AMT - NYSE

Ladies and gentlemen, thank you for standing by. Welcome to the American Tower Third Quarter 2023 Earnings Conference Call. As a reminder, today's conference call is being recorded. Following the prepared remarks, we will open the call for questions. [Operator Instructions] I would now like to turn the call over to your host, Adam Smith, Senior Vice President of Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining American Tower's third quarter 2023 earnings conference call. We have posted a presentation, which we will refer to throughout our prepared remarks under the Investor Relations tab of our website www.americantower.com. On this morning's call, Tom Barlett, our President and CEO will discuss current technology trends, and how our distributed portfolio of assets is positioned to benefit from ongoing wireless technology evolution. And then Rod Smith, our Executive Vice President, CFO and Treasurer will discuss our Q3 2023 results and revised full year outlook. We are also joined on the call today by Steve Vondran, our current Executive Vice President and President of our U.S. Tower division, who as announced this morning will assume the role of Global Chief Operating Officer effective November 1, before assuming the role of our President and Chief Executive Officer on February 1, 2024. After these comments, we will open up the call for your questions. Before we begin, I'll remind you that our comments will contain forward-looking statements that involve a number of risks and uncertainties. Examples of these statements include our expectations regarding future growth, including our 2023 outlook, capital allocation and future operating performance; our collections expectations associated with Vodafone Idea in India and any other statements regarding matters that are not historical facts. You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include the risk factors set forth in this morning's earnings press release, those set forth in our Form 10-K for the year ended December 31, 2022, as updated in our Form 10-Q for the six months ended June 30, 2023, and in other filings we make with the SEC. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained in this call to reflect subsequent events or circumstances. With that, I'll turn the call over to Tom.

Thanks, Adam. Good morning, everyone. And my focus for today's call will be on the technology trends and network investments that drive demand for our leading tower and data center platforms as well as the developments we're seeing at the edge. While my comments will largely be focused on the 5G evolution and the progress we're seeing in the United States, we believe similar trends will prevail across our international footprint as they have historically. Beginning with our macro tower business, the fundamental factor that drives demand for our global power portfolio, growth in mobile data consumption continues unabated. This is true both in the United States and across the globe, where mobile network data traffic has almost doubled over the last two years alone to a staggering 126 exabytes per month. Looking out over the next five years, forecasted growth in data traffic per device remains compelling as more spectrum for 5G networks will be deployed at scale. Average monthly data usage per smartphone across our key developed markets like the U.S., Germany and Spain is expected to grow at a healthy compounded annual rate of 18% between 2023 and 2028. And I would note that these estimates have been somewhat conservative historically. So let's spend a moment on where we are in the 5G investment cycle in the U.S. and where we believe we're going over the next several years. Just as we saw with the 3G and 4G rollouts, we expect the 5G investment cycle to play out in three phases that represent discrete business cases for the carriers and these three phases will drive two peak periods of spend that are bridged by a temporary phase of more moderate activity. The first phase is coverage-driven and aimed at upgrading existing infrastructure with new spectrum bands and radio technology, its competition to provide broad nationwide coverage with the new G ramps up. At the same time, carriers are looking to realize the efficiency benefits of their investments in new software, hardware and upgraded user devices. Initial equipment upgrades and new spectrum deployment quickly deliver reduced cost per gigabyte resulting in the ability to maintain margin profiles. Absent this migration, any incremental investments in the prior generation would be expected to result in significantly diminished returns as the additional densification required to sustain increasing network traffic on existing spectrum bands would be cost prohibitive. As the cadence of initial coverage investments begin to moderate from record spend of over $40 billion in 2022, the first peak of the 5G cycle, we retain a high degree of conviction that there's a long tail of network investment to come. This belief is predicated on several factors, including our experience with past investment cycles, industry forecast for growth in mobile data consumption that apply a necessity for significant incremental coverage and capacity and the visibility into network needs, we get through our contract structures. Today, Phase 1 of the 5G rollout is winding down and we're heading into a second phase. We expect Phase 2 to be characterized by carriers beginning to harvest the network efficiency benefits of their initial investments, while moderating spend from the record levels of 2022 to roughly $35 billion in 2023, which is $5 billion in excess of 4G averages, representing the second highest level of annual spend on record. In this next phase, we will begin to see a seeping in of 5G technology across the wireless and enterprise landscape. For example, 5G smartphone penetration has now surpassed the 50% mark in North America, which will ultimately allow for the majority of network traffic to shift over to 5G networks which we would expect to occur in the 2025 time frame. We're also looking forward to the emergence of more ubiquitous accessibility of stand-alone 5G core networks, which will unlock improved 5G network quality, higher speeds and lower latency and provide a platform for the development of innovative services and consumer applications. Finally, we anticipate that the arrival of end-to-end 5G capabilities will facilitate additional monetization opportunities at the enterprise level through use cases like private networks, network slicing and other IoT services that are beginning to emerge today. Ultimately, these dynamics will culminate in a third capacity focused phase aimed at significant densification of 5G networks. We continue to believe that 5G will advance and enable the next generation of mass market consumer use cases, particularly once 3GPP-released 17 and 18 are in the market, coupled with 5G cores that provide the true benefits of the end-to-end technology upgrade at scale. That said, meeting industry forecasts for growth in mobile data consumption that will drive the need for substantial network capacity investments seems highly achievable when taking into account the technology we have at our fingertips today. In fact, industry estimates already show that 5G subscribers are consuming 2 times to 3 times more mobile data than the average 4G subscriber. So let's take the case of mobile video consumption, which has consistently shown to be a dominant use case across subscriber usage types. As you can see on Slide 6, today the average smartphone subscriber in North America utilizes roughly 21 gigabytes of mobile data per month, and this is expected to grow to about 48 gigabytes by 2028. Of the 21 gigabytes consumed today, the majority or approximately 19 gigabytes are attributed to video streaming, which corresponds to a little over an hour of daily video usage and 360 and 480 pixel videos currently make up around half of that time. So by simply assuming a modest level of incremental usage towards higher resolution streaming such as 8 minutes of 4K Ultra HD, we would see video consumption alone drive usage to the forecasted 48 gigabytes per month or approximately 2.3 times the current rate. Furthermore, the data already shows that 5G is driving increased usage of higher resolution video formats. A recent report from Ericsson found that since 2021, 5G users report a nearly 50% increase in time spent on enhanced video formats. For example, among that user base, usage of new video formats like 360 degree videos and multi-view streaming have increased by an average of 10 minutes and 15 minutes per day, respectively, while time spent streaming videos and standard resolution has decreased by 23 minutes over the same period. In short, we've already seen 5G adoption linked with a shift in behavior towards using more data intensive applications, a trend we firmly believe will continue going forward. And while we remain confident that new low latency, high bandwidth consumer applications will be born as 5G standalone networks are deployed at scale, we see a highly tangible case for densification requirements from where we stand today. With that, I'll briefly provide an update on CoreSite in our data center segment before shifting to the progress we're making at the edge. The case remains that demand in CoreSite's interconnection centric business is exceeding our initial expectations. Our teams delivered record signed new business in 2022, a record we are targeting to exceed in 2023. We've also seen consistent elevated growth in interconnection revenue, mark-to-market pricing increases that exceed our historical averages, low churn and ongoing performance that we believe positions us to deliver compelling results in the segment for many years to come. And much like we see in our tower business, the secular trends that underpin the business model like the migration of workloads from on-prem to hybrid multi-cloud environments and the emergence of AI use cases that will drive more demand in our ecosystem continue on a path toward long-term acceleration. For example, findings from our recent 2023 state of the data center report showed that 94% of IT leaders noted that native direct connection between co-location data centers, major cloud providers, which CoreSite provides is essential for improved performance, enhanced security, cost savings and hybrid cloud connectivity. Further, 92% of IT leaders are considering moving critical workloads from public cloud to colocation to accelerate revenue growth and support the increasing need for AI and machine learning applications. In this context, we continue to upgrade our offerings and capabilities within the business to support emerging use cases. For example, earlier this month, we launched new capabilities on our OCX, our pioneering software defined networking platform, enabling clients to rapidly create higher bandwidth virtual connections to Google Cloud and AWS Direct Connect and between CoreSite data centers, including 50 gigabit services. These upgrades reduce the time required for organizations to augment network capacity to support high bandwidth, low latency hybrid applications like AI, machine learning and digital media production. When it comes to current and future AI and machine learning applications, CoreSite's flexible, purpose-built design data centers position us to host power-intensive GPU services being used for AI and ML use cases. For example, we're already providing GPU capacity for applications like 3D visualization and rendering and for software development with a niche cloud environment. And for the densest AI applications, our purpose built facilities are designed to accommodate liquid cooling with modest development efforts when required. As we've stated previously, in the near term, we continue to believe the majority of today's generative AI workloads will provide hyperscale opportunities that don't meet our investment criteria or fit within the CoreSite ecosystem. However, as GEN AI evolves, we would expect the balance of workloads to shift from large language model development, intensive training and public prompts to specialized inference-based use cases as productivity gains from the deployment of custom models accelerates. At this stage, when low latency interconnection high power density and distributed high performance compute become the priorities, we believe CoreSite and ultimately, our distributed portfolio of franchise real estate assets across the U.S. are going to be optimally positioned to benefit. On that note, we've continued to see progress toward the realization of demand cases that support our initial edge thesis, and we believe we have an opportunity to enable a more efficient exchange of network traffic and support cloud services and peering in a more distributed manner. As a result, we've been working both internally and with external stakeholders to develop an edge model we can execute on as compelling opportunities present themselves. In our initial assumption that through CoreSite, our seat at the table and visibility into the customer demand environment would be materially enhanced is holding true. We're increasingly seeing interest from potential customers looking to extend technologies such as private cloud computing AI and 5G applications closer to the end device through a more distributed architecture. This is resulting from several key demand cases including availability of future power requirements, business efficiency, revenue generation opportunities and customer experience. When it comes to power, CoreSite has secured significant future power availability and is insulated from expected shortages in markets like Northern Virginia. However, power constraints in general are increasingly in focus in legacy data center markets. In this case, we believe our distributed land footprint in Tier 2 and 3 markets with significant power availability and capability to connect back to CoreSite campuses can serve more distributed power capacity needs, while enabling customers to enjoy the interconnection benefits of the CoreSite ecosystem. And as potential customers increasingly focus on new revenue opportunities and customer experience including through the proliferation of applications like next-generation gaming, AR and devices and wearables that leverage interactive AI, we believe we have a compelling combination of distributed points of presence and interconnection capabilities that can be extended to a broader edge. In addition, by prioritizing our existing owned real estate, which in many cases is already designated for use as digital infrastructure, we see an opportunity to drive a significant time to market advantage and reduce overall development costs, which could be compelling to customers and enhance returns on investment. As a result of these factors, we continue to work towards establishing a repeatable, rapidly deployable design with initial capacity in the 1 megawatt range, which could then be scalable to incremental megawatts with interconnection to multisite campuses as demand dictates. As always, we'll assess potential growth at the edge through the prism of our disciplined capital allocation framework committing capital only if the opportunity meets our investment criteria and aligns with our long-term strategic vision of growing our interconnection ecosystem in a way that maximizes shareholder value. In closing, the bottom line is that we remain at the relatively early stages of a 5G and network technology evolution that we believe will necessitate continuous incremental investment in existing infrastructure like towers, data centers and distributed edge infrastructure. We also believe that ongoing technology developments will unlock new capabilities that will drive the next wave of innovative and data intensive consumer and enterprise devices and applications. And American Tower, with its leading tower portfolio and real estate footprint combined with a highly interconnected data center ecosystem is in a truly differentiated position to serve the network infrastructure needs of the future. Before I hand the call over to Rod, I'd like to close my remarks by congratulating Steve Vondran, who effective November 1 will hold the role of Global Chief Operating Officer until February 1 of next year, at which point he'll transition to the position of Chief Executive Officer; and Bud Noel, who will become our new Executive Vice President and President of our U.S. Tower Division. The Board and I have worked diligently on succession planning weighing the merits of an external search against the talent we have within our organization. Steve joined American Tower in 2000 and currently serves as the Executive Vice President of our U.S. and Canada business, including both towers and data centers. For the past 23 years, Steve has been instrumental to the growth and sustainability of earnings from American Tower and has built tremendous credibility with our global organization his peers, the Board of Directors, the American Tower investor base and our customers. All this to say, Steve is a clear candidate to lead American Tower in its next growth phase. And over the next several months, I'll work closely with Steve, the executive leadership team and the Board to ensure a seamless transition. Lastly, I want to thank all of the incredible American Tower employees around the world both past and present, our customers and investors for their support and confidence you've demonstrated since I joined in 2009. Although, this is a difficult decision on my part, I look forward to the time ahead with family and friends and new challenges, while watching the company under Steve's leadership continue to succeed. With that, I'll turn the call over to Rod to review our latest results and updated outlook. Rod?

Thanks, Tom. Good morning, and thank you for joining today's call. In Q3, we continued our trend of strong performance, driven by solid demand for our diverse global portfolio of assets. Against the challenging macroeconomic backdrop, we remain focused on delivering results and creating value by driving organic growth across our existing portfolio and demonstrating global operational efficiency and cost management in support of attractive margin expansion. At the same time, we are committed to strengthening our balance sheet by enhancing our liquidity extending our maturities, reducing floating rate debt volatility and making progress towards our leverage target. These efforts coupled with the evolving technological trends highlighted by Tom, remain key drivers of our current performance and give us confidence in our ability to drive sustained growth over the long term. Before delving into the specifics of our Q3 results and raised outlook, let me touch on a few highlights from the quarter. First, we saw a continuation of solid trends across our global operations, driving consolidated property revenue growth of 7%, consolidated organic tenant billings growth in our tower business exceeded 6% for the third consecutive quarter and was complemented by over 9% revenue growth in our data center business. As a result of this strong performance and visibility extending through the end of 2023, we raised our full year expectations across nearly all segments, which I'll discuss in more detail later. Next, our keen focus on cost management resulted in conversion rates exceeding 100% and adjusted EBITDA margin expansion of roughly 290 basis points year-over-year and still over 215 basis points when normalized for the prior year VIL revenue reserves, complementing our operational efforts. On the balance sheet side, we raised $1.5 billion in senior unsecured notes at a weighted average cost of approximately 5.9% by utilizing the proceeds to pay down revolver balances, we reduced our floating rate debt exposure to approximately $4 billion or less than 11% of our total outstanding debt as of the end of the third quarter down from over 22% at the start of the year. Finally, we're making significant progress on the strategic review of our India business. As we are in the final stages of this process, we remain committed to communicating the outcome to our shareholders before the end of the year, consistent with our past messaging. In Q3, we recorded $322 million in goodwill impairment charges associated with our India business. This was prompted by indications of value obtained through the process conducted over the past several months, supported by our own interim goodwill impairment test. We believe this impairment accurately reflects the current market conditions, evolving risk premiums associated with operating in the India market and more generally increases in the cost of capital. With that, please turn to Slide 8, and I'll review our property revenue and organic tenant billings growth for the quarter. As you can see, consolidated property revenue growth was 7% or 8% on an FX neutral basis. U.S. and Canada property revenue growth was over 5%, which includes a nearly 2% headwind associated with a reduction in straight-line revenue, offset by timing benefits associated with certain non-recurring one-time items in the quarter. International growth was nearly 9% or approximately 11% excluding the impacts of currency fluctuations, which included a 4% benefit associated with the full collection of VIL billings in India in the quarter, as compared to the approximately $48 million revenue reserve in the prior year. Finally, as I mentioned in my earlier remarks, our data center business revenue increased by over 9% and continues to demonstrate solid outperformance as compared to our initial underwriting plan. As Tom mentioned earlier, we anticipate 2023 to again break the signed new business record just set in 2022, setting up CoreSite to drive sustained attractive levels of growth as the backlog of new business commences over the next several years. Moving to the right side of the slide. Strong performance across each of our segments drove consolidated organic tenant billings growth of 6.3%. Within our U.S. and Canada segment, organic tenant billings growth was 5.3% and greater than 6.5% absent sprint related churn, including another quarter of colocation and amendment contributions of nearly $60 million. Our International segment saw outperformance across nearly all reported segments, primarily driven by higher new business in Africa and churn delays in Latin America and APAC resulting in organic tenant billings growth of 7.9%. Turning to Slide 9. Adjusted EBITDA grew over 10% to $1.8 billion for the quarter or approximately 11% on an FX neutral basis. As I highlighted in my opening remarks, adjusted EBITDA margin expanded to 64.4%, a 290 basis point improvement compared to the previous year, primarily driven by solid organic growth, effective cost management throughout the business and the one-time revenue items I mentioned. In fact, despite the current inflationary environment, we have managed to maintain a relatively flat year-over-year cash SG&A profile remaining consistent with the themes from the first half of the year, with cash SG&A as a percent of property revenue standing at approximately 6.5% for the quarter, a nearly 70 basis point improvement versus Q3 of 2022. Moving to the right side of the slide. Attributable AFFO and attributable AFFO per share each increased by over 9%, driven by solid cash adjusted EBITDA growth partially offset by an approximately 5% headwind from financing costs. Now shifting focus to our revised full year outlook. I'll start by highlighting a few key items. First, as a result of our strong performance in the third quarter and the momentum taking us through the end of the year, we've raised our guidance for property revenue, adjusted EBITDA, attributable AFFO and attributable AFFO per share. Next, our revised outlook includes a reduction in U.S. services, resulting in a $20 million decrease in gross margin compared to our previous expectations for the year. As we've highlighted in the past, although, quarter-to-quarter variations in tower leasing activity have impacted our services revenue in 2023, our leasing revenue remains unaffected, underpinned by the comprehensive master lease agreements currently in place. Finally, the updated midpoints include revised FX assumptions that have resulted in outlook to outlook headwinds of approximately $28 million for property revenue, $14 million for adjusted EBITDA and $5 million for attributable AFFO. With that, let's dive into the numbers. Turning to Slide 10. We are increasing our expectations for property revenue by approximately $60 million as compared to our prior outlook. Our revised expectations are driven by $31 million in core property revenue outperformance, along with approximately $45 million and $12 million in additional pass-through and straight-line revenues, respectively. Our revised guidance includes $10 million in outperformance associated with VIL collections with roughly half included in our core property revenue and the balance in the pass-through outperformance illustrated. Growth was partially offset by $28 million of negative FX impacts. Turning to Slide 11. We are increasing our expectations for organic tenant billings growth across nearly all segments. In the U.S. and Canada, we are increasing our guidance to greater than 5% or approximately 6.5% excluding Sprint churn, now with an expectation for approximately $230 million in colocation and amendment growth contributions. Growth is further benefiting from non-Sprint related churn delays, which we now anticipate occurring in 2024. In Latin America, we have increased our outlook from approximately 4% up now to approximately 5%, largely driven by continued delays in anticipated consolidation-related churn. Next, we're increasing our Africa outlook from greater than 11% to approximately 12%, primarily due to a continued uptick in colocation and amendment demand. In APAC, we are increasing our guidance from approximately 4% to about 5% supported by a combination of strong new business in delayed churn. Moving on to Slide 12. We are raising our adjusted EBITDA outlook by $60 million. This reflects the strong conversion of the incremental property revenue highlighted earlier, coupled with prudent cost controls, resulting in an incremental $67 million in cash property gross margin outperformance along with an additional $14 million in cash, SG&A savings and $30 million of straight line. This growth was partially offset by a reduction of $20 million associated with our U.S. services business and a negative FX impact of $14 million. Turning to Slide 13. We are raising our expectations for AFFO attributable to common stockholders by $40 million at the midpoint or approximately $0.09 on a per share basis, moving the midpoint to $9.79 per share. Our performance was driven by the cash adjusted EBITDA increase of $61 million partially offset by $16 million of other items, including an acceleration of certain maintenance projects in cash taxes, along with incremental minority interest due to outperformance in our JV businesses, partially offset by improvements to net interest. As I noted earlier, FX caused a headwind of approximately $5 million. Moving on to Slide 14. Let's review our capital allocation plans for the full year. Consistent with the expectations set at the beginning of the year, we are planning to distribute approximately $3 billion in common stock dividends which represents a year-over-year growth rate of 10% on a per share basis, subject to board approval. Our full year CapEx spend also remains consistent at $1.7 billion with the acceleration of certain non-discretionary projects that I mentioned earlier, offset by lower discretionary spend, which includes a reduction in development CapEx associated with lower anticipated new build volumes. As always, our goal is to execute a capital deployment strategy that maximizes total shareholder returns. In line with my earlier remarks, we're focused on creating incremental value through solid organic growth and quality of earnings optimizing global operational efficiency and expanding cash margins, all while strengthening our financial position by further reducing balance sheet risk and enhancing financial flexibility. As it relates to capital allocation and against the current economic backdrop, we believe it's optimal to prioritize balance sheet strength and keep discretionary spend focused on select capital expenditure projects that yield the best risk-adjusted returns and quality of earnings. Additionally, decoupled from our current line of sight to its attributable AFFO growth for next year, we anticipate maintaining a dividend per share profile in 2024 that closely aligns with our 2023 expectation of $6.45 per share resuming growth in a manner supportive of our REIT taxable income thereafter, all subject to Board approval. By focusing on the above priorities, we believe American Tower is positioned for sustained and compelling total shareholder returns supported through balance sheet strength over the long term. Consistent with our historical practice, we'll discuss our 2024 plans in more detail on our next earnings call. Moving to the right side of the slide and as highlighted earlier, as a result of the successful execution of our financing initiatives in the third quarter, we reduced our floating rate debt balance to below 11%, increased our liquidity to $9.7 billion, and our average maturity remains over six years. We closed the quarter with net leverage of approximately 5 times, which benefits from certain non-recurring items in the quarter, as I mentioned earlier, and we expect to close the year slightly above 5 times. Moving forward, we'll remain opportunistic and potentially further accessing the debt capital markets, ensuring continued strength in our balance sheet, reducing risk and enhancing our financial flexibility. Turning to Slide 15, and in summary, our diverse portfolio of global communications assets continue to demonstrate resiliency in the face of a challenging macroeconomic backdrop, producing attractive growth through organic leasing, further amplified by exceptional cost management at the margin. Complementing our operational performance, we continue to make progress in strengthening and de-risking our balance sheet. Furthermore, we remain committed to managing our capital structure, sources and uses and capital allocation priorities in a manner that positions American Tower to drive sustained attractive returns for our shareholders over the long term. With that, operator, we can open the line for questions.

Thank you. [Operator Instructions] And we'll go to the line of Simon Flannery with Morgan Stanley.

Tom, all the best for the future. It's been great working with you over the years, even back to the Verizon use of cell days. And Steve, congratulations and best of luck in the new role. If we could come back to the capital allocation please. The comments around the dividend and perhaps, Rod, you could just talk about target leverage? Are you thinking about bringing leverage down more aggressively given the rate environment and the uncertain macro environment? Just any color around that would be great or any other drivers of the dividend decision? And perhaps how are you thinking about M&A more broadly outside of the India process that you referenced earlier. There's a big gap here between public and private markets. Any opportunities there that you see? And what about buybacks? Is that something that could come into your toolbox in the coming quarters here? Thank you.

Yeah. Simon, good morning. Thanks for joining. I'll hit the leverage piece first, and then Tom will address the dividend more broadly. When you think about the leverage, we've been a little bit higher than our stated range. We've been up in the 5, 3 range. We did end this quarter at around 5.0 that was benefited from some non-recurring one-time revenue items. So we do expect that to tick back up towards the end of this year. And we expect to end this year, again, higher than our stated range of 3 to 5 times up in the 5.2%, 5.3% range. It is a priority of ours to bring that leverage down, along with driving organic growth operational efficiency, expanding margins, controlling the SG&A in the -- and ultimately, the AFFO and AFFO growth that we can drive. So the target is to get to 5.0 as soon as we can. We'll be working through that diligently next year. And a lot of these operational objectives around organic growth and driving AFFO as well as capital allocation, our capital plan, specifically you'll see a reduction -- you've seen a reduction in our capital plans this year versus last year. And that, again, is all in line with trying to drive down leverage and strengthen our balance sheet. We do think those are important steps to take to drive total shareholder return in the short term and the long term. So that's what it's really all about the dividend holding it flat next year is in line with that. I mean, I'll say, we believe that's the best use of capital in terms of strengthening the balance sheet in this time of uncertain rates. When it comes to M&A, we continue to not see compelling M&A opportunities in our pipeline. So it's not something that's hitting our radar screen in terms of capital allocation this year and we turn the corner into next year. Then I'll turn it over to Tom to hit and a little bit more directly.

First of all, Simon, thanks for your kind words. But maybe with regards to the dividend, it's important just to just take a step back and understand how we really manage this dividend growth. Since we became a REIT over a decade ago back in 2012, we've always looked to complement AFFO growth with a compelling yield, which we've grown, as you all know, around 20% annually as compared to our AFFO per share growth, which has been closer to 10% over that same time period. We've aligned our distribution with REIT taxable income, as you would expect. And within REIT AI you do have a recurring run rate and more of one-time buckets, consistent of things like earnings and profits, settlements, throwbacks NOLs, which we used last decade, much of which is discretionary in the planning that are absolutely separate from AFFO. And these tools allow us for to manage a more predictable glide path on our dividend. So here we are in 2023, we're committed to a 10% dividend growth rate which, like other years, consisted of certain one-time items to manage the dividend path and ensure alignment between our distribution and REIT AI. And so although our recurring REIT AI bucket was negatively impacted by interest rates, we utilize certain one-time items to manage towards the distribution. And absent those items, like most years, we'd be overdistributed. So as we look ahead to '24, we see an opportunity to accelerate our glide path and reset REIT AI closer to the run rate, which means temporarily relatively flat dividends per share in '24 decoupled from our expectations for AFFO growth based on our line of sight today. So our priorities that Rod just laid out really remain on maximizing our total shareholder returns. And we see the optimal path to do so, really centered around strengthening and de-risking our balance sheet, which means, in part, reducing our debt balance and advancing our pathway to sub 5 times net leverage and with that, more financial flexibility. And we view the levers to accelerate this path through maximizing organic growth, reducing our cost base as we've done in '23 and will continue to do in '24 with disciplined capital allocation that Rod just referred to, together with managing the dividend in a relatively flat basis before resuming growth in line with our recurring REIT AI thereafter. So this isn't a decision we take lightly, as you would expect. But given the current macro volatility, we believe that the balance sheet strength and accelerating financial flexibility for future opportunities, which could include buybacks is the optimal approach from where we sit today. So hopefully, that gives you a little bit of a sense, at least in terms of how we're thinking about it and how it fits into our overall plans for creating value long term.

Right. Yeah. That's very helpful. So just to be clear, the hope would be to resume dividend growth in '25 or into 25?

Yes.

Great. Thank a lot.

And next, we go to Michael Rollins with Citi. Please go ahead.

Thank and good morning. And Tom, I also want to express my thanks and best wishes for your upcoming retirement. Congratulations to Steve on your upcoming transition to the CEO role. Just a couple of questions for me. -- You're welcome. And again, thank you, it's both at Verizon and at AMP. We've been working...

We got a long answer. My hairline has received more than years

So a couple of things. So first, on activity levels in the domestic business. Curious, if you could just go deeper into what you're seeing as you're looking at the balance of this year and what it means for next year in terms of how that domestic business can grow relative to the long-term annual targets that you set for that business? And if you can -- within that context, also unpack the delays that you're seeing in Sprint related churn and what that means for that decommissioning pace as we look forward? Thanks.

Sure. I'll take that one. So we're not going to give specific guidance for 2024 at this time, obviously. And I don't want to get into specific care activity levels because I want to leave it to them to talk about the rollout plans. But in general, we have seen activity levels moderate over the last several months from the recent highs. However, the visibility that we have into a baseline level of contractually guaranteed growth through these comprehensive MLAs allow us to reiterate our expectation that we're going to achieve an average annual OTBG growth rate of at least 5% in the U.S. and Canada segment between 2023 and 2027. And despite some of the concerns that people have in the market over the recent moderation we have visibility into a level of organic growth in 2024 that's supportive of that average. Now having said that, I want to break down the components a little bit, we do not have visibility into another year of $230 million growth from colocation and amendment activity. That's far away a record from American Tower. But we balance that with an expectation for some moderation in churn following 2023, excluding Sprint. Our MLAs do provide us visibility into a level of colocation and movement contributions that exceeds the average we've seen over the past several years. And again, it's supportive of that at least 5% average OTBG that we've guided to between 2023 and 2027. And to reiterate on our Sprint churn, the annual impacts of our Sprint churn have been $195 million in 2021, $60 million in 2022, and $50 million in 2023 and $70 million in 2024 for a total of $375 million. So we're past the peak of that churn, and there's no change to that cadence versus our prior guidance in that respect.

And Mike, I would just add just to make it clear, the delays in churn that we're seeing in the U.S. is not Sprint related. It's other items that we were planning that could be moved out a bit, as Steve is saying the Sprint cadence has not changed. And when you think about next year 2024 in our long-term guide, it's unlikely that there's going to be material upside based on where we sit today. We do think there's potential for upside in the longer-term growth rates, but that would probably come in '26 and '27 and down the line, not necessarily in '24.

Thanks. And just one quick one, what's the percent that you're seeing in terms of the mid-band upgrades, the percent of sites that have been upgraded for mid-band already versus the amount that might be remaining?

It’s a little over half at this point.

Thank you.

Thanks, Michael.

And next, we can go to David Barden with Bank of America. Please go ahead.

Hey, guys. Thanks so much for taking the questions and let me echo Tom, the years we've spent together. It's been great and congrats to Budd and Steve on the new roles.

Thanks, Dave.

So I guess, if I could start, just maybe more on the finance side, Rod. Slide 11, you talked about some of the increases we're seeing in some of the non-U.S. regions. Could you break that down into kind of core organic leasing and then some of the inflation driven escalators? And so is this real growth that we're seeing that could be sustained or is it more of an inflation driven bubble that we need to kind of be conscious of that might reverse? And then second, just on the India situation with the write-down, I think the tactic acknowledgment that maybe some of the loftier valuation ambitions were not there. I guess we're all sitting here trying to figure out what kind of dilution we should be baking into 2024? The latest press reports that India suggested kind of a $2 billion valuation, something like a 5 times EBITDA multiple. Obviously, it depends on kind of how big a stake you sell and when you sell it. But is there any kind of more color you can shed on the shape of what kind of dilution expectation we should be thinking about for '24? Thank you.

Yeah, David. So let me hit the first part of your question. I think I missed a little bit of the second, so I may ask you to repeat that. But when you think about the upside in terms of the growth rates, let me hit it by addressing the organic tenant billings piece first-off. So we are seeing increases in organic tenant billings really across the board. So you can see in the charts, they were increasing our overall organic tenant billings for the company to about 6%, that's up about 50 basis points from prior. And that kind of -- that theme is consistent across many of the regions. So as Steve just highlighted in the U.S., we're bringing that guide to beyond 5% from what was previously around 5%. International is coming up to greater than 7%. Prior, we were at greater than 6.5%. And then you look at the different parts of the company region by region, LatAm is going up to about 5% versus what was previously a 4%. APAC is coming up to about 5%. Previously, it was 4%. Europe was staying around where it was at 8%. And then Africa is also coming up to around 12% from what was prior higher than 11%. A couple of things that I would say, in terms of the stay ability or the durability of some of that growth, certainly, in the U.S., it's nice strong performance. There is a little bit of delayed churn, so we can expect to see that hit next year. Other than that, the U.S. is very steady in terms of the demand. Part of that is because of the way the contracts we have work out. When you think of Latin America, we do have higher levels of churn this year than we have had in prior years. Some of the outperformance is churn driven. So when you think about the LatAm over performance, it's really a delay in churn and probably not all that durable from that perspective. When you get into APAC, it's a similar situation. The increase there is delayed churn, maybe some delayed discounts. Europe is staying in line. In Africa, we're seeing higher levels of new business activity. So much of that is, in fact, durable and lasting, that's the way I would kind of articulate that. And then maybe on the second question, if you could maybe just repeat the question about the dilution, just so I get it right.

Hey. Yeah, Rod. Thank you. So I think we were just trying to – and thank you for those comments, that's helpful on the pieces part. The -- just the India write-down would seem to suggest that the bid-ask spread between what maybe AMT hopes to accomplish from a valuation standpoint and what's been offered has kind of collapsed down to the offer the side of the spread? And is that the right interpretation or reading through that write-down. And then obviously, we're all attempting to evaluate what the dilution effect for the sale might be on 2024. Any more color on whether it's a full divestiture or 50% divestiture and kind of timetable would help us kind of do that math? Thank you.

Yeah. That's good, David. Thank you. So we're making good progress with the strategic review that we've set out. In terms of the write-down, we are writing the India business down about $322 million and sets the book value in around $2.2 billion or so. And as I stated in my prepared remarks, it really is based on our internal impairment review analysis, discounted cash flow driven and certainly, cost of capital plays a significant role in that. But also, as I highlighted in my comments, it does also consider indications of value that we've determined throughout the process. So I think you can understand what that means, and it will help you kind of think about where things might fit. We've also provided a little bit more breakout on the India financials and some of -- in the back of the presentation, which you'll see. But in terms of revenue, we're a little over $1 billion EBITDA. It's about $355 million. Unlevered AFFO is about $290 million. So that gives you a little bit more information to kind of piece through and kind of assume where we may -- the way we may have. I don't want to get into too much direct guidance. We'll certainly lay that out when we complete our strategic review, which -- the good news is we're happy with the way the process is evolving. We’re confident we’ll be concluding it this year just as we’ve previously mentioned, once we do, we’ll let the investors know exactly what we’ve concluded and what we plan to do there. We’ve said that our goal, and we’re on track to achieve our goals, which is to sell a majority equity stake to a financial investor. We’ve said between 51% and 100%, the reality is it’s probably going to be a majority stake. We probably will retain a stake, so it will be somewhere between that 61% and 100%. That’s where we’re kind of directing the process at this point. But again, we are confident that the process will conclude in the next couple of months. And when it does, we’ll let the investors know exactly what we’ve done.

Thanks so much, guys. Appreciate it. Good luck everybody.

Thanks.

And next, we'll move to Rick Prentiss with Raymond James. Please go ahead.

Guys, I'll echo the bell head, thanks for the memory, Tom. it's been great working with you. I think we went to your first NAREIT like, 14 years ago.

Absolutely. You set up the table for us at the NAREIT conference, Rick, I remember that.

Yeah. And Steve, been great working with you in the past, and we look forward to the new role.

Thanks, Rick.

Yeah. I want to go back to the dividend question from a couple of different angles as well. Rod, I think you mentioned $6.45 a share approximately current dividend announcing getting paid shortly would imply a little bit higher than that $6.48. Are we thinking it's in that range or is the $6.45 million more we should be thinking about?

Yeah. I think at this point, think about it being flat year-on-year. So, of course, every quarter, we get the dividend approved by the Board. But our intention is to hold the dividend flat annually year-over-year to help support deleveraging balance sheet strength and ultimately, AFFO growth as well as total shareholder returns.

Okay. I appreciate the comments that you're trying to kind of decouple from AFFO, more related to the REIT taxable income, it sounds like as well, but sort of implicit in that isn’t also that thought that the India sale is anticipated and that also can kind of affect what the dividend might have been prior thoughts.

Yeah. I guess, Rick, I would say that's not correct. The India business isn't in our REIT at this point. So it really doesn't drive into the retaxable income issue. I think Tom articulated all the drivers with that, which it's really -- this is a management decision and certainly supported by our Board to prioritize capital to prioritize deleveraging and balance sheet strength, it's not impacted by the India process at all. And Tom highlighted, there are certain REIT rules that allow one-time items in some pretax earnings to be moved from one period to another. So there have been times in the past where we've been over under distributed, and we can move some of that over or under distribution back and forth from year-to-year, which is helpful. So in this case, it really is a decision to drive balance sheet strength and using our capital in the best way we can again, to drive total shareholder return in the short term and in the long term. And in this market with uncertain interest rates going forward, we think that's prudent and that's really the driving factor.

Okay. And then, you said there was a small acquisition from AT&T/SBCs talking about history lesson. Can you talk a little bit about what you're seeing in the marketplace as far as multiples in the U.S., Europe and other places.

Yeah, Rick. I would -- let me highlight first that we don't see compelling M&A on our pipeline. I think everyone kind of knows that, I'll just reiterate that. We are seeing some things out there. Certainly, there is -- not as robust, but there is a market in the U.S. with some smaller portfolios. And I don't want to get into a lot of detail in terms of what we see. I think we still see very high prices, even though they may have pulled back slightly from where they were, let's say, a year ago. And for that, we still look at the small deals if we can find compelling ways to expand total shareholder return. We have a little flexibility there. We don't see anything major. But we also just see the majority of the deals are probably still priced a little higher than what today's cost of capital would suggest that they should be. The small acquisition you see in our numbers is really just a buyout of a prior SBC sublease, which you'll be familiar with. It was a small tranche.

Okay. Was that some of the final purchase option stuff as well?

Yeah. That's exactly what it is. It's not the final one. It's just another tranche, and that will continue for a few more years.

Makes sense. And last one for me then. I think you've mentioned that all assets are coming on the tail we reviewed with India getting closer to this process. Any update as far as what you're looking at on the balance sheet that might be possible to say it's not where they are, where we thought it would be or maybe someone else wants to pay more, given private versus pilot multiples?

Yeah. I would say, Rick, we routinely review the portfolio performance across our business globally. We do that from a couple of perspectives. One is, there could be capital recycling opportunities, which we think could be very good for our shareholders over the long term, that certainly the decisions we saw driving our exit from the Mexico fiber business. It also is what is driving our consideration around what we're doing in India. So I'll highlight that, I don't want to get into specific other places where we might be looking. But we are looking at our portfolio, and it's something we do constantly. The other thing we do is, we constantly look at our capital deployments. And from that perspective, we can throttle those back or up depending on where the opportunities are. We can also reallocate or redistribute that capital to where we feel that investments will most -- will be most aligned with our priorities of driving organic growth in the short term and the long term, quality of earnings and consistent durable industry-leading AFFO growth and ultimately, total shareholder return. So I wouldn’t just look at whether or not we sell a business here or there, those would be kind of operational decisions as well as recycling capital, but also kind of our CapEx programs, how much are we investing? Where are we investing? What kind of assets. And again, those decisions are made each and every year, really each and every quarter, and they are meant to and do align with our priorities.

Okay. Thanks, guys. And again, best wishes everybody.

Thanks, Rick.

And next -- pardon me, next we go to Matt Niknam with Deutsche Bank. Please go ahead.

Hey, guys. Thanks for taking the question. Just two related to the U.S. Maybe first on services. So it was a pretty sizable drop off maybe less surprising in terms of what's going on in the industry, but services revenue looks like they dropped off in third quarter. Just wondering if you can share any color in terms of whether this is broad-based or related to one or two customers in particular and how to think about sort of forward trajectory into 4Q? And then, maybe on a somewhat related note, in terms of colo and amendment activity in the U.S., so, 3Q held in relatively stable to what you saw in the first half. I think the implied number for 4Q is around $53 million. Just wondering whether that's sort of an appropriate run rate to consider into next year or whether we should anticipate sort of incremental moderations by virtue of just a broader low in the industry? Thanks.

Sure. I'll start out and then, if you want to jump in, Rod. In terms of our service business, it's inherently a non-run rate business, and that makes it difficult to predict. And you saw that in 2021 when we raised our guide materially over a couple of quarters, we're seeing that this year as we've seen a moderation of activity. What I would say is because of our cooperative MLAs, that's not a direct read across to our property revenue, because we are somewhat insulated from the peaks and valleys of activity with the customers on that. And it's too early to be giving guidance for 2024 and where we see the activity levels going there. What I would just reiterate is this is consistent with what we've seen in other Gs of activity. And the carriers have an initial build phase that starts out with kind of a [indiscernible] of activity, and you'll see that moderate a little bit. We are seeing the capital spend moderate a bit, but it's still settling at levels higher than it was in 4G. And even with our reduced expectations this year for our services business, it's still higher than it was at the same point in 4G. So we're very optimistic that customers will continue to build throughout the cadence of this 5G build. There will be a restart of that activity. We don't know exactly when that's going to happen and we'll give better guidance on that in February as we get more visibility into 2024, what those activity levels are going to be.

Yeah. And Matt, I'll just add a couple of data points. When you think about the co-location amendment additions. This year, we're anticipating a number of around $230 million for the U.S. You recall last year, we were around $150 million, we're at about $58 million this quarter and our guide anticipates a further reduction, but still a number that's greater than $50 million in Q4. I wouldn't just take that Q4 number and annualize. And I think you're better off and we won't give guidance, as Steve suggest until next year. But for modeling purposes, if you look at this year and last year and you split the difference, that's probably a safer place to put in your models today. And then, of course, we'll guide in February, and we'll be able to update that number. The only other thing I would say on services is the $140 million number is still higher than the historical average for services, and we're continuing to maintain a very nice gross margin in that business at all levels. So when we saw that go up to about $270 million, we were still in the 50s, low 50s, 53%, 54% margins as it tapered off a little bit to $140 million, we are able to drive up the margins based on the mix of the revenue and the way we service that revenue. So with a lower revenue, we’re still able to mitigate some of that with higher margins in the upper 50s at this point.

Appreciate it. Thank you both.

You’re welcome.

Thank you. And next, we'll go to Eric Luebchow with Wells Fargo. Please go ahead.

Great. Thanks for taking the question. Just a couple on capital allocation. So given the recent increases in interest rates and cost of capital, I mean, to influence at all as you look into next year, kind of your build-to-suit ambitions internationally or is there any kind of valuation of maybe slowing that to reinvest in other areas and that could potentially be data centers where it seems like you've had really strong performance year-to-date. It seems like growth continues to ramp and maybe you need to allocate more capital to your data center business and how you kind of balance that versus other forms of shareholder return? That would be very helpful. Thank you.

Yeah. Good morning, Eric. Thanks for joining in. And absolutely, all those issues are on the table. We look at our capital allocation every year, certainly, and I would say, even more frequently than that in the idea and the approach is to make the best decisions we can to support long-term total shareholder return. With the increase in cost of capital, the increase in interest rates as well as other factors affecting our markets around the globe, those all play into how much capital we will be deploying, how many build-to-suits will be executing on and where those will be. So that certainly comes into play. I won't get into a lot of detail in terms of decision-making there. I would just maybe highlight again that capital this year is lower than it was last year. And the environment in interest rates, in particular, there's still a fair amount of uncertainty. So we will be continuing to kind of look at that capital plan to decide if putting the capital into build-to-suits around the globe is better than some of the other options we have and a continuation of capital reductions is probably what you'll end up seeing in this environment. That's kind of where we're looking at it. The other part of your question is absolutely, we look at putting capital into places that primarily or specifically drive and align with our priorities. So when you think about us focused on organic growth over the long term, we're focused on quality of earnings. We're focused on operational efficiencies and driving balance sheet strength, all of the different ways that we can execute on achieving those goals are in play. If that means allocating more capital to higher quality markets versus emerging markets or vice versa. If it means putting less into CapEx and more into debt reduction, if it means reducing the growth of the dividend and putting more towards balance sheet and debt reduction. We think about those things all the time and it plays into our capital allocation and it will next year as well, and we'll lay out what that will mean in February.

Great. Thanks. And just one follow-up question. Latin America, you've talked about some delayed churn in that business. So maybe you could just kind of walk us through the cadence of when that you expect that churn to kind of layer through and when you may be on the other side of it. And then, obviously, it seems like given a pretty big reduction in inflation in some of those markets like Brazil, would seem to seem like the CPI-linked escalators will be a bit of a headwind at least into next year. So maybe just talk about some of the moving pieces and the growth outlook there? Thank you.

Yeah. A couple of things that I’d – that I highlight relative to the LatAm market. I mean in 2022, we had roughly 5% churn that was part of embedded in our organic tenant billings growth. In Q3 here, it was 5.2%, so pretty consistent. For the full year of '23, we're projecting that to be around 6%. So that's what's driving. When we say elevated churn, that's exactly kind of what we're seeing there. We are seeing delays in churn. Much of that is tied to the oi churn (ph) that we're experiencing and will continue to experience down in Brazil. We also see churn from Telefonica up in Mexico. Those are kind of the two primary places where we see churn. We've laid out a lot of the different pieces of the oi churn. I won't do that again here. But I would say, we do expect elevated churn to continue into next year. I think you're absolutely right in terms of when inflation moderates in some of these markets, that will potentially lower the organic tenant billings growth from that perspective as well. So we'll be watching all of those issues. I think when it comes to LatAm, we'll be watching the churn as we go into next year. I can't tell you yet that we're beyond the peak here because of this churn that was delayed and potentially pushed into next year. But over the next couple of years, LatAm because of the reduction in inflation that could happen and the elevated churn, we could be in the low single digits in terms of organic tenant billings growth as we head into next year.

Okay. Great. Thank you, Rob. Appreciate it.

You’re welcome.

And next, we can go to Nick Del Deo with Moffett Nathanson. Please go ahead.

Hey. Thanks for taking my questions. And first of all, I want to echo others' comments and congratulate both Tom and Steve on the upcoming changes.

All right. Thank you.

Tom, just following up on the technology outlook you shared, is there any reason to believe that -- call it, the combination of the volume of spectrum that the carriers have been able to deploy and the capacity improvements enabled by 5G and massive MIMO, are going to allow them to stretch out their 5G upgrades over a longer period of time than may have been the case in the past, I think what you call the harvest phase of the 5G deployment or do you think those -- the impact of those improvements are just confident to what we've seen in the past with other technology upgrades?

My sense is that they're more comparable with what we've seen in prior upgrades. Yeah. There are bigger swaps of spectrum in the market today that all of our customers are deploying, particularly in the mid-band. But the demand is disproportionate to what we've seen in the past. So my sense is that given the demand and the additional kind of usage that we would expect over the next several years, it will be very -- rarely, very, very consistent. The data intensity that I even talked about with regards to adding certain levels of video usage is really going to eat into a lot of that spectrum capacity that is out there. So as I said, there is definitely more spectrum out there, definitely more in the mid-band, but I would expect that the usage that we will see and experience over the next several years, we'll put it on the same path as what we've seen in 3G and 4G.

Okay. And then maybe for Rod kind of a follow-up question on the dividend outlook. You noted that coming 2025, we should start to see the dividend grow at kind of in line with taxable income. I think historically, you had outlined sort of a 10% expectation. Should we think of your likely taxable income growth as being in that zone or is it going to be sort of a different level or is it just too early to say?

I think, Nick, it -- we'll have to watch kind of the trajectory of the REIT taxable income. But in general, I think it's probably safe for you to assume that, that will be in line with all material respects with our AFFO growth and AFFO per share growth, that's probably a safe way to kind of think about it. It may not be exact all the time. But given the fact that we can't predict the future certain -- and certainly, we're not going to be guiding long term on that. If you think about where our AFFO and AFFO per share growth is going to be and you think about that being probably consistent with where re-taxable income might be and where the dividend growth could be. That's probably the safest bet. I'd just highlight again, we do have a requirement to dividend out 90% of our REIT taxable income. We typically dividend out closer to 100% because we think that's most beneficial to our shareholders from a tax perspective. So that's important to notice. But then, Tom, mentioned, there are other ways that we manage the dividend payout relative to REIT taxable income, and that's where there is a little bit more discretion on our end to try to match it up to AFFO growth. So that's probably the way to think about it. Think about what our AFFO growth is going to be over the long term, what our AFFO per share growth is going to be and a dividend growth very well may align with that. But with that said, we will be considering capital allocation and the best uses of capital for our shareholders each and every year and each and every quarter. And the dividend specifically, is approved by our Board each year in each quarter.

Okay. That's great. Thank you, Rod. And can I just -- one quick clarification on the one-time revenue benefits you called out. It looks like other was elevated in the U.S. in the quarter. I think that's really the Sprint payments. And any other one-timers that you would call out or be able to describe to us?

The only thing it's really in the settlement area. I mean we had about -- I think it was about $50 million in settlements this quarter. Last year, same quarter was much lower, more in the $15 million range. There's a customer equipment removal settlement in the U.S. that was pulled forward from the fourth quarter into the third quarter, that was probably in the range of $25 million or so. But those are really the items. It's the one-time items, it's settlement fees. We get some small settlement fees throughout our other international markets and the timing of those can be somewhat bumpy. One thing you'll see from our guide is those settlement fees, those one-time items do drop off pretty substantially in Q4. So that's one of the things you can think about when you look at the bridge from Q3 to Q4 in terms of our AFFO, there will be a non-recurrence of close to $40 million, $45 million of those one-time items.

Okay. Great. Thank you so much.

And next, we’ll go to Batya Levi with UBS. Please go ahead.

Great. Thank you. Tom ad Steve, I wish you all the best as well. Just a couple of quick follow-ups. Rod, you mentioned that we'll end leverage at about 5.2, 5.3 at year-end. Where do you want that to be over the next year or two? And we will get specific guidance next year, but just directionally, do you expect AFFO to grow in '24, assuming India is sold at year-end? Thank you.

Yeah. Hey, Batya. Nice to hear from you. Hope you are well. Yes, so we ended the quarter with 5.0 leverage. It's going to be a little higher than that at the end of the year, primarily driven because of those one-time items on the EBITDA side. But our clear focus is to delever to reduce debt as well as reduce our exposure to floating rate debt by driving the percentage of our debt that is exposed to floating rates, and we got that down to about 11% or so. Our goal is to get to 5 times really as soon as we can. And that's what we're focused on, and that's what's driving a lot of our capital allocation decisions is driving balance sheet strength and reducing leverage getting to that 5.0 as soon as we can. So that is clearly the goal. The goal will also -- the goal -- and it's specifically for 2024, that's where we hope to get to. And we're looking for all the opportunities we can find to drive that. And that could include reducing the capital program a little bit next year, that certainly is in line with the dividend decision that you heard us articulate today, you'll see that our SG&A is being held flat year-over-year. You'll see that our margins are expanding that's the result of a lot of global initiatives around operational efficiency to drive additional EBITDA and AFFO. Not only is that good for everyone. It also helps us get our leverage numbers down a little bit. It provides a little bit more cash flow to reduce the debt. So those are all the pieces that we're focused on. The short answer is 5 times as soon as possible. 5 times in 2024 would be great. That's possible, and we're driving towards that and we'll see if we can achieve it. And then with AFFO, I would absolutely say, our portfolio, consistent with the way we've explained this for years is really well positioned for durable AFFO per share growth. This year, that was interrupted primarily because of financing cost headwinds, driven by interest rates, additional shares that we issued for some of our prior acquisitions and some minority interest that we have because of some of the private capital that we raised in certain parts of our business. With our new AFFO per share outlook of around $9.79, we’re pretty much flat with where we were prior year. So we’ve been able to convert a 1% to 2% reduction in AFFO, AFFO per share up to closer to flat, which is good. But when you think about that number being flat and an 8% headwind from financing being embedded in it as well as a 2% headwind from VIL short payments or, let’s say, the VIL reserve of $75 million we made, you adjust for those things, the underlying core operating performance of the assets that we own around the globe are driving double-digit growth without those headwinds. So we absolutely believe this business can drive growth over the long term and in 2024. The thing that we’ll be watching that a potential interrupters would be any material volatility in FX. We don’t know where rates will go. Rate uncertainty is something that we watch. But absent those sorts of items, we think the portfolio is well positioned to grow next year and over the long term.

Got it. Thank you.

You’re welcome.

And ladies and gentlemen, that does conclude our Q&A session for today. I'll hand the call back over to our team.

Great. Thank you, everyone, for joining today's call. If you have any other questions, please feel free to reach out to me here at the Investor Relations team. Have a great day.