American Tower Corporation (NYSE: AMT) yesterday reported financial results for the quarter ended June 30, 2019.
Jim Taiclet, American Tower’s CEO, stated, “We had another strong quarter in Q2 2019, highlighted by 7.5 percent Organic Tenant Billings Growth in the U.S. and sustained momentum across our international operations. U.S. consumer demand for mobile data continues to expand more than 30 percent per year, with broadly similar usage growth rates in our overseas markets fueling ongoing demand for tower space. In addition,” Taiclet said, “initial 5G deployments are now picking up in the U.S. and we are seeing increasing signs that low and mid-band spectrum on macro towers will serve as a substantial component of next generation networks.”
- Total revenue increased 6.1 percent to $1,890 million
- Property revenue increased 5.7 percent to $1,849 million
- Net income increased 38.1 percent to $434 million
- Adjusted EBITDA increased 9.2 percent to $1,183 million
- Consolidated AFFO increased 7.8 percent to $910 million
MoffettNathanson’s Nick Del Deo said it’s nearly impossible to paint a fundamental bear case for a towerco with a domestic focus and well-written leases given the strength of the business model and underlying demand, and American Tower certainly falls into this camp. Del Deo said, “stellar domestic operating results” have fueled this rally more than any other single factor. “The company’s organic gross domestic growth rate leapt from 7.4 percent in Q4 2017 to 9.6 percent in Q1 2019, with commensurate increases in net growth,” he said. “Its acceleration has been faster and its absolute level of performance greater than that of peers Crown Castle and SBA.”
Spencer Kurn, analyst with New Street Research, said the earnings beat expectations due to higher one-time other revenue but organic growth was weaker than expected both domestically and internationally.
“Management increased guidance, largely from factoring in the one-time benefits this quarter,” Kurn said, “but also partly to higher organic growth in the U.S. relative to their initial outlook. U.S. organic growth declined sequentially for AMT for the first time in five quarters, and guidance implies that it should continue to decline for the rest of the year. While growth is still at a high level relative to history, we remain Neutral on AMT because we think elevated multiples will be difficult to sustain as growth decelerates,” he said.
Taiclet, however said their strong second quarter results indicate that their “Stand and Deliver strategy” of leading wireless connectivity around the globe predominantly with macro towers, innovating for a mobile future, driving efficiency both internally and for the industry and selectively growing our portfolio to serve their tenants, “is the right course for American Tower and our stockholders.” The success of this strategy, according to Taiclet, has led them to raise their full year expectations for all of their key metrics.
August 1, 2019
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