American Tower Corp. – BUY – PO US$95.00 (current price US$92.35)
First look 2Q14: Strong leasing demand drives beat and raise
2Q beat across the board stripping out one-offs
AMT reported 2Q rental and management revenue of $1,006m, above our $981m. The company called out a positive impact of $8m in the quarter from accelerated revenue recognition from a major US tenant that was previously expected to occur ratably throughout the year. Domestic rental and management revenue of $659.7m (vs. our $647.7m) and international rental and management revenue of $346.0m (vs. our $333.1m) came in above our estimates. Adj. EBITDA was $682m, well above our $637m and consensus of $645m, even excluding a 1x $7m expensebenefit in the quarter. AMT reported AFFO of $473.9m ($1.19/sh), again well above our $422.2m ($1.06/sh), even backing out a $5m cash tax benefit and the aforementioned $7m opex benefit.
Raised outlook leaves consensus below the midpoint
AMT raised its full-year outlook to reflect: 1) flow-through of the 2Q beat and aforementioned revenue acceleration with a specific US tenant, 2) modestly less-onerous FX assumptions, and 3) the impact from acquisitions closed in the quarter. We will look to the call for more clarity on the magnitude of the moving pieces within guidance. The company’s improved outlook reflects ’14 rental and management revenue guidance of $3.945-4.015b, compared to $3.895-3.975b previously and our current $3.960m. AMT raised its core organic growth rate assumption to 10.6% from 10% as of 1Q. Updated adj. EBITDA guidance of $2.615-2.655b compares to $2.555-2.605b previously, our current $2.601b and the Street at $2.612b. AMT expects domestic rental and management revenue of $2.625b vs. $2.605b previously and our $2.606b, and international rental and management revenue of $1.355b vs. $1.330b previously and our current $1.354b. Updated ’14 AFFO guidance of $1.755-1.795b is up from $1.725-1.765b previously and compares to our current $1.756b.
More to follow on today’s conf. call at 8:30am ET