American Tower Corp. Earnings Signal Strong Growth in 2015

By Markets Fool.com

Fresh on the heels of completing the largest wireless tower transaction in history, American Tower Corp. reported robust first-quarter earnings results before the market opened this morning. The communications and wireless tower operator beat consensus analyst estimates on both the top and bottom lines and increased its full-year guidance. That guidance could head even higher, as the company is expected to close at least one more tower acquisition deal this year,which would provide another boost to 2015 results.

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Dialing into the numbers
American Tower reported total revenue of $1.08 billion, which was up 9.7% from the first quarter of last year and beat analysts' average estimate by about $10 million. The company's domestic rental and management segment drove that growth, as revenue in the States grew by 12.9% to $718 million. Meanwhile, international rental and management revenue increased by 6.2% to $344 million. International growth would have been even higher if not for foreign currency fluctuations -- organic core growth in revenue was 9.7% internationally after adjusting for the stronger U.S. dollar.

This strong revenue growth produced even stronger growth on the bottom line. Adjusted EBITDA increased 13% to $724 million while adjusted funds from operations, or AFFO, climbed 16.9% to $514 million. On a per-share basis, AFFO was up 13.6% to $1.25, which was $0.09 higher than analysts had expected. This growth was driven by the company's strong leasing activity and acquisitions.

Speaking of acquisitions, American Tower completed a couple in the quarter. In total, the company acquired 196 tower sites for $120 million, including 163 directly purchased from Verizon . In addition, the company paid $5 billion for the exclusive right to lease or otherwise operate and manage 11,285 sites from Verizon. Subsequent to the quarter's end, American Tower closed on a $644 million deal for 4,176 sites as part of its previously announced TIM Brazil acquisition. Finally, the company expects to close its 4,800-communication-tower deal with Airtel Nigeria sometime in the second quarter.

A look ahead
As a result of these acquisitions, as well as strong organic leasing growth, American Tower is increasing its 2015 outlook. It is boosting total rental and management revenue by $290 million, adjusted EBITDA by $150 million, and AFFO by $85 million. However, that guidance does not include the Airtel Nigeria transaction, which is expected to contribute about $145 million in revenue, $38 million in adjusted EBITDA, and $22 million in AFFO at current exchange rates.

Meeting the midpoint of American Tower's newly increased guidance would represent revenue growth of 14.3%, adjusted EBITDA growth of 13.6%, and AFFO growth of 13.2% over the prior year. However, this guidance also assumes the company's current outlook for exchange rates stays within its expected range. It also does not incorporate any additional acquisitions in 2015.

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Investor takeaway
American Tower delivered another strong quarter as its acquisitions over the past year drove strong growth on the top and bottom lines. Acquisitions in 2015 are expected to fuel further top-line growth, while strong leasing of additional space on its towers is expected to drive bottom-line growth. The only real headwinds are currencies, which are slowing international growth at the moment, but could prove to be a tailwind if the currency situation reverses course.

The article American Tower Corp. Earnings Signal Strong Growth in 2015 originally appeared on Fool.com.

Matt DiLallo owns shares of American Tower, Apple, and Verizon Communications andhas the following options: long January 2017 $80 calls on American Tower. The Motley Fool recommends American Tower, Apple, and Verizon Communications. The Motley Fool owns shares of American Tower and Apple and has the following options: long January 2017 $80 calls on American Tower. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.