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American Tower (AMT) Beats Q3 FFO Estimates, Updates View

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American Tower (AMT - Free Report) reported solid results for the third quarter of 2018, wherein adjusted funds from operations (AFFO) and revenues surpassed the Zacks Consensus Estimates.

Consolidated AFFO came in at $821 million compared with $748 million reported in the year-ago quarter. The AFFO per share came in at $1.85, beating the Zacks Consensus Estimate of $1.82. Further, this compares favorably to AFFO of $1.73 per share reported in the last year. 

The company posted total revenues of $1.79 billion, beating the Zacks Consensus Estimate of $1.77 billion. The figure improved 6.2% year over year.

Operating Metrics

Adjusted EBITDA in the reported quarter was $1,095 million, up 5.3% from the prior-year quarter. Adjusted EBITDA margin was 61.3% in the third quarter. Selling, general, administrative and development expenses totaled $177.9 million compared with $148 million incurred in the year-earlier quarter. Operating income was $567.2 million compared with $561.1 million reported in the year-ago quarter.

Cash Flow and Liquidity

In the third quarter of 2018, American Tower generated $753 million of cash from operations, up 15.3% year over year. Free cash flow in the quarter was $561 million, up 21.3% year over year.

At the end of the reported quarter, the company had $1,027 million in cash and cash equivalents, and around $18,423 million of outstanding long-term debt compared with $802.1 million and $19,430.3 million, respectively, witnessed at the end of December 2017.

Property Segment

Quarterly revenues grossed $1,785 million, up 6.2% year over year. Operating profit was $1,122 million and operating profit margin was 64% during the Jul-Sep period.

In the Property segment, revenues from the United States totaled $958 million, up 5.9% year over year. Total international revenues amounted to $794 million, up 7.1% year over year. Within this, revenues from Asia totaled $323 million, up 8.6% year over year. EMEA revenues grossed $167 million, up 7.1% year over year. Latin America revenues totaled $304 million, up 2% year over year.

Services Segment

Quarterly revenues totaled $34 million, up 34% year over year. Operating profit was $14 million and operating profit margin was 42% in the quarter under review.

Outlook for 2018

For 2018, American Tower anticipates property revenues of $7,200-$7,260 million, reflecting growth of 10.1% at the mid-point. Net income is expected between $1,285 million and $1,315 million, marking growth of 6.1% at the mid-point. Adjusted EBITDA is projected at $4,580-$4,620 million, indicating mid-point growth of 12.5%. Consolidated AFFO is estimated in the range of $3,470-$3,500 million, reflecting mid-point growth of 20.1%.

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.

We now look forward to the earnings releases of other REITs like The Macerich Company (MAC - Free Report) , Federal Realty Trust (FRT - Free Report) and Mark Cali Realty . All three companies are scheduled to report their Q3 numbers on Oct 31.

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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