LMRK - Earnings call transcript Q1 2018 | Landmark Infrastructure Partners LP

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Operator

Good day, ladies and gentlemen, and welcome to the Landmark Infrastructure Partners’ First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Marcelo Choi, Vice President of Investor Relations. begin. may you Sir,

Marcelo Choi

statements, business, remind which good call Partners’ Financial uncertainties all like Doyle, in subject Today, First of operating and Executive Chief presentation. Officer. of share and your will materially also I differ to following are include like questions we welcome number Tim Landmark today George an our the our overview periods future financial Infrastructure Quarter risks forward-looking on and that we morning. you, will to take the participants could We’d certain Presenting current to are our to results A and you will expectations. comments Officer; and would today to from cause uncertainties. Thank Earnings actual and Chief Call. Brazy, factors

a you encourage documents file risks, with complete the release to read these discussion and For partnerships’ earnings on we SEC. of the

and EBITDA, Tim. with refer Additionally, earnings to may non-GAAP EBITDA And for to the refer call. release turn most we flows definition call such and the the of their GAAP public comparable non-GAAP as during measures reconciliations I’ll to these Please filings measures. the adjusted distributable that, and over measures with cash

Tim Brazy

partnership. of both our The our quarter another target In Marcelo, of initiatives, to execute year-over-year, to growth the high-quality our quarter going an cash including results other in thanks all we and and months last we’re increasing and the continuing core our predictable and very you drive the to much. markets Today, strategy had first acquisition first our and partnership the their and at portfolio. markets, financial with the XX% infrastructure at results profile sponsor driven the increasing operating by developments activities, acquisitions consistent, results. we’re the our stability assets financing completed give quarterly discuss operating on Landmark revenue strong flows our quarter, in update our Rental XX opportunities strong our and of grew and on continued Dividend.

since expected wireless escalators busy annual are led comprised $X announced With rents. quarter XXX outdoor generation we’ve financing, of financing in Our to asset portfolio lease very of the assets. million X and advertising renewable has and Year-to-date, we’re to approximately March public and million. contribute closed of million the power XX, low Those contractual transaction regard offering stable early activity And XXXX, XX previously assets communication, in XXX in and very year-to-date, acquisitions the We issuing that assets April, the by growth the financial net $XX consideration by of by by organic performed for we proceeds C revolving had from a partnerships’ provide churn $XX also driven Series experience. of partnership million our for approximately our flexibility balance will continued through initial acquired which units, approximately we’ve raised total facility. the reducing credit ROFO well preferred $XX.X mid-January.

assets remains of strong. year-over-year, the acquisition quarter XX% increased activity Turning first very volume increased pipeline to signed year-over-year. acquisitions our and contract the XX% Closed LMRK’s sponsor. in and

see the remains for very drive cap to the attractively to assets LMRK acquire and these continued directly priced can as higher We opportunity for assets sponsor market accretion dropdown the that significant assets The that target currently, continue acquired. from strong, rate we partnership. or

under plus partnership even in the result sponsor, production to the completed a ROFO additional portfolio asset ROFO after grow, the assets assets continues our management was acquisition of the increasing the of mid-January. As at XXX portfolio, by

XX% million under asset today. portfolio at approximately $XX partnerships’ in under or in the assets sponsor XXXX represent ROFO dropdown assets additional management of assuming plus the portfolio, the approximately management, the still at all assets XXst, approximately revenue, the These stood XXX were of annual March of rents As assets.

FlexGrid Turning Landmark product. our to

several projects of city who locations tenants like part owners, working number and provide have for commercial attractive currently transportation to property initiatives, We’re who as real with their strategic owners, the on would of partners, smart connectivity including and municipalities the riders. estate access property authorities to

we’re While progress these we’ll and to not ready today, on our periodic shortly, announce some any to throughout and agreement year. definitive expect announce provide of yields updates quite finalize we the pending

multiple and we’ve We’re on programs several currently working on locations. broken deployments, and ground

for pipeline about we’re the and product the FlexGrid excited opportunities to continues Our expand, many developing. were

for continue We to joint in countries. growth LMRK. very source making with significant make evaluating With UK, the expect we’re will other our ongoing and European FlexGrid assets a outdoor to identifying to our outdoor acquire progress attractive be regard of Western European advertising in the product we progress venture, partner

the ahead Looking to remainder year. this of

the of our We’re grow to lease us core encouraged available to by strong pipeline assets business. ground

offering. site and tenant carrier to our to, on and enhance densification leasing their additional us will existing is estate well market. we accretive many as and This currently carriers add has to particular to cash are substantial Within been initiatives partnerships’ accelerate deployment the well modifications our the deployments, significant growth sites. increase Remember, and of allow will partnership relationships upgrade wireless expected network from the communication technologies. network massive are also of receive, the at FlexGrid domestic the lead segments for partnership. we Assets attractive lease FlexGrid we distributable deployment real continue the to our believe rates, further design densification These very to and and industry as activity equipment opportunities segment, we driven higher densification XG that that very and solution and The for IoT by in underlying for new look need The benefit and industry FlexGrid specifically for to expect for leverage driving XG and target to are colocation. which be portfolio wireless available in flow. opportunities position will substantially, the stands capital expenditures that with believe network the be growth, cap

the and is again potential T-Mobile front terms In Sunday’s between industry merger recent and center, of developments, given Sprint announcement. the

before, discuss we In an to there transaction believe business of things in the considering we potential have are the impact As several mind. of impact keep deal, on our a would much don’t

of the merger hurdles. First all, faces significant regulatory

We for to and expect that it will transaction XX final XX regulators review infer to to months a approve close.

effects and diversify grow during reconfigurations fact that portfolio Assuming to be portfolio that take actual that any combination or the happened, partnership's time. any decommissionings the site years mitigated and continue would significantly by would to the complete, will itself from

took be smaller to was that when a integrated, fully For Metro example, much years MetroPCS, much, T-Mobile bought and it transaction. from out

much Given T-Mobile the and the we expect complicated. and and the proposed of the size complexity of will merger take rationalization networks be more longer between Sprint,

revenues T-Mobile-Sprint today. its the site said exists, on about that just portfolio. our as necessarily overlap it entire worth our Second, X% the of revenue. because affected escalators portfolio past, lose mean In direct we be of overlap or site by about of two there’s a only landmark limited the in doesn't the total, amount And potentially years across the overlap might of X% direct will lease partnership

lease a T-Mobile-Sprint new upgraded. need revenue existing as additional resulting common would modification opportunities the offsetting to As income be into significant combination network networks and the platform platform, there’d the reconfigure is

partnership impact exposure sites, where rural has a tenant of or more an You on small very today. will the see single

to of escalators from organic means remains as a our the expect market ad are to and becomes to measurable help of highly and firms participate integrated valuable and channels LMRK industry you'd conversion cost-effective is shift the the point benefit which the potential advertising of and most Also revenue advertising indirectly outdoor share advertising generated growth in increasing. designing is additional its outdoor Internet stands acquisitions asset a any - both advertising advertising merger. today industry. digital number the from to us advertisers their analytics offset The and mobile to allow advertising continuing regard Finally, value by ongoing billboards of leases Outdoor more billboards, and digital effects directly that looked one billboards advertising, stable and to to These together. outdoor also contractual digital customers. campaigns will With from converters. parts directly ongoing the digitalization advertising our as static outdoor it in align outdoor The the surge with mix. data as advertising trends exactly both of now in long-term the proposition from are an continues, advertising digital what that static

revenue utilities. especially continue streams wind Landmark to investment XX be source in in this power energy US with continues side, and to of on long-term than with Lastly, sources expected solar provide generation from in years. purchase assets the agreements, which high-quality next segment, these double grade-rated increasing power the an backed target more by to solar the

expect very attractive give continued generation business fundamentals acquire sector this LMRK renewable as significant the our growth to strong they've we power are the ever of assets. believe We in as been. Overall, will opportunity a

plentiful. Our markets opportunities healthy are continue grow. to Acquisition large, are and

XXXX capital flexibility business. access goals. position grow we our us financial of a our to need to We on the variety have provide that sources execute to And with well we’re

financial we And to review us our to turn the of deliver call running long-term who provide over on quarter. As with on is for I’ll will ahead, our tremendous business strategy, a that, continue our the more unitholders. see focus execute value opportunity to detailed with we George? the and George,

George Doyle

you, Thank Tim.

and our the first quarter; increased in quarter, revenue site in well. remaining January driven ROFO the the the to to very of from first assets acquired last by in assets quarter were continued remaining year, quarter a the X.X% in the January. the lesser LMRK extent the ROFO over asset asset March. acquired During acquisitions portfolio by in XXXX acquisition the of perform Rental fourth acquisition for a Most

quarter. of In renewables evenly in recognized is where one million, approximately addition, not have segment annual during $X.XX the revenue we lease with revenue the

and During XXXX. we $XX,XXX of asset million recognized the revenue of quarter, only part later from expect mostly this recognize to the the remaining over first

mix over we reimbursement to current million. contribution rates. reduction the average on a with accretive also QX, higher million from changing as target the As sponsor last our are the rate only cap we $X.X acquisitions on been basis. than acquisitions from in have our is was a for cap several capital quarters, G&A including reimbursement our assets The of basis direct acquisitions X%. but our in have reflected on acquired The focusing approximately as before a The sponsor discussed calls for historically, long-term to the our $X.X on of were G&A rather G&A expense. expenses not quarter QX

increased fees service timing to expenses primarily G&A the filing and year-over-year, of fees. return professional Our due state

acquisition-related and during XXXX. G&A derivatives decline year-over-year. million to non-cash at several including first expenses, rate We and leased excludes to increase expenses remainder the $XX.X see increased with ended gain an out quarter the of which the unrealized of total expect for EBITDA, of Adjusted items, the quarter, We of tenant XX%. for XX% quarter X,XXX remained occupancy the the X,XXX sites, tenant on available sites

portfolio on bit The our our As We of we net million anticipate the with we with over quarter, approximately facility. outstanding call unique. the April Series proceeds unit in our the closed preferred minimal quarter credit offering $XXX course $XX.X discussed a revolving of we borrowings Series was churn C C last million. offering finished On of on X, XXXX.

$XX you behind a were million In XXXX, interest LIBOR swap and when So that the minute swap transaction. rates executed LIBOR XXXX. June through and take extremely anticipation March of We a beginning in interest financings. walk the me forward-starting rate our we low, thinking of executed in fix additional let

our interest longer no rates risen, revolver source our cheapest is debt have financing. of As

balances XXXX, attractive outdoor at fixed-rate financings. been refinancing we on in months, fixed rates. our April Over financing other financing rate six in XXXX the completed renewals and revolver have fixed-rate on November last for working our We our both

As we we revolver, XXXX our hedge on we interest balances refinance revolver. executed determine to our would to rate that to need swap on not continue exposure

willing The common of the preferred the units not units structure would XXXX, with fit capital preferred of issue overly allowed common dilutive. lower convertible common higher March issuance our that issue time current with We as than swap into units in a was As of coupon for well offering that XX% alternatives we our variable-rate unit and a conversion price price convertible the pricing to to at XXXX. that began units we felt be at common were look offering. us a

the X.X%. rate, units this was we priced our preferred at since three-month floating Although to closer the swap below rate convertible X% issuance at LIBOR current effectively floating rate, fixes

capital the capital the capital. to acquisition needed we this majority guidance, the more of raised cost closing the With have raise, meet of attractive our with of XXXX

fixed interest swaps. all upon or of our next of through will be substantially financing, hedged rate our debt addition, completion In rate

Series of revolver financing the renewables XXXX. $XXX our C to and April reduced offering With balance XX, we preferred completed, equity have million as

debt, risk. we As or cents secured rising the common On better rates maturities on last of long-term exposure an mitigates announced unit our on refinancing financings The refinancing to quarter of refinancing existing credit. than per balances are which continue I our of mentioned to on the distribution its first unit the common also annualized of April interest per markets $X.XX call, on cash XX, our attractive, basis. The options and line $X.XXXX financing partnership focus out credit. our provide spread revolving line

distribution we XXXX, portfolio development in flat the we always matched XX% portfolio, of reported We very the as keep our continue our last capital and our has relative with expect until we plan our of of the distribution on end of raised the activities flat the This been that to decision capital. investments distribution Based timing performance to rapidly not up drive pipeline declared. The quarter, catches of we made been distribution expected of keep our the But performance from to of the with have revenue strong. acquisitions XXXX. the growing, by deployment to have growth quarter. the to the

now will take We questions. your

Operator

Raymond first Rick Our question James. from Instructions] Prentiss [Operator comes with

You may begin.

Rick Prentiss

questions. of couple A

and FlexGrid was within much acquisition CapEx, the call million? on it, was of, I much the $XX how First how million $XX

George Doyle

funds That was that the We we’re number. didn’t spending that on XXX% acquisitions. any of include FlexGrid a

Rick Prentiss

you did in much How the FlexGrid Okay. spend the on quarter?

George Doyle

$XX roughly. approximately is million, It

Rick Prentiss

to it and of Okay. just Because helpful I other. able to versus clarify included just you’ve of kind think, maybe some FlexGrid prior quarters, kind be be

from XQ, acquisitions? right, cap am math that about in the doing the So I million implies guess rate that your I $X.X

George Doyle

Yes.

Rick Prentiss

to your should targeting you about what And might targeting million rates cap about $XXX area? You as think ones. acquisitions, the that of Okay. kind How think we XXXX mentioned million the of see to be on to year should the rate annual going how for accretive think cap about what you’re for do $XXX we target in more guidance?

George Doyle

some would maybe some and on the cap the be of assets, ROFO The think, units But may where side rate roughly the should in about to We it’s purchases. Sure. acquisition be composition rate. acquisition X% guidance, we around cap going of issue that that X%. direct acquisition, the include of

On where We low single execute the would the those developments on activities we developments. how development the side, high to leasing-related in that’s digit, rates. on we’re think cap on digit be targeting and depending higher cap the rate double

Rick Prentiss

are money a the And guess? of bit given there little could I development, and be the getting between Right. spending that they pause returns,

George Doyle

to say, expecting to months quickly. that X the returns within, think quickly, double the hit up But all fairly do are will not you’ll I’m We high to right. project is X digit we those digit the I’d completed. way low pretty the or That’s returns come sure but single get after

Rick Prentiss

Okay. then then said. fanning flame those distribution But do have that there the to about to the consternation one. is big been you you’ve thoughts? one How of grow goal you being some school unit. a distribution your XX% out out of that and And there lot your the to might also, cut there’s per last feel thought ability the about continue Obviously,

that not said as You’ve well previously years and it. made other in

think is So is. no just then firm and I’m cut realistic the to trying how how the XX%

George Doyle

completed mentioned the no acquisition level. precisely we’ve there challenges capital. its is Sure. is There distribution with lining we the thought immediately you I capital The coverage portfolio current the performing, earlier and the Based on comfortable that have to with the is distributions. at where up today, very been our cutting acquisitions about such is discussions there the no when are raise

additional we naturally capital there’s that and not move more have time and distribution. expect, just XXXX, drive through had growth, that seeing raised would course to coverage there trying as some you So delays grow on been the we continue of you and company the

about we current to that the can We distribution. revenue any us So it the that level give to up though, cover catches distribution. it did decide doesn’t just until flat, that keep concern demonstrate

Rick Prentiss

Okay.

the And year you what comfort this you years, other the so it on gives why the so And number? XX% XX%? that you make made that haven’t will firm

George Doyle

Sure.

assets. rate Our ability on to, I acquire capital at able is to depends two growth The the access is would say, organic pretty drive consistent. is distribution we’re growth the factors. of really other the portfolio One to and which

to really growth the able X% assets. always distribution So but access it able drive range, being maybe bit little that from to to that’s rest think X% to going being and in capital we a comes acquire of

over the when we assets went frequently really which acquire raise public, in extent cap we’re became two shifted rate of lot And the kind have actually we three of don't Previously that drive challenging. years. low We but we the had a what targeting accretion. targeting to a bit lot those, were the little first last to profiles, to a that capital range, nice go of X

However, we execute focus And different activities. of have our started We've a we bit. targeted on changed a the then acquisitions. to also development have set little

will XX we’ve the three certainly two, going last, accretive. the the accretion saw the say, earlier to activities derive certainly, increased, been more we acquiring cap at rates back And X just months development it what So very over than are years. which years, in has now that where

are low relative certainly is cost potentially accretive be our of to well, going capital. get as that higher much double-digit where to more rates certainly cap So time over

that April, the drive better year manage remainder that also that We and will the capital accretion cost was capital going XXXX. of solidify the of also, helped for us were for to during the our help completed with raise

Operator

you. Thank

from with comes Mike question next Janney. Gyure Our

You may begin.

Mike Gyure

just invested $XX million -- front? Can at investing to much It little you that the talked Or you million. correct, on I [Indiscernible]. How the sounds on maybe rate you’ve more the regarding a of is require for remainder cap kind we where how in how $XX much FlexGrid you’re my planning you the much about talk products. of are think bit year math if and quarter FlexGrid, like, the

George Doyle

making with of and currently that are Sure. stages. We’ve a program, projects number great been we’ve in various traction got

nearly for So in we entered sites. announced we arrangement the Canada up into XXX

initial number not We sites have of through have of a going final stages permitting. their complete. built. They’re been quite They’re that

will those of development got then initiatives out as where expect to on pretty that we coming actually some So different holes city well, an be expected here forward project. putting We’ve quickly. the are And some we also have transportation moving ground. start

then So we’re this of on inventory for is spend areas initial of mostly making online. on. few bit development capital project come a bit the good to-date taking they the focus on of ground. polls capital as rest progress we’re the And that the of rest a three the some on the And we’ve activities, a of

So in full be will we’ll we’re the thinking addition in had roughly and year, what capital, $XX last still that we of end the to spend about looking at million year. spent at

You’re number. right your on

and million QX. expect run roughly We higher $XX spend pick that more in QX start QX to-date, to in do have and have rate about up spent we a and

Operator

next Burke Riley comes Our B. from question FBR. with Liam

may begin. You

Liam Burke

give commitments customer a of to, the on the have sense FlexGrid. the the kind George, you deployment, you of in that or Could as build-out? on you what rental us deployment terms capital side, of, mentioned

George Doyle

Sure.

non-cancelable we with have be We tenants The number There of X-, position we're essentially those. in which they contract XX-year can that initial these follow-on to are plan well. well, process contracts. follow in as for typical place. structures in tenant a negotiations then in type plan And of a as of is, on finalizing an

Liam Burke

have So have of sites I’m tenants expected of committed looking number percentage at of and the -- I both what year-end mean, that on to a you committed deployments, US customers Out XXXX, those deployment of if those sites? number x will Canada. of

George Doyle

I XX%. would Well, XX%, think

tenant just a couple, be to looks to what building are going show from built these infrastructure without commitment. not like, the Aside

Liam Burke

acquisitions in as a us what sense And there. the the on Could the increases for contractual give rental income to the contributed you there growth quarter, rent were to growth?

George Doyle

They’ve they’ve would say, last, Sure. consistent two years, themselves. organic the very the been, been over with leases growth in last rate I the

in X.X% roughly So for they’ve been running range organic growth. that

Operator

Our from question [Operator next Rodgers Instructions] comes Dave with Baird.

begin. may You

Dave Rodgers

talk a bit to wanted little cost I capital. about of George,

your think accretive acquisition X% was said comments first term. in in You was of initially long the quarter and I kind

dropdowns have a of So that by year, When about into I to end that get to also And it dive given I’d of cost sponsor go you just that capital given getting levels? is think any you weighted is kind cash to dividend Rick’s cut coverage at. look X% to everything higher guess table flow on that you’ve just renegotiated haven’t I your obviously much I maybe of time the kind so wanted the calls substantially like now, that at fact the not I or been we’re coverage. of higher settlements through this the dividend from X.XX the average not you investing Or closure the avoid time probably the why than those question. for the year, that. distributable been your

George Doyle

coverage look and look debt sure is is basis. at of That that get our on at times as cost not trading. exactly we the to a capital attractive. level. of cost you the X.XX current common when very certainly component. depends still The it I’m capital, stock It But drive we long-term Sure. where how of will

combination the to a So get look at we than capital of X%. when less that's cost the we two,

a on basis, look If we at debt equity of entirely finance are way the then, That’s costs. its the with to current agree those capital, equity and we combination not yes, be them they So tend that would it. but accretive. accretive we

Dave Rodgers

are kind equity you guess, I And if guys? XX% are today think at where do each equity of investment? so, costs so, thinking for the cost about And of you you

George Doyle

targeting on roughly the or depends X a mean, on you on acquiring investment. times also were Yeah, in stabilized if returns I about developing those we Xto range in of your less think at basis, the equity. would XX%, use low high but of single-digit, XX% assets than the it leverage double-digit it do kind

Some very equity it be But developments. mid-teens for as equity using well as rates for you’re well Which we certainly yeah, roughly assets not those at cap about assuming XX% may look of imply debt well. the much in type and acquisitions.

Dave Rodgers

then kind think capacity your really year, do today? for enough this of what’s essentially the remaining capacity is I And if the that total raised you is to acquisitions today.

George Doyle

Yeah.

So with have the as offering, we've or so and million we I mentioned, would say, certainly that some of our acquisitions gives And units ATM us it we development-type kind acquisition, roughly $XX of of for call to-date. about I acquisitions, $XXX capacity, million completed then programs. issue could

also We program. our have UEP

just the for combination will remainder of out year. fill a different sources probably So the

Operator

to I’m closing no you. showing currently over questions Tim at back time. turn the to And I’ll remarks. further Thank call this Brazy for

Tim Brazy

Thank you.

we As market think tremendous confident the for George full advantage take said, really in of a what our is and we’re opportunity to ability company. I

plan our this your speak time on on you year, will initiatives next we you the and with appreciate morning, We execute We can. continue quarter's. this to to progress as business for new share and we’ll we’ll

Operator

conference. have a and Ladies this and Thank your you for day. concludes participation, gentlemen, wonderful today’s

Landmark Infrastructure Partners (LMRK) 2 May 182018 Q1 Earnings call transcript