First Quarter Highlights SARASOTA, Fla., May 9
/PRNewswire-FirstCall/ -- Global Signal Inc. (NYSE: GSL) today
reported a net loss for the quarter ended March 31, 2006, of $35.1
million, or $0.51 per diluted common share, compared with net
income of $3.9 million, or $0.07 per diluted common share for the
first quarter of 2005. The net loss incurred during the first
quarter of 2006 is primarily due to a loss on the early retirement
of debt of $21.1 million associated with the issuance of our
February 2006 mortgage loan and associated debt repayments, as well
as increases in non-cash depreciation, amortization and accretion
incurred with respect to the Sprint sites acquired on May 26, 2005,
and the interest expense related to the financing of these sites.
For the quarter ended March 31, 2006, Adjusted EBITDA (as defined
below in Non-GAAP Measures - Adjusted EBITDA) increased to $58.9
million, or $0.84 per diluted common share, which represents a per
share increase of 42% from our Adjusted EBITDA per diluted common
share of $0.59 in the first quarter of 2005. On a sequential
quarter basis, Adjusted EBITDA per share increased 5% from our
Adjusted EBITDA in the fourth quarter of 2005 of $0.80 per diluted
common share. Adjusted FFO (as defined below in Non-GAAP measures -
Adjusted Funds From Operations) for the quarter ended March 31,
2006, increased to $33.3 million, or $0.47 per diluted common
share, which represents a per share increase of 18% from our
Adjusted FFO per diluted common share of $0.40 in the first quarter
of 2005. On a sequential basis, Adjusted FFO per share increased 9%
from our Adjusted FFO in the fourth quarter of 2005 of $0.43 per
diluted common share. For the quarter ended March 31, 2006, we paid
a dividend of $0.525 per share of common stock. This represented a
31% increase over the dividend per share we paid with respect to
the first quarter of 2005 of $0.40 per share of common stock and a
sequential increase of 5% over the dividend we paid for the fourth
quarter of 2005. We ended the quarter with $184.0 million of cash
and cash equivalents excluding $38.6 million of restricted cash
associated with our mortgage loans. Wesley R. Edens, Chairman,
commented, "We had a solid first quarter and a strong start to the
year. The tower industry fundamentals remain terrific as our
wireless customers continue to add new sites to their networks to
support their subscriber growth and new technologies. Our tower
assets are well positioned to capture a strong share of the new
leasing activity." Capital Market Activities On February 28, 2006,
we issued $1.55 billion of commercial pass through mortgage-backed
securities to provide fixed rate financing (the "February 2006
mortgage loan") for (i) the Sprint sites transaction, (ii) the
communications sites we have acquired since April 2005, and (iii)
to refinance our February 2004 mortgage loan. After repaying the
associated outstanding indebtedness of approximately $1.4 billion,
we received proceeds of approximately $145.5 million which was or
will be used to pay expenses related to the February 2006 mortgage
loan, to fund impositions and other reserves related to the
February 2006 mortgage loan, to pay prepayment penalties associated
with the February 2004 mortgage loan and to provide funds for
working capital and general corporate purposes, including potential
future acquisitions. In connection with the repayment of the Sprint
Bridge Loan, our acquisition credit facility and our February 2004
mortgage loan, we incurred a loss on the early extinguishment of
debt of $21.1 million in the first quarter of 2006. The February
2006 mortgage loan requires payments of interest at a weighted
average interest rate of approximately 5.7% until its repayment
date in February 2011. The effective interest rate on the February
2006 mortgage loan, including the benefit from terminating the 2005
interest rate swaps which qualified for hedge accounting and the
amortization of estimated deferred debt issuance costs, is
approximately 5.5%. Investment Activity During the first quarter of
2006, we invested $18.9 million to acquire 10 wireless
communications sites and to acquire fee interests or permanent or
long-term easements in the real estate under 109 of our towers
where we previously had a leasehold interest. Wireless
Communication Towers Global Signal's wireless communication sites
are principally located in major metropolitan areas and alongside
major highways throughout the United States. As of March 31, 2006,
we owned, leased or managed approximately 11,000 wireless
communications sites with over 73% of our towers located in the 100
largest U.S. BTAs. In addition, as of March 31, 2006, over 80% of
Global Signal's revenue was generated from wireless telephony
service providers and investment grade tenants. Business Strategy
Our business strategy is to grow our dividend, Adjusted EBITDA and
Adjusted FFO by: (1) organically adding additional tenants to our
existing towers; (2) acquiring towers with existing telephony
tenants in locations where we believe there are opportunities for
organic growth; and (3) financing these newly acquired towers on a
long-term basis using equity combined with low-cost fixed-rate debt
obtained through the issuance of mortgage-backed securities.
Conference Call Management will conduct a conference call on May 9,
2006, to review the financial results for the three months ended
March 31, 2006. The conference call is scheduled for 3:00 p.m.
Eastern time. All interested parties are welcome to participate in
the live call. The conference call can be accessed by dialing (866)
323-2841 (from within the U.S.) or (706) 643-3330 (from outside of
the U.S.) ten minutes prior to the scheduled start and referencing
the "Global Signal First Quarter Earnings Call." A webcast of the
conference call will be available to the public on a listen-only
basis on our website at http://www.gsignal.com/. Please allow extra
time prior to the call to visit the site and download the necessary
software required to listen to the Internet broadcast. A replay of
the web cast will be available for three months following the call.
For those who are not available to listen to the live call, a
replay will be available until 11:59 p.m. Eastern time on Tuesday,
May 16, 2006 by dialing (800) 642-1687 (from within the U.S.) or
(706) 645-9291 (from outside of the U.S.); please reference access
code "8455782". About Global Signal Global Signal owns, leases or
manages approximately 11,000 towers and other wireless
communications sites. Global Signal is organized and conducts its
operations to qualify as a real estate investment trust (REIT) for
federal income tax purposes. For more information on Global Signal
or to be added to our e-mail distribution list, please visit
http://www.gsignal.com/. Safe Harbor Certain items in this press
release and the associated earnings conference call may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and are subject to
various risks and uncertainties, including without limitation,
statements relating to our ability to deploy capital, close
accretive acquisitions, close dispositions of under-performing
sites, close acquisitions under letters of intent and purchase
agreements, anticipate, manage and address industry trends and
their effect on our business, the rate and timing of the deployment
of new wireless communications systems and equipment by our
customers, whether we successfully address other future
technological changes in the wireless industry, consolidation
amongst our customers and the impact it will have on our customers
leases at our sites and the timing of such impact, pay or grow
dividends, generate growth organically or through acquisitions,
secure financing and increase revenues, Adjusted EBITDA and/or
Adjusted FFO ("AFFO") and add telephony tenants; and statements
relating to the integration of, the timing of such integration and
final cost of the Sprint transaction (including fees and expenses),
the incremental costs of operating the Sprint sites and how the
proceeds of future financing will be used. Forward-looking
statements are generally identifiable by use of forward-looking
terminology such as "may," "will," "should," "potential," "intend,"
"expect," "endeavor," "seek," "anticipate," "estimate,"
"overestimate," "underestimate," "believe," "could," "would,"
"project," "predict," "continue" or other similar words or
expressions. Forward-looking statements are based on certain
assumptions or estimates, discuss future expectations, describe
future plans and strategies, contain projections of results of
operations or of financial condition or state other forward-looking
information. Our ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Although we
believe that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, actual results and
performance could differ materially from those set forth in the
forward-looking statements. Factors which could have a material
adverse effect on our operations and future prospects or which
could cause events or circumstances to differ from the
forward-looking statements include, but are not limited to, failure
to successfully and efficiently integrate the Sprint sites into our
operations, difficulties in acquiring towers at attractive prices
or integrating acquisitions with our operations, a decrease in the
demand for our communications sites and our ability to attract
additional tenants, the economies, real estate markets and wireless
communications industries in the regions where our sites are
located, consolidation in the wireless industry and changes to the
regulations governing wireless services, the creditworthiness of
our tenants, customer concentration and the loss of one or more of
our major customers, the terms of our leases, integration of or
enhancements to new software systems, our ability to compete,
competing technologies, equipment and software developments, our
ability to modify our towers, our ability to obtain or refinance
credit facilities and mortgage loans on favorable terms, our
failure to comply with federal, state and local laws and
regulations and changes in the law, our failure to comply with
environmental laws, our ability to conduct our business
effectively, secure financing and generate revenues, the
termination of site management agreements, disasters and other
unforeseen events, the demonstrated or perceived negative health
effects from our towers or other equipment, our ability to qualify
as a REIT, REIT distributions requirements and the stock ownership
limit imposed by the Internal Revenue Code for REITs and other
risks detailed from time to time in Global Signal's SEC reports
including its Form 10-K for 2005 filed on March 16, 2006 and other
filings with the SEC. When considering forward-looking statements,
you should keep in mind the risk factors and other cautionary
statements in such SEC filings. Readers are cautioned not to place
undue reliance on any of these forward-looking statements, which
reflect our management's views as of the date of this press release
and/or the associated earnings conference call. The factors
discussed above and the other factors noted in our SEC filings
could cause our actual results to differ significantly from those
contained in any forward-looking statement. Although we believe
that the expectations reflected in the forward- looking statements
are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Such forward looking
statements speak only as of the date they are made, and we
expressly disclaim any obligation to release publicly any updates
or revisions to any forward-looking statements contained herein to
reflect any change in our expectations with regard thereto or
change in events, conditions or circumstances on which any
statement is based. GLOBAL SIGNAL INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per
share data) Three Months Ended March 31, 2006 2005 Revenues
$120,922 $53,798 Direct site operating expenses (excluding
depreciation, amortization and accretion) 53,202 15,823 Gross
margin 67,720 37,975 Other expenses: Selling, general and
administrative (including $(10) and $318 of non-cash stock-based
compensation (income) expense, respectively) 11,100 6,756 Sprint
sites integration costs 254 - State franchise, excise and minimum
taxes 525 174 Depreciation, amortization and accretion 44,270
17,389 56,149 24,319 Operating income 11,571 13,656 Interest
expense, net 24,647 10,201 Gain on derivative instruments (176) -
Loss on early extinguishment of debt 21,102 - Other income 45 (103)
Income (loss) from continuing operations before income tax benefit
(expense) (34,047) 3,558 Income tax benefit (expense) (37) 525
Income (loss) from continuing operations (34,084) 4,083 Income
(loss) from discontinued operations (503) (169) Income (loss)
before gain (loss) on sale of properties (34,587) 3,914 Gain (loss)
on sale of properties (499) (18) Net income (loss) $(35,086) $3,896
Basic income (loss) per common share: Income (loss) from continuing
operations $(0.49) $0.08 Loss from discontinued operations (0.01)
(0.01) Loss on sale of properties (0.01) - Net income (loss)
$(0.51) $0.07 Diluted income (loss) per common share: Income (loss)
from continuing operations $(0.49) $0.08 Loss from discontinued
operations (0.01) (0.01) Loss on sale of properties (0.01) - Net
income (loss) $(0.51) $0.07 Dividends declared per common share
$0.525 $0.400 Weighted average number of common shares outstanding:
Basic 69,378 52,023 Diluted 69,378 53,935 GLOBAL SIGNAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share
data) March 31, December 31, 2006 2005 Assets (unaudited) Current
assets Cash and cash equivalents $183,992 $47,793 Accounts
receivable, net 2,689 2,360 Other current assets 37,932 59,539
Total current assets 224,613 109,692 Long-term assets Cash and cash
equivalents-restricted 38,607 20,232 Fixed assets, intangibles and
other assets 2,143,421 2,158,888 Total long-term assets 2,182,028
2,179,120 Total assets $2,406,641 $2,288,812 Liabilities and
Stockholders' Equity Liabilities Current liabilities $115,141
$98,176 Current portion of long-term debt 576 538 Long-term debt,
net of current portion 1,844,067 1,693,058 Other long-term
liabilities 51,102 43,851 Total liabilities 2,010,886 1,835,623
Stockholders' equity 395,755 453,189 Total liabilities and
stockholders' equity $2,406,641 $2,288,812 Non-GAAP Financial
Measures Adjusted EBITDA We define Adjusted EBITDA as net income
(loss) before interest, income tax benefit (expense), depreciation,
amortization and accretion, gain or loss on early extinguishment of
debt, non-cash stock based compensation expense, Sprint integration
costs, straight-line revenues, straight-line rent expense, gain or
loss on sale of properties, gain or loss on derivative instruments
and asset impairment charges. Adjusted EBITDA is not a measure of
performance calculated in accordance with accounting principles
generally accepted in the United States, or "GAAP." We use Adjusted
EBITDA as a measure of operating performance. Adjusted EBITDA
should not be considered in isolation or as a substitute for
operating income, net income or loss, cash flows provided by
operating, investing and financing activities or other income
statement or cash flow statement data prepared in accordance with
GAAP. We believe Adjusted EBITDA is useful to an investor in
evaluating our operating performance because: - one of the key
elements of our business strategy is to grow adjusted EBITDA; - it
is one of the primary measures used by our management to evaluate
the economic productivity of our operations, including the
efficiency of our employees and the profitability associated with
their performance, the realization of contract revenues under our
tenant leases, our ability to obtain and maintain our customers and
our ability to operate our leasing business effectively; - it is
widely used in the wireless tower industry to measure operating
performance without regard to items such as depreciation and
amortization, which can vary depending upon accounting methods and
the book value of assets; and - we believe it helps investors
meaningfully evaluate and compare the results of our operations
from period to period by removing the impact of our capital
structure (primarily interest charges from our outstanding debt)
and asset base (primarily depreciation and amortization) from our
operating results. Our management uses Adjusted EBITDA: - in
presentations to our board of directors to enable it to have the
same measurement of operating performance used by management; - for
planning purposes, including the preparation of our annual
operating budget; - as a valuation measure in strategic analyses in
connection with the purchase and sale of assets; - with respect to
compliance with our revolving credit agreement, we are required to
maintain certain financial ratios based on Consolidated EBITDA,
which is equivalent to Adjusted EBITDA except that Consolidated
EBITDA, (i) annualizes the Adjusted EBITDA contribution from newly
acquired towers until such towers have been owned for twelve
months, (ii) excludes gains or losses on foreign currency exchange
and certain other non-cash charges, and (iii) includes Sprint
integration costs; we expect any future credit facilities we obtain
to contain similar financial ratios based on Consolidated EBITDA;
and - as a measurement of operating performance because it assists
us in comparing our operating performance on a consistent basis as
it removes the impact of our capital structure (primarily interest
charges from our outstanding debt) and asset base (primarily
depreciation and amortization) from our operating results. There
are material limitations to using a measure such as Adjusted
EBITDA, including the difficulty associated with comparing results
among more than one company and the inability to analyze certain
significant items, including depreciation, amortization and
interest expense, that directly affect our net income or loss. We
compensate for these limitations by considering the economic effect
of the excluded expense items independently as well as in
connection with our analysis of net income. Adjusted EBITDA should
be considered in addition to, but not as a substitute for, other
measures of financial performance reported in accordance with GAAP.
The table below shows Adjusted EBITDA for the three months ended
March 31, 2006 and 2005: Three Months Ended March 31 2006 2005 (in
thousands) Net income (loss) $(35,086) $3,896 Depreciation,
amortization and accretion (1) 44,463 17,558 Interest, net 24,647
10,201 Sprint sites integration costs 254 - Straight-line revenues
(4,294) (867) Straight-line rent expense 7,124 1,062 Income tax
expense (benefit) 37 (525) Loss on early extinguishment of debt
21,102 - Non-cash stock based compensation expense (10) 318 (Gain)
loss on sale of properties (2) 733 24 (Gain) loss on derivative
instruments (176) - Impairment of assets 124 - Adjusted EBITDA (3)
$58,918 $31,667 (1) Depreciation, amortization and accretion
includes $44.3 million and $17.4 million for the quarters ended
March 31, 2006 and 2005, respectively, related to continuing
operations; and $.2 million and $.2 million for the quarters ended
March 31, 2006 and 2005, respectively, related to discontinued
operations. (2) (Gain) loss on sale of properties includes $.5
million and $.0 million for the quarters ended March 31, 2006 and
2005, respectively, related to continuing operations; and $.2
million and $.0 million for the quarters ended March 31, 2006 and
2005, respectively, related to discontinued operations. (3) Diluted
shares used in the calculation of Adjusted EBITDA per share are
70,530 for the quarter ended March 31, 2006 and 53,935 for the
quarters ended March 31, 2005, respectively. Adjusted Funds From
Operations We believe Adjusted Funds From Operations, or AFFO, is
an appropriate measure of the performance of REITs because it
provides investors with an understanding of our ability to incur
and service debt and make capital expenditures. AFFO, for our
purposes, represents net income (computed in accordance with
generally accepted accounting principles or GAAP), excluding
depreciation, amortization and accretion on real estate assets;
gain or loss on early extinguishment of debt, non-cash stock based
compensation expense, Sprint sites integration costs, straight-line
revenues, straight-line rent expense, gain or loss on sale of
properties, gain or loss on derivative instruments and asset
impairment charges. AFFO does not represent cash generated from
operating activities in accordance with GAAP and therefore should
not be considered an alternative to net income as an indicator of
our operating performance or as an alternative to cash flow
provided by operations as a measure of liquidity and is not
necessarily indicative of funds available to fund our cash needs
including our ability to pay dividends. In addition, AFFO may not
be comparable to similarly titled measurements employed by other
companies. Our management uses AFFO: - in management reports given
to our board of directors; - to provide a measure of our REIT
operating performance that can be compared to other companies using
AFFO; and - as an important measure of operating performance.
Growing AFFO on a per share basis is a key element of our growth
strategy and our management team's focus. Adjusted Funds From
Operations is calculated as follows for the three months ended
March 31, 2006 and 2005: Three Months Ended March 31, 2006 2005 (in
thousands) Net income (loss) $(35,086) $3,896 Real estate
depreciation, amortization and accretion (1) 43,517 17,134 Sprint
sites integration costs 254 - Straight-line revenues (4,294) (867)
Straight-line rent expense 7,124 1,062 Loss on early extinguishment
of debt 21,102 - Non-cash stock based compensation expense (10) 318
(Gain) loss on sale of properties (2) 733 24 (Gain) loss on
derivative instruments (176) - Impairment of assets 124 - Adjusted
Funds From Operations (3) $33,288 $21,567 (1) Real estate
depreciation, amortization and accretion includes $43.3 million and
$16.9 million for the quarters ended March 31, 2006 and 2005,
respectively, related to continuing operations; and $.2 million and
$.2 million for the quarters ended March 31, 2006 and 2005,
respectively, related to discontinued operations. (2) (Gain) loss
on sale of properties includes $.5 million and $.0 million for the
quarters ended March 31, 2006 and 2005, respectively, related to
continuing operations; and $.2 million and $.0 million for the
quarters ended March 31, 2006 and 2005, respectively, related to
discontinued operations. (3) Diluted shares used in the calculation
of Adjusted EBITDA per share are 70,530 for the quarter ended March
31, 2006 and 53,935 for the quarters ended March 31, 2005.
Supplemental Unaudited Financial Information For the three months
ended March 31, 2006, and 2005, our revenue mix for the primary
technology categories was as follows: Revenue Percentage by Tenant
Technology Type Percent of Revenues for the Three Months Ended
March 31, 2006 March 31, 2005 Technology Type Telephony 79.7% 52.7%
Mobile radio 9.1 20.5 Paging 6.0 17.0 Broadcast 3.4 6.3 Wireless
data and other 1.8 3.5 Total 100.0% 100.0% Capital expenditures,
excluding acquisitions of towers and other communications sites,
for the three months ended March 31, 2006 and 2005, were as
follows: Capital Expenditures Three Months Ended March 31, 2006
2005 (in thousands) Maintenance $394 $1,015 EBITDA enhancing (1)
4,921 1,305 Corporate 309 857 Total capital expenditures $5,624
$3,177 (1) EBITDA enhancing capital expenditures generally
represent tower improvements to accommodate additional tenants or
equipment, as well as the conversion of lit sites to satellite
monitoring to reduce operating costs. Our 2006 communication sites
portfolio activity was as follows: Tower Portfolio Activity No. of
Communication Sites Owned Managed Total As of January 1, 2006
10,267 694 10,961 Acquisitions 9 1 10 Dispositions,
reclassifications and transfers to discontinued operations (4) (15)
(19) As of March 31, 2006 (1) 10,272 680 10,952 (1) Included in
continuing operations. DATASOURCE: Global Signal Inc. CONTACT:
Steven G. Osgood, Chief Financial Officer, Global Signal Inc.,
+1-941-308-3599 Web site: http://www.gsignal.com/
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