American Tower Corp (AMT 0.68%) reported its second-quarter results before the opening bell on Wednesday. The communications tower REIT delivered better-than-expected Adjusted Funds From Operations, or AFFO, as a result of recent acquisitions. With another acquisition recently closing, and a strong pipeline of future opportunities, the company is raising its full-year guidance again this year.
Dialing into the numbers
American Tower reported revenue of nearly $1.2 billion for the quarter, which was 13.9% higher than the year-ago quarter. Driving this growth was the company's Domestic Rental and Management Segment, as revenue increased 21.7%, to $803 million, largely due to the company's recently completed acquisition of a tower portfolio from Verizon. This helped to overcome tepid growth in the company's International Rental and Management Segment, as revenue only increased by 1.6%, to $351 million, as a result of strong headwinds from foreign currency fluctuations.
Core growth, which the company uses for more of an apples-to-apples comparison between quarters as it strips out charges and other fluctuations, was much stronger in the international segment, as revenue, on a core basis, was up 28.5%. Meanwhile, organic core growth, which measures growth not driven by acquisitions, was also solid in both segments, as it was up 5.8% domestically and 11.6% internationally.
This strong overall revenue growth enabled American Tower to deliver solid bottom-line growth. AFFO, which is a key metric for a REIT like American Tower, was up 13.3%, to $527 million. However, AFFO per share didn't grow quite as fast, as it was only up 5.9%, to $1.26 per share, as a result of a higher share count from the aforementioned acquisition. That said, it did beat the consensus estimate of analysts by $0.06 per share.
A look ahead
American Tower expects its strong growth to continue for the balance of 2015. As a result of recent acquisitions, as well as the expectation for solid organic core growth, the company is raising its full-year outlook. The company is boosting its full-year revenue outlook by $90 million, to a range of $4.6 billion-$4.7 billion, which represents growth at the midpoint of 16.6% year over year, with midpoint core growth of 22.9% year over year. Meanwhile, AFFO guidance is up by $60 million, to around $2.1 billion. At the midpoint, that's 16.5% higher than last year.
In the company's press release CEO Jim Taiclet provided some context for this growth, as well as the company's outlook for the future. He said that:
We are confident that the customer network investment trends developing in markets like Mexico, India and Brazil position us well to not only deliver 2015 Core Growth of over 20% in rental and management revenue, Adjusted EBITDA and AFFO, but also to drive compelling growth in all three of these metrics well into the future.
In addition to what he is seeing internationally, Taiclet also pointed out that the company has 900 lease applications in its pipeline for tower space on its Verizon portfolio. These new tenants will help drive organic core growth over the near and long term, and create more value out of that acquisition.
Overall, American Tower reported a pretty solid quarter. While acquisitions continue to drive growth, the company is doing a solid job organically growing its tenant base, which creates more value out of each location. As a result, the company expects it will be able to deliver more than 20% growth not just this year, but for the foreseeable future.