American Tower Beats on Earnings, Revs - Analyst Blog

American Tower Corp. AMT reported robust financial numbers for the first-quarter of 2014. Moreover, the company raised its guidance for fiscal 2014 based on robust 4GLTE deployment.

In the reported quarter, American Tower reported net income of $439.3 million or $1.10 per share against $357.8 million or $0.90 cents per share in the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of 49 cents per share. Total revenue of $984.1 million increased 22.6% year over year and was also above the Zacks Consensus Estimate of $971 million.

Adjusted EBITDA in the reported quarter was $640.5 million, up 22.1% year over year. Adjusted EBITDA margin came in at 65%, in line with the prior-year quarter figure. Gross margin was 73.5% against 74.9% in the year-ago quarter. Selling, general & administrative expenses totaled $110 million compared with $101.2 million in the year-ago quarter. Operating income was $353.6 million, up 18% year over year. In the reported quarter, Adjusted Funds from Operations (AFFO) grew 22.8% year over year to $439.3 million or $1.10 per share.

At the end of first-quarter 2014, American Tower generated $476.6 million in cash from operations, against $394 million in the prior-year quarter. At the end of the quarter under review, the company had $333.4 million in cash and marketable securities and around $14,009 million of outstanding debt compared with $293.6 million and $14,408.1 million at the end of 2013, respectively. The debt-to-capitalization ratio stood at 0.81 against 0.82 at the end of 2013.

Domestic Rental and Management

Quarterly revenues were $635.8 million, up 23.3% year over year. Gross margin came in at 80.9% compared with 82.2% in the year-ago quarter. Operating margin was 77% versus 78% in the prior-year quarter.

International Rental and Management

Quarterly revenues stood at $324.3 million, signifying a 23.9% year-over-year increase. Gross margin for the segment was 61% compared with 63.4% in the year-ago quarter. Operating margin was 52% against 52% in the year-earlier quarter.

Network Development Services Segment

Quarterly revenues totaled $24 million, down by 5.2% year over year. Gross margin was 59.1% compared with 59.4% in the year-ago quarter. Operating margin was 49% versus 48% in the year-ago quarter.

Tower Count

At the end of the first quarter of 2014, American Tower managed 67,710 communications towers. Geographically, the company operates 27,846 wireless towers in the U.S. and 39,864 wireless towers outside the U.S.

Financial Outlook

For 2014, total revenue from the Rental & Management segment is likely to be in the range of $3,895–$3,975 million. Adjusted EBITDA is anticipated in the band of $2,555–$2,605 million. AFFO is estimated at around $1,725–$1,765 million. Net income is forecasted in the band of $820–$850 million. Capital expenditure is projected in the $850–$950 million range.

Other Stocks to Consider

American Tower currently has a Zacks Rank #3 (Hold). Better-performing stocks in the industry where American Tower operates are The GEO Group, Inc. GEO, Sotherly Hotels Inc. SOHO and W. P. Carey Inc. WPC.  All three sport a Zacks Rank #1 (Strong Buy).