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American Tower's (AMT) Q2 AFFO Beats Estimates, Revenues Up

Zacks Equity Research

American Tower Corporation AMT reported second-quarter 2019 adjusted funds from operations (AFFO) per share of $2.01, beating the Zacks Consensus Estimate of $1.93. Further, the reported figure improves 15.5% from the year-ago tally of $1.74.  

Results indicate growth in revenues from property segment as well improvement in adjusted EBITDA. Further, cash from operations for the June-end quarter improved on a year-over-year basis.

The company generated total revenues of $1.89 billion, beating the Zacks Consensus Estimate of $1.84 billion. The figure also climbed 6.1% year over year.

Operating Metrics

Adjusted EBITDA in the reported quarter was $1,183 million, up 9.2% from the prior-year quarter.

Adjusted EBITDA margin was 62.6% in the second quarter. Selling, general, administrative and development expenses totaled $164.8 million compared with $157.9 million incurred in the year-earlier quarter. Operating income was $683.9 million compared with $546 million reported in the year-ago quarter.

Cash Flow and Liquidity

In the second quarter of 2019, American Tower generated $1,037 million of cash from operating activities, up 10.3% year over year. Free cash flow in the quarter was $789 million, up 10.9% year over year.

At the end of the reported quarter, the company had around $1.19 billion in cash and cash equivalents compared with $1.2 billion posted at the end of December 2018. Further, it had around $4.3 billion under its revolving credit facilities (net of any outstanding letters of credit).

Property Segment

Quarterly revenues grossed $1,849 million, up 5.7% year over year. Operating profit was $1,196 million and operating profit margin was 65% during second-quarter 2019.

Within the Property segment, revenues from the United States totaled $1,007 million, up 5.3% year over year. Total international revenues amounted to $842 million, up 6.2% year over year. Within this, revenues from Asia totaled $321 million, improving 4.3% year over year. EMEA revenues grossed $175 million, up 5% year over year. Latin America revenues totaled $346 million and improving 8.7% year over year.

Services Segment

Quarterly revenues totaled $41 million, up 29.2% year over year. Operating profit was $25 million and operating profit margin was 61% in the June-end quarter.

Outlook for 2019

For 2019, American Tower revised its guidance and anticipates property revenues of $7,205-$7,335 million, reflecting decline of 0.6% at the mid-point. Net income is expected between $1,590 million and $1,660 million, marking growth of 28.5% at the mid-point. Adjusted EBITDA is projected at $4,490-$4,570 million, indicating a mid-point decline of 2.9%. Consolidated AFFO is estimated in the $3,460-$3,530 million band, reflecting a mid-point contraction of 1.2%.

Bottom Line

Amid increasing U.S. consumer demand for mobile data, American Tower witnessed 7.5% U.S. organic tenant billings growth during the April-June quarter. Additionally, growth in property revenues boosted the top line.  

Further, American Tower is making efforts to expand its footprint in the United States and international markets, in a bid to benefit from existing growth opportunities in the global wireless industry. This will likely fuel the company’s long-term growth.  

Currently, American Tower carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Tower Corporation (REIT) Price, Consensus and EPS Surprise

American Tower Corporation (REIT) Price, Consensus and EPS Surprise

American Tower Corporation (REIT) price-consensus-eps-surprise-chart | American Tower Corporation (REIT) Quote

Performance of Other REITs

Cousins Properties Incorporated CUZ reported second-quarter FFO per share (before TIER transaction costs) of 71 cents, missing the Zacks Consensus Estimate by a whisker. Nonetheless, the figure came in higher than the prior-year quarter’s reported tally of 60 cents.

SL Green Realty Corp. SLG delivered second-quarter 2019 FFO of $1.82 per share, surpassing the Zacks Consensus Estimate of $1.73. The tally includes promote income from the sale of 521 Fifth Avenue of $3.4 million or 4 cents per share. Results also compared favorably with the year-ago quarter’s tally of $1.69.

Crown Castle International Corp. CCI posted second-quarter adjusted AFFO per share of $1.48, up from the prior-year figure of $1.31. Furthermore, the reported figure outpaced the Zacks Consensus Estimate of $1.43.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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