- Total revenue increased by 4.6% year over year to $2.9 billion.
- Net income surged by 96.8% to $908 million.
- Adjusted EBITDA rose by 8.1% to $1.89 billion.
American Tower (AMT -0.27%), a global operator of wireless and broadcast communications infrastructure, released its second-quarter earnings on Tuesday that showed growth on both top and bottom lines.
Total revenue for the quarter came in at $2.9 billion, a 4.6% jump year over year. Net income rose a whopping 96.8% to $908 million, indicating that the company is well-positioned to exceed its annual net income expectations. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 8.1% to $1.89 billion.
Overall, the quarter was financially robust for this real estate investment trust (REIT).
| Metric | Q2 2024 | Q2 2023 | Change (YOY) |
|---|---|---|---|
| Revenue | $2.9 billion | $2.77 billion | 4.6% |
| Net income | $908 million | $461.5 million | 96.8% |
| Adjusted EBITDA | $1.89 billion | $1.749 billion | 8.1% |
| Adjusted funds from operations (AFFO) | $1.31 billion | $1.15 billion | 13.5% |
Source: American Tower. YOY = Year over year. EBITDA = Earnings before interest, taxes, depreciation, and amortization.
Business Overview and Recent Focus
American Tower owns and operates a large portfolio of wireless and broadcast communications real estate. It leases space on these sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies, and municipalities. Recently, the REIT's focus has been on expanding its global footprint and adapting to the growing demand for data and 5G integration. Key factors contributing to its success include stable property revenue, a diversified tenant base, and effective capital allocation strategies.
The company operates over 224,000 communications sites worldwide, with 42,905 in the U.S. & Canada and significant holdings across Latin America, Europe, and Asia-Pacific. Key success factors involve maintaining high lease renewal rates and securing long-term contracts with major wireless carriers.
Notable Quarterly Highlights
During Q2, American Tower's total property revenue rose by 4.6% year over year to $2.85 billion, underscoring the demand for its leased communication sites. The U.S. & Canada segment contributed $1.32 billion in revenue, which was stable from the previous quarter, validating high lease renewal rates and solid demand for site colocation. The international segments saw notable revenue growth, with significant contributions from Latin America and Europe, emphasizing the importance of geographic diversification.
Additionally, tenant billings reported strong growth. Total tenant billings grew 6.1% year over year to $119 million, driven by organic tenant billing growth of 5.3%, amounting to $103 million. This reflects increased market demand for American Tower’s assets and is likely tied to the further deployment of 5G networks and the need for enhanced mobile data capability.
Another bright spot was the performance of its data centers segment, CoreSite, which achieved its second-highest quarter of signed new business. This signifies expanding interest and demand for diverse real estate assets, contributing to American Tower’s overall financial strength.
From a financial perspective, the company’s adjusted funds from operations (AFFO) -- a REIT's nearest equivalent to earnings -- showed an impressive 13.5% growth to $1.31 billion. That works out to $2.79 per share. This increase underscores strong cash flow, reinforcing the company's capacity to fund dividends, reinvest in operations, and pursue acquisitions.
During the quarter, capital expenditures totaled $328 million, focusing primarily on discretionary projects, demonstrating a disciplined approach to capital allocation.
Despite these achievements, certain challenges persist for American Tower, including foreign currency fluctuations, which resulted in a $21.7 million loss for the current period compared to $107.6 million in the prior year. Regulatory hurdles also added complexities, including the ongoing approval stages for pending transactions like the ATC TIPL. The foreign currency impacts and regulatory environment must be managed carefully to avoid potential disruptions.
Looking Ahead
Looking to the future, American Tower management raised its full-year 2024 financial guidance. It updated the midpoint of total property revenue to the range of $11.1 billion to $11.28 billion, reflecting strong operational performance. Additionally, net income expectations are now in the range of $3.225 billion to $3.315 billion, demonstrating management’s confidence in fulfilling its annual financial goals. Adjusted EBITDA is now projected between $7.25 billion and $7.36 billion, an increase from previous expectations, while AFFO per share moved up to a range of $10.48 to $10.72.
For investors, it will be crucial to monitor American Tower's management of foreign currency risks and regulatory developments, especially concerning international operations. Additionally, close attention to ongoing 5G network deployments and tenant billing trends will provide insights into the company's growth trajectory.
