American Tower Corporation Reports Fourth Quarter and Full Year 2019 Financial Results

CONSOLIDATED HIGHLIGHTS

Fourth Quarter 2019

  • Total revenue decreased 9.8% to $1,924 million
  • Property revenue decreased 9.3% to $1,908 million
  • Net income increased 94.5% to $569 million
  • Adjusted EBITDA decreased 14.6% to $1,217 million
  • Consolidated AFFO decreased 19.5% to $859 million

Full Year 2019

  • Total revenue increased 1.9% to $7,580 million
  • Property revenue increased 2.1% to $7,465 million
  • Net income increased 51.5% to $1,917 million
  • Adjusted EBITDA increased 1.7% to $4,745 million
  • Consolidated AFFO decreased 0.5% to $3,521 million

Q4 2019 and full year 2019 growth rates were impacted by the nonrecurrence of the Company’s settlement with Tata Teleservices Limited and related entities (collectively, “Tata”), which resulted in a net positive impact of $334 million to property revenue, $327 million to Adjusted EBITDA and $313 million to Consolidated AFFO in Q4 2018. The impact of the Tata settlement on net income is not provided, as the impact on all components of the net income measure cannot be reasonably calculated.

BOSTON–(BUSINESS WIRE)–American Tower Corporation (NYSE: AMT) today reported financial results for the quarter and year ended December 31, 2019.

Jim Taiclet, American Tower’s Chief Executive Officer, stated, “American Tower delivered another year of strong performance in 2019, including Organic Tenant Billings Growth of more than 7% in the U.S. We also added nearly 14,000 communications sites to our portfolio via high quality acquisitions in the U.S., Latin America, and Africa and the most substantial build-to-suit construction program in the Company’s history. Moreover, we again increased our dividend by 20% and simultaneously strengthened our investment-grade balance sheet with a number of refinancing transactions that reduced our cost of debt and extended maturities.

In 2020, we expect to make sustained progress in each of the key elements of our Stand and Deliver strategy to advance the Company’s vision of making wireless communication possible everywhere. By pursuing a broader leadership role in the industry, innovating for a 5G future, driving efficiency both internally and for our tenants, and thoughtfully growing our asset base, we are confident in our ability to continue to deliver strong cash flow growth while expanding return on invested capital going forward.”

CONSOLIDATED OPERATING RESULTS OVERVIEW

American Tower generated the following operating results for the quarter and year ended December 31, 2019 (all comparative information is presented against the quarter and year ended December 31, 2018, respectively).

($ in millions, except per share amounts.)

 

Q4 2019(1)

 

Growth

Rate(1)

 

FY 2019(1)

 

Growth

Rate(1)

Total revenue

 

$

1,924

 

 

(9.8

)%

 

$

7,580

 

 

1.9

%

Total property revenue

 

$

1,908

 

 

(9.3

)%

 

$

7,465

 

 

2.1

%

Total Tenant Billings Growth

 

$

88

 

 

6.2

%

 

$

350

 

 

6.1

%

Organic Tenant Billings Growth

 

$

72

 

 

5.1

%

 

$

223

 

 

3.9

%

Property Gross Margin

 

$

1,366

 

 

(13.2

)%

 

$

5,293

 

 

2.0

%

Property Gross Margin %

 

71.6

%

 

 

 

70.9

%

 

 

Net income

 

$

569

 

 

94.5

%

 

$

1,917

 

 

51.5

%

Net income attributable to AMT common stockholders

 

$

563

 

 

102.7

%

 

$

1,888

 

 

53.9

%

Net income attributable to AMT common stockholders per diluted share

 

$

1.26

 

 

103.2

%

 

$

4.24

 

 

53.1

%

Adjusted EBITDA

 

$

1,217

 

 

(14.6

)%

 

$

4,745

 

 

1.7

%

Adjusted EBITDA Margin %

 

63.3

%

 

 

 

62.6

%

 

 

 

 

 

 

 

 

 

 

 

Nareit Funds From Operations (FFO) attributable to AMT common stockholders

 

$

994

 

 

(0.8

)%

 

$

3,492

 

 

8.8

%

Consolidated AFFO

 

$

859

 

 

(19.5

)%

 

$

3,521

 

 

(0.5

)%

Consolidated AFFO per Share

 

$

1.93

 

 

(19.6

)%

 

$

7.90

 

 

(1.1

)%

AFFO attributable to AMT common stockholders

 

$

870

 

 

(0.8

)%

 

$

3,442

 

 

7.9

%

AFFO attributable to AMT common stockholders per Share

 

$

1.95

 

 

(1.0

)%

 

$

7.73

 

 

7.4

%

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

994

 

 

(21.3

)%

 

$

3,753

 

 

0.1

%

Less: total cash capital expenditures(2)

 

$

275

 

 

(11.6

)%

 

$

1,030

 

 

9.9

%

Free Cash Flow

 

$

719

 

 

(24.5

)%

 

$

2,723

 

 

(3.1

)%

_________

(1)

 

Inclusive of the negative impacts of Indian Carrier Consolidation-Driven Churn (“ICCC”) and the nonrecurrence of the Tata settlement. For reconciliations of these impacts on key metrics, please see tables below.

(2)

 

Q4 2019 and FY 2019 cash capital expenditures include $10.0 million and $47.6 million, respectively, of finance lease and perpetual land easement payments reported in cash flows from financing activities in the condensed consolidated statements of cash flows.

The Company’s results and growth rates for the fourth quarter and full year 2019 were impacted by ICCC and the nonrecurrence of the Tata settlement, which also resulted in an overall reduction in Indian contracted tenant revenue. The Company is disclosing the additional financial metrics below to provide insight into the underlying long-term trends across the Company’s business excluding these impacts. The impacts of ICCC and the Q4 2018 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 2019 Results

 

Q4 2018 Results

 

Growth Rates vs. Prior Year

 

As Reported

Impact of

ICCC(1)

Normalized

 

As Reported

Impact of

Tata

Settlement(2)

Impact of

ICCC(1)

Normalized

 

As Reported

Impact of

ICCC and

Tata

Settlement(1)(2)

Normalized

Total property revenue

$

1,908

 

$

93

 

$

2,001

 

 

$

2,103

 

$

(334

)

$

79

 

$

1,849

 

 

(9.3

)%

17.5

%

8.2

%

Adjusted EBITDA

1,217

 

65

 

1,282

 

 

1,425

 

(327

)

54

 

1,152

 

 

(14.6

)%

25.9

%

11.3

%

Consolidated AFFO

859

 

52

 

911

 

 

1,067

 

(313

)

43

 

796

 

 

(19.5

)%

33.9

%

14.4

%

Consolidated AFFO per Share

$

1.93

 

$

0.12

 

$

2.05

 

 

$

2.40

 

$

(0.71

)

$

0.10

 

$

1.79

 

 

(19.6

)%

34.1

%

14.5

%

Consolidated Organic Tenant Billings

72

 

24

 

96

 

 

52

 

 

58

 

111

 

 

5.1

%

1.4

%

6.5

%

International Organic Tenant Billings

15

 

24

 

38

 

 

(16

)

 

58

 

42

 

 

2.9

%

3.9

%

6.8

%

FY 2019 Results

 

FY 2018 Results

 

Growth Rates vs. Prior Year

 

As Reported

Impact of

ICCC(1)

Normalized

 

As Reported

Impact of

Tata

Settlement(2)

Impact of

ICCC(1)

Normalized

 

As Reported

Impact of

ICCC and

Tata Settlement(1)(2)

Normalized

Total property revenue

$

7,465

 

$

361

 

$

7,826

 

 

$

7,315

 

$

(334

)

$

189

 

$

7,170

 

 

2.1

%

7.1

%

9.1

%

Adjusted EBITDA

4,745

 

248

 

4,992

 

 

4,667

 

(327

)

120

 

4,459

 

 

1.7

%

10.3

%

11.9

%

Consolidated AFFO

3,521

 

198

 

3,719

 

 

3,539

 

(313

)

96

 

3,322

 

 

(0.5

)%

12.5

%

12.0

%

Consolidated AFFO per Share

$

7.90

 

$

0.44

 

$

8.34

 

 

$

7.99

 

$

(0.71

)

$

0.22

 

$

7.50

 

 

(1.1

)%

12.3

%

11.2

%

Consolidated Organic Tenant Billings

223

 

210

 

433

 

 

275

 

 

128

 

403

 

 

3.9

%

3.5

%

7.4

%

International Organic Tenant Billings

(39

)

210

 

171

 

 

32

 

 

128

 

160

 

 

(1.9

)%

9.6

%

7.7

%

_______________

(1)

 

Reflects the cumulative impacts of ICCC since 2017. 

(2) 

 

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 year ended December 31, 2019, the Company declared the following regular cash distributions to its common stockholders:

Common Stock Distributions

 

Q4 2019(1)

 

FY 2019

Distributions per share

 

$

1.01

 

 

$

3.78

 

Aggregate amount (in millions)

 

$

447

 

 

$

1,673

 

Year-over-year per share growth

 

20.2

%

 

20.0

%

_______________

(1)

 

The distribution declared on December 11, 2019 was paid in the first quarter of 2020 to stockholders of record as of the close of business on December 27, 2019.

Stock Repurchase Program – The Company repurchased a total of 0.1 million shares of its common stock for approximately $20 million during Q4 2019 and for the full year 2019. As of December 31, 2019, there was approximately $2.1 billion remaining under the Company’s existing stock repurchase programs.

Capital Expenditures During the fourth quarter of 2019, total capital expenditures were approximately $275 million, of which $54 million was for non-discretionary capital improvements and corporate capital expenditures. For the full year 2019, total capital expenditures were approximately $1.0 billion, of which $171 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 2019, the Company spent approximately $2.6 billion, including the assumption of existing debt, to acquire 8,218 communications sites. This included approximately 5,800 sites in Africa through the acquisition of Eaton Towers Holdings Limited (the “Eaton Towers Acquisition”) and approximately 2,400 sites in Chile and Peru from Entel PCS Telecomunicaciones S.A. and Entel Peru S.A. (“Entel”). For the full year 2019, the Company spent approximately $3.3 billion, including the assumption of existing debt, to acquire nearly 9,200 communications sites and other communications infrastructure assets.

In addition, on November 28, 2019, the Company entered into definitive agreements with Orange S.A. for the acquisition of up to approximately 2,000 communications sites in France over a period of up to five years. This transaction is expected to close in multiple tranches beginning in the first half of 2020 for total consideration in the range of approximately 500 million to 600 million Euros (approximately $550.5 million to $660.5 million at the date of signing) to be paid over the five-year term.

Other Events – In April 2019, Tata Teleservices Limited (“Tata Teleservices”) 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 redemption of the remaining put shares for total consideration of approximately INR 24.8 billion (approximately $348 million at the December 31, 2019 exchange rate) is now expected to occur in the first half 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, in connection with the closing of the Eaton Towers Acquisition, the Company entered into an agreement with its joint venture partner, MTN Group Limited (“MTN”), to acquire MTN’s noncontrolling interests in each of the Company’s joint ventures in Ghana and Uganda for total consideration of approximately $523 million. The transaction is expected to close in the first quarter of 2020, subject to regulatory approval, and is expected to result in a one-time negative impact of approximately $65 million to the Company’s 2020 Consolidated AFFO from the payment of previously deferred cash interest related to joint venture debt.

LEVERAGE AND FINANCING OVERVIEW

Leverage For the quarter ended December 31, 2019, the Company’s Net Leverage Ratio was 4.6x net debt (total debt less cash and cash equivalents) to fourth quarter 2019 annualized Adjusted EBITDA.

Calculation of Net Leverage Ratio

($ in millions, totals may not add due to rounding)

 

As of December 31, 2019

 

Total debt

 

$

24,055

 

Less: Cash and cash equivalents

 

1,501

 

Net Debt

 

22,554

 

Divided By: Fourth quarter annualized Adjusted EBITDA(1)

 

4,870

 

Net Leverage Ratio

 

4.6x

 

_______________

(1) 

 

Q4 2019 Adjusted EBITDA multiplied by four.

Liquidity As of December 31, 2019, the Company had $4.4 billion of total liquidity, consisting of $1.5 billion in cash and cash equivalents plus the ability to borrow an aggregate of $2.9 billion under its revolving credit facilities, net of any outstanding letters of credit.

On October 3, 2019, the Company issued $750.0 million aggregate principal amount of 2.750% senior unsecured notes due 2027 and $600.0 million aggregate principal amount of 3.700% senior unsecured notes due 2049. The Company used the net proceeds to repay existing indebtedness under its 2019 multicurrency credit facility and its 2019 364-day term loan.

On December 20, 2019, the Company entered into amendments and restatements to its revolving credit facilities and term loan, which, among other things, increased the commitments under the 2019 multicurrency credit facility to $3.0 billion and the 2019 credit facility to $2.25 billion.

Subsequent to the end of 2019, on January 10, 2020, the Company issued $750.0 million aggregate principal amount of 2.400% senior unsecured notes due 2025 and $750.0 million aggregate principal amount of 2.900% senior unsecured notes due 2030. The Company used the net proceeds to repay existing indebtedness under its 2019 credit facility.

Additionally, on January 15, 2020, the Company completed the redemption of all of its outstanding 5.900% senior unsecured notes due 2021 for a total aggregate redemption price of $539.6 million, including $6.1 million in accrued and unpaid interest. Upon completion of the redemption, none of the 5.900% notes remained outstanding.

On February 13, 2020, the Company entered into a loan agreement for a new $750.0 million unsecured term loan. The Company used the net proceeds of this new term loan, together with borrowings under its 2019 credit facility and cash on hand, to repay outstanding indebtedness under its 2019 364-day term loan.

FULL YEAR 2020 OUTLOOK

The following full year 2020 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 25, 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.

The Company’s outlook is based on the following average foreign currency exchange rates to 1.00 U.S. Dollar for February 25, 2020 through December 31, 2020: (a) 70.00 Argentinean Pesos; (b) 4.25 Brazilian Reais; (c) 785 Chilean Pesos; (d) 3,390 Colombian Pesos; (e) 0.91 Euros; (f) 5.70 Ghanaian Cedis; (g) 71.50 Indian Rupees; (h) 102 Kenyan Shillings; (i) 19.00 Mexican Pesos; (j) 360 Nigerian Naira; (k) 6,530 Paraguayan Guarani; (l) 3.35 Peruvian Soles; (m) 15.00 South African Rand; (n) 3,700 Ugandan Shillings; and (o) 600 West African CFA Francs.

The Company’s outlook reflects estimated unfavorable impacts of foreign currency exchange rate fluctuations to property revenue, Adjusted EBITDA and Consolidated AFFO, of approximately $85 million, $44 million and $41 million, respectively, relative to the Company’s 2019 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 is not providing outlook projections adjusted for the impacts of ICCC in 2020, as the Company believes the carrier consolidation process in India is largely complete. Although the Company anticipates that its churn rate will move closer to historical levels over time, given the uncertainty created by the recent court ruling by the Indian Supreme Court regarding the definition of adjusted gross revenue, the churn rate is expected to remain elevated in the immediate term.

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

vs. Prior Year

Total property revenue(1)

$

7,975

 

to

$

8,125

 

 

7.8%

Net income

1,950

 

to

2,050

 

 

4.4%

Adjusted EBITDA

5,085

 

to

5,185

 

 

8.2%

Consolidated AFFO

3,740

 

to

3,840

 

 

7.6%

_______________

(1)

 

Includes U.S. property revenue of $4,385 million to $4,445 million and international property revenue of $3,590 million to $3,680 million, reflecting midpoint growth rates of 5.4% and 11.0%, respectively. The U.S. growth rate includes an estimated positive impact of nearly 1% associated with an increase in non-cash straight-line revenue recognition. The international growth rate includes an estimated negative impact of approximately 3% 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): ($ in millions, totals may not add due to rounding.)

U.S. Property

 

 

International

Property(2)

 

 

Total Property

 

International pass-through revenue

N/A

 

 

$

1,090

 

 

$

1,090

 

Straight-line revenue

185

 

 

30

 

 

215

 

_______________

(1)

 

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

(2)

 

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): (Totals may not add due to rounding.)

U.S. Property

 

 

International

Property(2)

 

 

Total Property

Organic Tenant Billings

~5%

 

 

~5-6%

 

 

>5%

New Site Tenant Billings

<0.5%

 

 

~13-14%

 

 

~5%

Total Tenant Billings Growth

~5-6%

 

 

~19%

 

 

~10%

_______________

(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, Africa, Europe and Asia segments.

Outlook for Capital Expenditures:

($ in millions, totals may not add due to rounding.)

 

 

 

Full Year 2020

Discretionary capital projects(1)

$

375

 

to

$

405

 

Ground lease purchases

175

 

to

185

 

Start-up capital projects

130

 

to

150

 

Redevelopment

260

 

to

280

 

Capital improvement

150

 

to

170

 

Corporate

10

 

10

 

Total

$

1,100

 

to

$

1,200

 

_______________

(1)

 

Includes the construction of 6,000 to 7,000 communications sites globally.

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

 

 

 

Full Year 2020

Net income

$

1,950

 

to

$

2,050

 

Interest expense

865

 

to

845

 

Depreciation, amortization and accretion

1,925

 

to

1,945

 

Income tax provision

175

 

to

185

 

Stock-based compensation expense

115

 

115

 

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

55

 

to

45

 

Adjusted EBITDA

$

5,085

 

to

$

5,185

 

 

Reconciliation of Outlook for Consolidated AFFO to Net income:

($ in millions, totals may not add due to rounding.)

 

 

 

Full Year 2020

Net income

$

1,950

 

to

$

2,050

 

Straight-line revenue

(215

)

(215

)

Straight-line expense

53

 

53

 

Depreciation, amortization and accretion

1,925

 

to

1,945

 

Stock-based compensation expense

115

 

115

 

Deferred portion of income tax

10

 

10

 

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

62

 

62

 

Capital improvement capital expenditures

(150

)

to

(170

)

Corporate capital expenditures

(10

)

(10

)

Consolidated AFFO

$

3,740

 

to

$

3,840

 

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 year ended December 31, 2019 and its 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: (844) 291-5491

International dial-in: (409) 207-6989

Passcode: 3012298

When available, a replay of the call can be accessed until 11:55 p.m. ET on March 10, 2020. The replay dial-in numbers are as follows:

U.S./Canada dial-in: (866) 207-1041

International dial-in: (402) 970-0847

Passcode: 7149782

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 180,000 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. The Company’s Non-GAAP and Defined Financial Measures may not be comparable to similarly titled measures used by other companies.

Revenue Components

In addition to reporting total revenue, the Company believes that providing transparency around the components of its revenue provides investors with insight into the indicators of the underlying demand for, and operating performance of, its real estate portfolio. Accordingly, the Company has provided disclosure of the following revenue components: (i) Tenant Billings, (ii) New Site Tenant Billings; (iii) Organic Tenant Billings; (iv) International pass-through revenue; (v) Straight-line revenue; (vi) Pre-paid amortization revenue; (vii) Foreign currency exchange impact; and (viii) Other revenue.

Tenant Billings: The majority of the Company’s revenue is generated from non-cancellable, long-term tenant leases.

Contacts

Igor Khislavsky

Vice President, Investor Relations

Telephone: (617) 375-7500

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