American Tower Delivers

American Tower Corp. (AMT - Analyst Report) today declared its third quarter results. Total revenues of $444.1 million marked an 8.5% year-over-year improvement. This was also better than the Zacks Consensus Estimate of $430 million. Primary reason for the solid top-line performance was the healthy growth of the company’s core Rental and Management business segment. On a GAAP basis, third-quarter net income was $67.4 million or 17 cents per share compared to a net income of $60.5 million or 15 cents per share in the prior-year quarter. Quarterly EPS of 17 cents was in line with the Zacks Consensus Estimate.
 
Adjusted EBITDA in the third quarter was $304.2 million, up 9.6% over the prior-year quarter. Quarterly adjusted EBITDA margin was 68%. Gross margin was 75.5% in the same quarter compared to 74.6% in the year-ago quarter. Selling, general & administrative expenditure was $47.9 million compared to $44.7 million in the year-ago quarter. At the end of the reported quarter, the company had $229.7 million of cash & cash equivalent and $4,186.8 million of outstanding debt compared to $74.3 million of cash & cash equivalent and $4,430.4 million of outstanding debt at the end of the prior-year quarter.
 
During the third quarter, American Tower generated $240 million of cash, compared to $227.2 million in the prior-year quarter. Quarterly free cash flow (cash flow from operation less capital expenditure) was $171.5 million, compared to $159.3 million in the year-ago quarter. The company is progressing well with healthy free cash flow. With the tower industry moving forward, operating cash flow is likely to accelerate. This is reflected in management’s 11% year-over-year growth projection for 2009.
 
During the third quarter, American Tower completed the construction of 267 communications sites and purchased 74 communications sites. Subsequent to the end of the quarter, the company acquired additional 326 communications sites in India. During the same quarter, American Tower repurchased a total of 3.6 million shares of its Class A common stock for total consideration of approximately $117.6 million.
 
Rental and Management Segment
 
Quarterly revenues of $430.5 million recorded an 9.2% year-over-year improvement. Gross profit increased 9.4% over prior-year quarter to $333 million.
 
Network Development Services Segment
 
Quarterly revenue of $13.6 million was down 8.7% year over year. Gross profit increased 29.8% over prior-year quarter to $6.1 million.
 
Outlook
 
American Tower reiterated its fiscal 2009 guidance. Revenues from the Rental & Management segment are expected to range between $1,640 million and $1,665 million. Gross margin for this segment is projected at about $1,277 million - $1,297 million. Revenues for the Network Development & Services segment are estimated in the range of $35 million - $50 million with a projected gross margin of $15 million - $21 million. American Tower continues to expect adjusted EBITDA of $1,161 million - $1,185 million. Income from continuing operations is projected in the range of $235 million - $247 million with cash flow from operations of $838 million - $878 million. The company revised its capital expenditure guidance to range between $220 million and $255 million.