American Tower Corporation (AMT) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Q2 Performance: American Tower reported robust performance in Q2, driven by resilient demand for its assets, leading to solid growth across key areas.
• CoreSite's Exceptional Quarter: CoreSite, part of American Tower, experienced double-digit revenue growth, marking its second highest quarter of signed new leasing and a record cash backlog.
• Positive Collections in India: The company continued to see positive collection trends in India, allowing for the reversal of approximately $67 million of previously reserved revenue.
• Strategic Capital Allocation: American Tower is increasing its investments in developed markets, demonstrating a strategic pivot towards higher quality, sustainable earnings growth.

Pessimistic Highlights

• Emerging Market Challenges: Financial risks in emerging markets have outpaced initial expectations, leading to results that fall short of American Tower's standards in certain areas.
• FX Headwinds: The company revised its full-year outlook due to negative foreign exchange impacts, indicating a challenging macroeconomic environment.

Company Outlook

• Deleveraging and Investment Focus: American Tower aims to strengthen its balance sheet and focus on investments in developed markets and high-quality return profiles. The anticipated sale of ATC India is expected to reduce emerging market exposure and contribute to long-term value creation.
• Continued Growth in CoreSite and US Market: The company expects continued strong demand in its US and CoreSite segments, supporting long-term shareholder value.

Q & A Highlights

• Q: Can you update on opportunities for M&A in the US, Europe, and data centers? (Simon Flannery, Morgan Stanley)

  A: We're focused on deleveraging and internal CapEx programs. Current evaluations of M&A opportunities do not align with our priorities. In CoreSite, we see ample opportunity for investment in existing campuses. (Steve Vondran)

• Q: What's the outlook on the US leasing environment and dividend policy exiting 2024? (Michael Rollins, Citi)

  A: US leasing is in line with expectations, driven by 5G rollouts. For dividends, we target distributions to equal about 100% of our pretax income, expecting dividend growth to resume in 2025 in line with AFFO and AFFO per share growth. (Steve Vondran, Rod Smith)

• Q: Can you discuss the status of the India sale and decommissioning towers? (Ric Prentiss, Raymond James)

  A: We're targeting a second-half closing for the India sale. Decommissioning is part of our cost management strategy, contributing to direct expense savings. (Steve Vondran, Rod Smith)

• Q: How does the holistic MLA with AT&T impact the business outlook? (David Barden, Bank of America)

  A: The comprehensive MLA structure provides revenue predictability. One major customer's holistic portion has expired, impacting growth rates. We're focused on maximizing organic growth and disciplined reinvestment. (Steve Vondran)

• Q: What's driving demand in CoreSite, and how do you view AFFO growth trends? (Matt Niknam, Deutsche Bank, Eric Luebchow, Wells Fargo)

  A: Demand in CoreSite is driven by hybrid cloud deployments and AI. We're optimistic about returning to high single-digit AFFO growth, supported by strong fundamentals across our portfolio. (Steve Vondran, Rod Smith)

• Q: Are comprehensive MLAs being considered internationally? What's the outlook for AFFO growth? (Batya Levi, UBS)

  A: We're discussing comprehensive MLAs with international partners but have no agreements yet. Assuming stable interest rates and FX, we're on a path for upper single-digit AFFO per share growth. (Steve Vondran, Rod Smith)