American Tower Corp. (AMT) today declared its fourth quarter of 2010 financial results, with significant top-line growth, attributable to the company’s global expansion strategy. Quarterly total revenue was more than $547.6 million, up 22.2% year over year, surpassing the Zacks Consensus Estimate of $537 million.
On a GAAP basis, fourth-quarter net income was $83.5 million or 21 cents per share compared with a net income of $64.4 million or 16 cents per share in the prior-year quarter. However, quarterly EPS of 21 cents was a penny shy of the Zacks Consensus Estimate of 22 cents.
Adjusted EBITDA in the fourth quarter of 2010 was $365.3 million, up 18.5% over the prior-year quarter. Adjusted EBITDA margin was 67% compared with 69% in the prior-year quarter.
Adjusted EBITDA growth was positively impacted by approximately 0.5% due to foreign currency exchange rate fluctuations and approximately 10.4% due to straight-line revenues and expense recognition. Excluding these items, core growth of adjusted EBITDA was 7.6%.
Gross margin was 75.7% in the reported quarter compared with 76% in the year-ago quarter. Selling, general & administrative expenditure was $65.4 million compared with $46.3 million in the year-ago quarter. Quarterly operating income was $203.4 million, up 15.3% year over year. In the fourth quarter of 2010, recurring free cash flow per share was 57 cents, up 3.6% year over year.
During the reported quarter, American Tower repurchased 1.5 million shares of its Class A common stock for a total consideration of approximately $74.6 million.
Cash Flow
During fiscal 2010, American Tower generated around $1,021 million of cash from operations compared with $842.1 million in fiscal 2009. Free cash flow (cash flow from operation less capital expenditure) in fiscal 2010 was $674.3 million compared with $591.9 million in fiscal 2009. Recurring cash flow upped 13.2% year over year to $918.6 million.
Balance Sheet
At the end of fiscal 2010, the company had $930.9 million of cash & cash equivalents and around $5,587.4 million of outstanding debt on its balance sheet compared with $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 fiscal 2010, debt-to-capitalization ratio was 0.61 compared with 0.56 at the end of fiscal 2009.
Domestic Rental and Management Segment
Quarterly revenue was $420.5 million, up 17% year over year. Gross margin surged 79.8% compared with 78% in the year-ago quarter. Quarterly operating profit was $315.2 million, up 18.3% year over year.
International Rental and Management Segment
Quarterly revenue was $115.8 million, up 53% year over year. Gross margin was 67.5% compared with 76.6% in the year-ago quarter.Quarterly operating profit was $64.3 million, up 30.4% year over year.
Network Development Services Segment
Quarterly revenue was $11.4 million, down 10.9% year over year. Gross margin was 39.4% compared with 44.7% in the year-ago quarter. Quarterly operating profit was $2.7 million, down 37.4% year over year.
Tower Count
As on December 31, 2010, AmericanTowerhad 35,074 communications towers of which 34,411 were for Wireless network, 440 for Broadcasting and the remaining 223 for DAS (Distributed Antenna System). Geographically, United States had 20,685 wireless towers, 241 broadcast towers and 220 DAS. Mexico had 2,633 wireless towers, 199 broadcast towers and 3 DAS. Moreover, Brazil had 1,700, Chile had 113, Colombia had 1,008, Peru had 475, and India had 7,797 wireless towers, respectively.
Future Financial Outlook by Management
For fiscal 2011, total revenue from the Rental & Management segment is expected to range between $2,200 million – $2,240 million. Income from continuing operations will be within the range of $330 million – $370 million. Adjusted EBITDA will be within the range of $1,490 million – $1,530 million. Cash flow from operating activities will be around $1,040 million – $1,090 million. Capital expenditures will be around $400 million – $450 million. Depreciation, amortization & accretion will be around $530 million – $545 million.
Recommendation
We maintain our long-term Neutral recommendation on American Tower. The company fiercely competes with Crown Castle International Inc. (CCI). Currently, it holds a short-term Zacks #4 Rank (Sell) on the stock. This was primarily attributable to the current valuation of the company, which moved up by more than 39% in the past one year.
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