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American Tower's (AMT) Q4 AFFO Up Y/Y, Revenues Top Estimates

Zacks Equity Research

American Tower Corporation AMT reported fourth-quarter 2018 adjusted funds from operations (AFFO) per share of $1.97. The reported figure improved 23.9% from the year-ago tally of $1.59.  

The company posted total revenues of $2.13 billion, beating the Zacks Consensus Estimate of $2.02 billion. The figure climbed 25.1% year over year.

For full-year 2018, AFFO per share of $7.20 went up 12.9% year over year. This was backed by 11.6% year-over-year growth in revenues to $7.4 billion.

Operating Metrics

Adjusted EBITDA in the reported quarter was $1,425 million, up 38.2% from the prior-year quarter. Adjusted EBITDA margin was 66.8% in the fourth quarter. Selling, general, administrative and development expenses totaled $192.5 million compared with $171.1 million incurred in the year-earlier quarter. Operating income was $388.9 million compared with $329 million reported in the year-ago quarter.

Cash Flow and Liquidity

In the fourth quarter of 2018, American Tower generated $1,263 million of cash from operations, up 59.1% year over year. Free cash flow in the Dec-end quarter was $953 million, up 74% year over year.

At the end of the reported quarter, the company had $1.2 billion in cash and cash equivalents compared with $802.1 million at the end of December 2017. Further, it had around $3.1 billion under its revolving credit facilities (net of any outstanding letters of credit).

Property Segment

Quarterly revenues grossed $2,103 million, up 25.3% year over year. Operating profit was $1,449 million and operating profit margin was 69% during the Oct-Dec period.

In the Property segment, revenues from the United States totaled $976 million, up 7% year over year. Total international revenues amounted to $1,127 million, up 47.2% year over year. Within this, revenues from Asia totaled $637 million, surging 114.5% year over year. EMEA revenues grossed $180 million, up 12% year over year. Latin America revenues totaled $311 million and inched up 0.8% year over year.

Services Segment

Quarterly revenues totaled $29 million, up 9.2% year over year. Operating profit was $17 million and operating profit margin was 60% in the quarter under review.

Outlook for 2019

For 2019, American Tower anticipates property revenues of $7,125-$7,295 million, reflecting decline of 1.4% at the mid-point. Net income is expected between $1,510 million and $1,620 million, marking growth of 23.7% at the mid-point. Adjusted EBITDA is projected at $4,415-$4,525 million, indicating a mid-point decline of 4.2%. Consolidated AFFO is estimated in the band of $3,370-$3,480 million, reflecting a mid-point contraction of 3.2%.

Currently, American Tower carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Stocks in the Same Space

Extra Space Storage, Inc.’s EXR fourth-quarter 2018 core FFO per share of $1.22 outpaced the Zacks Consensus Estimate of $1.20. The figure also came in 8.9% higher than the prior-year quarter.

PS Business Parks, Inc. PSB reported fourth-quarter 2018 core FFO of $1.65 per share, beating the Zacks Consensus Estimate of $1.63. Also, the figure came in 8.6% higher than the prior year’s $1.52.

Lamar Advertising Company LAMR posted fourth-quarter 2018 adjusted funds from operations (AFFO) of $1.48 per share, handily outpacing the Zacks Consensus Estimate of $1.41. This also marked a 7.2% increase from the year-ago tally of $1.38 per share.

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

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