Key Metrics
- Property Revenue:
- U.S. & Canada: $1,318.0 million (0% yoy)
- Asia-Pacific: $5.7 million (19% yoy)
- Africa: $296.9 million (1% yoy)
- Europe: $212.8 million (6% yoy)
- Latin America: $402.8 million (-12% yoy)
- Data Centers: $233.7 million (10% yoy)
- Total Property Revenue: $2,470 million (-1% yoy)
- Services Revenue: $52 million (100% yoy)
- Total Tenant Billings Growth: $106 million (5.9% yoy)
- Organic Tenant Billings Growth: $94 million (5.2% yoy)
- EBITDA Margin: 66.9% (-0.9% yoy)
- Capex: $433 million (6% yoy)
- Free Cash Flow (FCF): $1,037 million (16.2% yoy)
Forward guidance
- Revenue Projections: Increasing expectations for property revenue from continuing operations by approximately $15 million, driven by the data center segment and a one-time customer settlement in Brazil.
- Organic Tenant Billings Growth: Expecting approximately 5% organic tenant billings growth for the consolidated company, with international expectations increased to about 6% due to the removal of the lower-growth India business.
- Adjusted EBITDA Outlook: Increasing outlook for adjusted EBITDA from continuing operations by $5 million, reflecting revenue drivers and operating expense savings.
- AFFO Per Share Guidance: Revised attributable AFFO per share midpoint adjusted to $10.48, with expectations to grow to approximately $10.50 for 2025.
- Capital Expenditures: Planning to allocate more capital to CoreSite over the next several years, likely meeting or exceeding the $480 million in development spend assumed at the midpoint of the 2024 guide.
- Dividend Growth: Expecting to resume dividend growth in 2025, aligning with mid-single-digit AFFO per share growth rates over time.
- Cost Management: Continued focus on cost management initiatives, with cash SG&A down about $17 million or 3% year-over-year, supporting margin expansion.
Key takeaways
- Positives:
- Steve Vondran noted, "Demand remains strong across our global portfolio," highlighting robust activity in the US, Europe, and emerging markets, particularly driven by mid-band 5G deployment.
- The data center segment is experiencing "record-breaking leasing each year," with Vondran emphasizing, "AI-driven workloads are a growing component of CoreSite's signed leasing," indicating strong future demand.
- The disciplined approach to capital allocation and cost management is yielding results, with Rod Smith stating, "SG&A, excluding bad debt, declined nearly 2% year-over-year," supporting margin expansion.
- European operations are showing healthy growth, with Vondran stating, "We remain confident in driving organic growth, in line with our mid-single-digit expectations in the region going forward."
- The company is strategically enhancing its portfolio by focusing on developed markets and divesting from less profitable regions, as evidenced by the successful sale of its India operations.
- Negatives:
- The company anticipates a step-down in US growth rates due to "the final tranche of Sprint churn," which will impact leasing activity in the near term, as noted by Vondran.
- Rod Smith mentioned potential headwinds from foreign exchange fluctuations, stating, "Our revised FX assumptions include an incremental headwind of $25 million," which could affect revenue.
- The ongoing challenges in emerging markets, particularly with customer WOM in Colombia, led to revenue reserves of $13 million, indicating operational risks in those regions.
- The company is cautious about new capital expenditures in emerging markets, with Vondran stating, "We’re reducing the capital spend there and focusing more in the developed markets," which may limit growth opportunities.
Peer Summary
- Sector Demand: CROWN CASTLE INC noted, "U.S. wireless data usage surpassed 100 trillion megabytes in 2023," indicating robust demand for wireless infrastructure, which may impact AMERICAN TOWER's competitive positioning.
- Growth Projections: SBA COMMUNICATIONS CORP highlighted, "All of our major customers have significant network needs over the next few years," suggesting a strong growth trajectory in site leasing that could intensify competition.
- Operational Challenges: EQUINIX INC mentioned, "Energy constraints and long-term development cycles pose challenges," reflecting potential operational hurdles that could affect the broader data center market.
- Market Dynamics: IRON MOUNTAIN INC stated, "The strength of the U.S. dollar has been a headwind," indicating macroeconomic pressures that could impact revenue across the sector, particularly in international markets.
- Capital Expenditure Trends: CROWN CASTLE INC's unchanged CapEx guidance of $1.2 billion to $1.3 billion suggests a cautious approach to investment, which may influence competitive strategies in infrastructure development.
