to |
3,770 |
|
|
6.4% |
|||
_______________
- Includes U.S. property revenue of $4,485 million to $4,505 million and international property revenue of $3,370 million to $3,410 million, reflecting midpoint growth rates of 7.3% and 3.5%, respectively. The U.S. growth rate includes an estimated positive impact of approximately 3% associated with an increase in non-cash straight-line revenue recognition. The international growth rate includes an estimated negative impact of approximately 7% from the translational effects of foreign currency exchange rate fluctuations. International property revenue reflects the Company’s Latin America, Africa, Europe and Asia segments.
|
2020 Outlook for Total Property revenue, at the midpoint, includes the following components(1): |
U.S. Property |
|
International |
|
Total |
|||||
|
International pass-through revenue…………………………………………………………. |
N/A |
|
$ |
985 |
|
|
$ |
985 |
|
|
|
Straight-line revenue…………………………………………………………………………… |
274 |
|
36 |
|
|
310 |
|
|||
_______________
- For additional discussion regarding these components, please refer to “Revenue Components” below.
- International property revenue reflects the Company’s Latin America, Africa, Europe and Asia segments.
|
2020 Outlook for Total Tenant Billings Growth, at the midpoint, includes the following components(1): |
U.S. Property |
|
International |
|
Total |
|
|
Organic Tenant Billings………………………………………………………………………… |
~4.5% |
|
~5% |
|
~4.5-5% |
|
|
New Site Tenant Billings………………………………………………………………………. |
<0.5% |
|
~13% |
|
~5% |
|
|
Total Tenant Billings Growth…………………………………………………………………. |
~5% |
|
~18% |
|
~9-10% |
_______________
- For additional discussion regarding the component growth rates, please refer to “Revenue Components” below.
- International property revenue reflects the Company’s Latin America, Africa, Europe and Asia segments.
|
Outlook for Capital Expenditures: |
Full Year 2020 |
|||||||
|
Discretionary capital projects(1)……………………………………………………………………………………. |
$ |
415 |
|
to |
$ |
455 |
|
|
|
Ground lease purchases……………………………………………………………………………………………… |
180 |
|
to |
190 |
|
|||
|
Start-up capital projects…………………………………………………………………………………………….. |
150 |
|
to |
170 |
|
|||
|
Redevelopment……………………………………………………………………………………………………….. |
200 |
|
to |
210 |
|
|||
|
Capital improvement………………………………………………………………………………………………… |
145 |
|
to |
165 |
|
|||
|
Corporate……………………………………………………………………………………………………………….. |
10 |
|
— |
10 |
|
|||
|
Total………………………………………………………………………………………………………………. |
$ |
1,100 |
|
to |
$ |
1,200 |
|
|
_______________
- Includes the construction of 5,000 to 6,000 communications sites globally.
|
Reconciliation of Outlook for Adjusted EBITDA to Net income: |
Full Year 2020 |
|||||||
|
Net income…………………………………………………………………………………………………………….. |
$ |
1,855 |
|
to |
$ |
1,905 |
|
|
|
Interest expense………………………………………………………………………………………………………. |
800 |
|
to |
790 |
|
|||
|
Depreciation, amortization and accretion……………………………………………………………………….. |
1,860 |
|
to |
1,870 |
|
|||
|
Income tax provision………………………………………………………………………………………………… |
110 |
|
to |
120 |
|
|||
|
Stock-based compensation expense………………………………………………………………………………. |
120 |
|
— |
120 |
|
|||
|
Other, including other operating expenses, interest income, gain (loss) on retirement of long-term obligations and other income (expense)……………………………………………………………………… |
330 |
|
to |
320 |
|
|||
|
Adjusted EBITDA……………………………………………………………………………………………… |
$ |
5,075 |
|
to |
$ |
5,125 |
|
|
|
Reconciliation of Outlook for Consolidated AFFO to Net income: |
Full Year 2020 |
|||||||
|
Net income…………………………………………………………………………………………………………….. |
$ |
1,855 |
|
to |
$ |
1,905 |
|
|
|
Straight-line revenue………………………………………………………………………………………………… |
(310) |
|
— |
(310) |
|
|||
|
Straight-line expense………………………………………………………………………………………………… |
58 |
|
— |
58 |
|
|||
|
Depreciation, amortization and accretion……………………………………………………………………….. |
1,860 |
|
to |
1,870 |
|
|||
|
Stock-based compensation expense………………………………………………………………………………. |
120 |
|
— |
120 |
|
|||
|
Deferred portion of income tax……………………………………………………………………………………. |
(34) |
|
— |
(34) |
|
|||
|
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….. |
326 |
|
to |
336 |
|
|||
|
Capital improvement capital expenditures……………………………………………………………………… |
(145) |
|
to |
(165) |
|
|||
|
Corporate capital expenditures……………………………………………………………………………………. |
(10) |
|
— |
(10) |
|
|||
|
Consolidated AFFO……………………………………………………………………………………………. |
$ |
3,720 |
|
to |
$ |
3,770 |
|
|
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 ended September 30, 2020 and its revised outlook for 2020. 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: (877) 692-8955
International dial-in: (234) 720-6979
Passcode: 5662618
When available, a replay of the call can be accessed until 11:59 p.m. ET on November 12, 2020. The replay dial-in numbers are as follows:
U.S./Canada dial-in: (866) 207-1041
International dial-in: (402) 970-0847
Passcode: 3376479
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 over 181,000 communications sites. For more information about American Tower, please visit the “Earnings Materials” and “Investor Presentations” 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.
Contacts
Contact: Igor Khislavsky
Vice President, Investor Relations
Telephone: (617) 375-7500