3q11 investor presentation
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8/3/2019 3Q11 Investor Presentation
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F rwar L kin tat m nt
“Safe Harbor” Statement under the Private Securities Litigation Reform
Act of 1995: This presentation contains forward‐looking statements
concerning our goals, beliefs, strategies, future operating results and
underlying assumptions. Actual results may differ materially from those
indicated by these forward‐looking statements as a result of various
important factors, including those described in Item 1A of our SEC Form
10‐Q
for
the
quarter
ended
September
30,
2011
under
the
caption
“Risk
” .
obligation to update the information contained in this presentation to
reflect subsequently occurring events or circumstances. Definitions are
measures are available on our website at www.americantower.com.
2
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A n a
•
• Sustainable Growth in Revenue, Profitability and Cash Flow
• Investing for
Future
Growth
• Financial Strength and Stability
• Summary
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Attri t f th T w r A t
Long‐Lived Assets Substantial Capacity for Additional Tenants
• Structures consist primarily of
galvanized steel
and
concrete
• Minimal annual capex is required to
• Approximately 2.2 tenants per site as of
September 2011 (2.7
in
the
U.S.)
• Accommodation of additional tenants
ma n a n our s es
• Historical average of $500 to $1,500
per site, for international and U.S.,
respectively
requ res e o no re eve opmen
capex
•
Redevelopment
capex in
2011
is
expected to be $55 million (1)
• Investment payback period is typically
less than a year
• Cost typically shared with tenant
4(1) As outlined in the Company’s Form 8‐K filed on November 1, 2011.
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R v n Charact ri tic (1)
• Typical contract terms include an initial term of 5‐10 years with multiple 5 year renewal
• Successful history
of
tenant
lease
renewals
and
extensions
• Avera e escalation in our domestic o erations of a roximatel 3.5% er ear,
escalations in our international operations are typically based on local inflation rates
Global Tenant Lease Renewal Schedule
0.9%6.7% 8.0% 7.2%
11.5%
2011 2012 2013 2014 2015
5(1) Characteristics as of the quarter ended September 30, 2011.
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Ex n Charact ri tic (1)
Land Lease: Other Major Expenses:
•Domestic attributes as of September 30, 2011:
• Over 26%
of
the
land
under
our
domestic
towers
was owned or operated under a capital lease
•
•Property Taxes
•Utilities
•Repairs and Maintenance .
• Average remaining term approximately 21 years
until final maturity
• In our
international
markets,
certain
expenses
such as ground rent are passed through to our
tenants
•Lack of near‐term lease expirations and successful
s ory
o
renew ng
groun
eases
Domestic Ground Lease Renewal Schedule
6(1) Characteristics as of the quarter ended September 30, 2011.
~1% <1% <1% ~1% ~1% ~1% ~1% ~1% ~2% ~2%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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Market Diversification
Fuels
On oin
Demand
Increased data adoption and use Spectrum auctions Growing subscriber
base
Future growth in tower demand
+ + =
International:
• Brazil: NII Holdings a top winner in
Domestic:
• Rising smartphone penetration, with
International:
• India: Rapidly growing wireless
Increased Data Spectrum Auctions Subscriber Base
• Mexico: Telefonica and NII
Holdings top winners in recent 3G
auctions
• Chile: nationwide 3G network
approximately 40% of service
revenues by year end 2012 (1)
• Carriers are focused on investment
in data
networks
,
expected to increase approximately
48% (1) between 2010 and 2012
• Ghana: Growing wireless market –
carriers focused
on
improving
the
build out expected over next few
years
• Colombia: expected future build
out of new mobile broadband
network
International:
• South Africa: carriers beginning to
invest in data networks; data as a
percent of service revenues is
qua ty an coverage o vo ce
networks
• Peru: spectrum auctions
expected
to occur in near future
• India: spectrum will be utilized to
continue the deployment of voice
expected to
be
almost
20%
by
year
end 2012 (1)
8
an n t a ata networ s
(1) Source: Wall Street Research.
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A n a
•
• Sustainable Growth in Revenue, Profitability and Cash Flow
• Investing for
Future
Growth
• Financial Strength and Stability
• Summary
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C n i t nt Gr wth
Adjusted EBITDA(1)
($ in millions)
Total Rental and Management Revenue($ in millions)
$1,603
,
$868
,
2006 2007 2008 2009 2010 3Q11A2006 2007 2008 2009 2010 3Q11A(2)(2)
Strong core performance and expanded international presence lead to continued growth in revenue and Adjusted EBITDA
11(1) Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com.
(2) Q3 2011 annualized. CAGR is based on compounded annual growth rate over a 4.75 year period.
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International Rental & Management
($ in millions)
Revenue Gross Margin(1) Operating Profit(1)
$99.5
$178.0
$113.2
$70.1
$57.2
.
79% Growth
79%
Core
Growth
61% Growth 60% Growth
3Q10 3Q11 3Q10 3Q11 3Q10 3Q11Pass‐Through
Revenue (1)
• Q3 2011 international performance highlights:• cqu re or constructe , s tes s nce t e eg nn ng o ; nc u ng , s tes ur ng
• As a result of new sites, pass‐through revenue increased 102% to $54 million
• 91% gross margin, and 84% gross margin conversion rate, excluding the impact of pass‐through
• Continuing to invest to scale and staff recently launched markets
13(1) Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com.
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A n a
•
• Sustainable Growth in Revenue, Profitability and Cash Flow
• Investing for
Future
Growth
• Financial Strength and Stability
• Summary
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Site Count(in thousands) • Development pipeline includes:
•
39.9
43.3
2.9
• Acquisition of property
interests• Construction of between
450‐650 sites durin 4 (1)
0.5
• Additional existing sites under contract:
•
~700 sites
in
Ghana
• ~
3Q11 In Outlook Additional Existing
Sites Under
Pro Forma
Tower Count
,
• ~80 existing sites in South
Africa
Focused on deploying our discretionary capital into investments that drive growth in Return on
16
(1) Based on Outlook, as referenced in the Form 8‐K filed with the SEC on November 1, 2011.
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Investments($ in millions)
Capital Expenditures 2011 Capital AllocationAs of September 30, 2011
$161
Capital
Expenditures$397
Stock
Repurchases$393
$96
3Q10 4Q10 1Q11 2Q11 3Q11
Capital Improvements & Corporate Redevelopment
Discretionary Land Purchases Discretionary Capital Projects
Acquisitions
$1,221
• 2011 Discretionary Investments:• Constructed 204 domestic sites and 946 international sites
• ncrease proper y n eres owners p un er our omes c s es o over , on a pro orma as s
• Acquired 135 domestic sites and 3,614 international sites
• Continue to gain traction on our shared generator program in the U.S.
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Deployed over $2.0 billion through our Capital Allocation Process YTD
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tr n Track R c r f Accr tiv Inv tm nt
$2,000
$2,500
Discretionary Investments($ in millions)
Return on Invested Capital(1) Recurring Free Cash Flow(1)
($ in millions)
8.5%
11.1%
$962
$500
$1,000
$1,500
$548
•
$‐
2006 2007 2008 2009 2010 2011
YTDCapital Expenditures Acquisitions
Stock Repurchases
2006 2007 2008 2009 2010 3Q11A 2006 2007 2008 2009 2010 3Q11A(2) (2) (3)
.
• The construction of ~4,300 sites, including ~1,100 in the US and ~3,200 in our international markets
• The acquisition of ~13,700 sites, including ~1,100 in the US and ~12,600 in our international markets
• Increased property ownership in the US to over 28%
• Repurchased ~92 million shares of our Class A common stock through our stock repurchase programs at an average
price of $40.16
Focused on deploying our discretionary capital into investments that drive growth in Return on
18
(1) Definitions are provided at the end of this presentation and reconciliations to GAAP measures can be found at www.americantower.com
(2) Q3 2011 metric annualized.
(3) CAGR is based on compounded annual growth rate over a 4.75 year period.
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A n a
• ower eas ng us ness o e an r vers o eman
• Sustainable Growth in Revenue, Profitability and Cash Flow
Generation
•
• Financial Strength and Stability
• Summary
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Balanc h t Pr nc
Pro Forma September 30, 2011($ in millions)
(1) (2)
$1,075
$1,000
$1,750
600$1,000
$700
$1,575
300
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Bank Debt Drawn Bank Debt Available Securitization Senior Notes
254 250 246
Interest Expense($ in millions)
4.3x4.7x
5.5x5.1x
Interest Coverage Ratio(3)
3.8x3.4x 3.5x 3.5x
Net Leverage Ratio(3)
20
(1) Pro forma for the Company's issuance of $500 million of 5.900% Senior Notes due 2021 in October 2011, and the receipt of net proceeds of approximately $495.2 million, $100.0 million of which has been
utilized
for
the
repayment
of
a
portion
of
the
Company’s
Senior
Unsecured
Revolving
Credit
Facility.
(2) Excludes approximately $288.0 million of other subsidiary debt, which is comprised primarily of capital leases and international subsidiary debt.
(3) Definitions are provided at the end of this presentation.
(4) Q3 2011 annualized.
2008 2009 2010 3Q11A 2008 2009 2010 3Q11A2008 2009 2010 3Q11A4 (4)4
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A n a
•
• Sustainable Growth in Revenue, Profitability and Cash Flow
• Investing for
Future
Growth
• Financial Strength and Stability
• Summary
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• Wireless industry continues to invest in substantial network development
• High visibility
to
drivers
of
revenue
and
profitability
for
2011
and
beyond
•
• Continued benefit from the strength of our free cash flow generation and
solid balance
sheet
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• Adjusted EBITDA: net income before income (loss) from discontinued operations, net, income from equity
, , , ‐
term obligations, interest expense, interest income, other operating expenses, depreciation, amortization
and accretion,
and
stock
‐based
compensation
expense.
• Core Growth: (Total rental and management revenue and Adjusted EBITDA) the increase or decrease,
,
corresponding financial results for the corresponding period in a prior year, in each case, excluding the
impact of straight‐line revenue and expense recognition, foreign currency exchange rate fluctuations and
material one‐time items.
, ‐
expense. International rental and management segment includes interest income, TV Azteca, net.
• Gross Margin Conversion Rate: the percentage that results from dividing the change in gross margin by
the change in revenue.
•
Operating
Profit:
Gross
margin
less
segment
selling,
general,
administrative
and
development
expense,
excluding stock‐based compensation expense.
• Pass‐through Revenues: In several of our international markets we pass through certain operating
expenses to our tenants and recognize revenues and off ‐setting expenses. In Latin America we pass
through ground rent expenses, and in India and South Africa, fuel costs, to our customers.
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• Recurring Free Cash Flow: Adjusted EBITDA before straight‐line revenue and expense plus interest income less
‐, ‐ ,
improvement and corporate capital expenditures).
• Recurring Free Cash Flow per Share: Recurring Free Cash Flow divided by the diluted weighted average common
shares outstanding.
• Return on Invested Capital: Last quarter annualized Adjusted EBITDA less improvement and corporate capital
expenditures divided by gross property, plant and equipment, goodwill and intangible assets.
• Straight‐line expenses: We calculate straight‐line ground rent expense for our ground leases based on the fixed
non‐cancellable
term
of
the
underlying
ground
lease
plus
all
periods,
if any,
for
which
failure
to
renew
the
lease
imposes an economic penalty to us such that renewal appears, at the inception of the lease, to be reasonably
assured. Certain of our tenant leases require us to exercise available renewal options pursuant to the underlying
ground lease, if the tenant exercises its renewal option. For towers with these types of tenant leases at the
inception of the ground lease, we calculate our straight‐line ground rent over the term of the ground lease,
including all renewal options required to fulfill the tenant lease obligation.
• Straight‐line
revenues: We
calculate
straight
‐line
rental
revenues
from
our
tenants
based
on
the
fixed
escalation
clauses present in non‐cancellable lease agreements, excluding those tied to the Consumer Price Index or other
inflation‐based indices, and other incentives present in lease agreements with our customers. We recognized
revenues on a straight‐line basis over the fixed, non‐cancellable terms of the applicable leases.
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Further Information Available
• For more information on the tower industry and American Tower, please
refer to our “Introduction to the Tower Industry and American Tower”
,
website
under
Presentations
and
Webcasts.
This
presentation
provides
an
overview of the tower business model and information on American
’
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