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American Tower Corp. (AMT) today declared its third quarter of 2010 financial results, that outperforms the Zacks Consensus Estimates. On a GAAP basis, third quarter net income was $93.4 million or 23 cents per share compared with a net income of $67.4 million or 17 cents per share in the prior-year quarter. Quarterly EPS of 23 cents was well above the Zacks Consensus Estimate of 20 cents.

Higher revenues from the U.S., Latin America and Asia delivered solid results with a strong growth in both Adjusted EBITDA and Recurring Free Cash Flow.

Revenue

Total revenue of $513.3 million increased 15.6% year over year and was above the Zacks Consensus Estimate of $489 million. The solid top-line performance was driven by healthy growth of the company’s core Rental and Management business segment.

Margins

Adjusted EBITDA in the third quarter of 2010 was $350 million, up 15.1% over the prior-year quarter. Adjusted EBITDA margin was 68%. Adjusted EBITDA growth was positively impacted by approximately 0.5% due to foreign currency exchange rate fluctuations and approximately 8.9% due to straight-line revenues and expense recognition.

Gross margin was 76% in the same quarter compared to 75.6% in the year-ago quarter. Selling, general & administrative expenditure was $57.3 million compared to $47.9 million in the year-ago quarter.

Share Repurchase

During the reported quarter, American Tower repurchased 3.2 million shares of its Class A common stock for total consideration of approximately $149.8 million.

Balance Sheet

At the end of the third quarter of 2010, the company had $441.1 million of cash & cash equivalents and around $4,805 million of outstanding debt on its balance sheet compared to $257.1 million of cash & cash equivalents and $4,211.6 million of outstanding debt at the end of fiscal 2009. At the end of the third quarter of 2010, debt-to-capitalization ratio was 0.58 compared to 0.56 at the end of fiscal 2009.

Cash Flow

During the first nine months of 2010, American Tower generated $774.6 million of cash from operations compared to $649.4 million in the prior-year period. Free cash flow (cash flow from operation less capital expenditure) in the same period was $546.1 million compared to $467 million in the year-ago period. Recurring cash flow upped 11.1% year over year to $228.9 million.

Rental and Management Segment

Revenues of $499.8 million were up 16.1% year over year. Gross profit increased 16.7% over the prior-year quarter to $384.4 million.Segment revenue growth was positively impacted by approximately 0.8% due to foreign currency exchange rate fluctuations and approximately 5.7% due to straight-line revenues recognition.

Network Development Services Segment

Revenues of $13.5 million fell 0/6% year over year. Gross profit decreased 3.2% over the prior-year quarter to $5.9 million.

Tower Count

At the end of the third quarter of 2010, American Tower had total 33,319 communications towers of which 32,680 were for Wireless network, 433 for Broadcasting and the rest 206 for DAS (Distributed Antenna System). Regionally, United States had 20,771 of the total tower count; Mexico had 2,820 of the total tower count, Brazil 1,659, Chile 113, Colombia 225, and India 7,600.

Future Financial Outlook

For fiscal 2010, revenues from the Rental & Management segment are expected to range between $1,920 million - $1,930 million. Income from continuing operations will be within the range of $360 million - $370 million. Adjusted EBITDA will be within the range of $1,338 million - $1,348 million. Cash flow from operating activities will be around $1,000 million - $1,010 million. Capital expenditures will be around $300 million - $320 million.

Recommendation

We maintain our long-term Neutral recommendation for American Tower. Currently it is a short-term Zacks #3 Rank (Hold) stock.

Disclosure: No position

Source: American Tower Tops 3Q Estimates and Raises Outlook