American Tower Corporation ((AMT)) has held its Q4 earnings call. Read on for the main highlights of the call.
American Tower Corporation’s recent earnings call revealed a mixed sentiment, showcasing strong performance in 2024 and a positive outlook for 2025, particularly in the data center business and cost management. However, the company also acknowledged challenges such as Sprint churn, emerging markets issues, and FX and interest rate volatility.
Strong 2024 Performance
American Tower closed 2024 on a high note with property revenue growth of nearly 1%, which translates to 3% on an FX-neutral basis. The company also reported adjusted EBITDA growth of approximately 2%, or over 4% when excluding FX impacts, demonstrating robust financial health.
Data Center Business Success
The CoreSite data center business was a standout performer, with fourth-quarter revenue growth nearing 10%. This success underscores the demand and pricing resilience for interconnection-centric, retail-oriented colocation services, highlighting a key area of strength for American Tower.
Cost Management and Efficiency
In 2024, American Tower successfully reduced cash SG&A expenses, excluding bad debt, by approximately $35 million compared to 2023. The company anticipates further reductions in 2025, showcasing its commitment to cost efficiency and operational effectiveness.
Positive Outlook for 2025
Looking ahead, American Tower expects organic tenant billings growth of about 5% in 2025, with the U.S. data center business projected to grow at nearly 12% at the midpoint. This positive outlook reflects the company’s strategic focus on sustaining solid performance.
Sprint Churn Impact
The final tranche of Sprint churn is expected to impact organic tenant billings growth, particularly in the first three quarters of 2025. This challenge highlights the ongoing adjustments the company must navigate in its tenant portfolio.
Emerging Markets Challenges
American Tower is strategically reducing discretionary CapEx in emerging markets, shifting focus to developed market platforms due to persistent challenges in these regions. This move aims to optimize capital allocation and mitigate risks.
FX and Interest Rate Volatility
The company faced significant challenges from FX devaluation and interest rate volatility, resulting in net interest headwinds of $80 million, equating to a roughly 1.7% negative impact on growth. This underscores the importance of managing global financial risks.
Guidance and Strategic Priorities
American Tower’s guidance for 2025 emphasizes strategic priorities and financial targets, including maintaining a leverage target of 5 times and achieving a $35 million reduction in cash SG&A expenses. The company plans significant capital deployment, focusing on developed markets and data center development, while forecasting AFFO per share growth of over 4% and cash adjusted EBITDA growth of approximately 1%, or over 3% on an FX-neutral basis.
In summary, American Tower’s earnings call reflected a balanced sentiment, with strong performance and a positive outlook tempered by challenges in certain areas. The company’s strategic focus on cost management, data center growth, and disciplined capital allocation positions it well for sustained growth amidst global financial uncertainties.