American Tower Corp.
(AMT - Analyst Report
) reported robust financial numbers for the second-quarter of 2014. Moreover, the company raised its guidance for fiscal 2014 based on rising 4GLTE deployment.
In the reported quarter, American Tower reported net income of $230.1 million or 58 cents per share against $99.8 million or 25 cents per share in the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of 52 cents per share. Total revenue of $1,031.5 million increased 27.5% year over year and was also above the Zacks Consensus Estimate of $1,000 million.
Adjusted EBITDA in the reported quarter stood at $682.2 million, up 30.2% year over year. Adjusted EBITDA margin came in at 66% against 65% in the prior-year quarter. Gross margin was 73.6% against 74.6% in the year-ago quarter. Selling, general & administrative expenses totaled $98.5 million compared with $99.8 million in the year-earlier quarter. Operating income was $402.5 million, up 28.7% year over year. In the reported quarter, Adjusted Funds from Operations (AFFO) grew 29.4% year over year to $470.9 million or $1.19 per share.
At the end of second-quarter 2014, American Tower generated $595.8 million in cash from operations, against $390.5 million in the prior-year quarter. At the end of the quarter under review, the company had $283 million in cash and marketable securities and around $12,749.5 million of outstanding debt compared with $293.6 million and $14,408.1 million at the end of 2013, respectively. Meanwhile, the debt-to-capitalization ratio stood at 0.74 against 0.80 at the end of 2013.
Domestic Rental and Management Segment
Quarterly revenues were $659.7 million, up 26.6% year over year. Gross margin came in at 80.9% compared with 81.1% in the year-ago quarter. Operating margin was flat at 77% year over year.
International Rental and Management Segment
Quarterly revenues stood at $346 million, signifying a 29% year-over-year increase. Gross margin for the segment was 60.5% compared with 61.7% in the year-ago quarter. Operating margin stood at 51%, flat year over year.
Network Development Services Segment
Quarterly revenues totaled $25.7 million, exhibiting an increase of 31.1% year over year. Gross margin was 64.6% compared with 61.7% in the year-ago quarter. Operating margin was 56% versus 51% in the year-ago quarter.
At the end of the second quarter of 2014, American Tower managed 68,822 communications towers. Geographically, the company operates 28,203 wireless towers in the U.S. and 40,619 wireless towers outside the U.S.
In 2014, total revenue from the Rental & Management segment is likely to be in the range of $3,945–$4,015 million. Adjusted EBITDA is anticipated in the band of $2,615–$2,655 million. AFFO is estimated at around $1,755–$1,795 million. Net income is forecasted in the band of $830–$850 million. Capital expenditure is projected in the $925–$1,025 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 Ashford Hospitality Trust, Inc. (AHT - Snapshot Report
) , FelCor Lodging Trust Incorporated (FCH - Snapshot Report
) and W. P. Carey Inc. (WPC - Snapshot Report
) . All three stocks sport a Zacks Rank #1 (Strong Buy).