AMT: Q3 2023 Beat And Raise, Yet Again

American Tower (AMT) reported very strong results for Q3 2023. To avoid being thrown off by numbers being pulled between quarters, we focus primarily on the annual guidance. Guidance improved in Q2 2023 and again in Q3 2023. Who doesn’t like back-to-back “beat and raise” quarters? Shares rallied abruptly the next morning but remain very cheap overall.

For reference: 

• Q1 2023 was technically a beat and raise, but AFFO guidance growth was just shifting overhead costs to stock compensation. 

• Q2 2023 was a pretty good beat and raise.

• Q3 2023 is the best beat and raise.

2023 Outlook Adjustments By Quarter

The first model shows the factors AMT highlights in their bridge for AFFO growth.

The annual guidance for AFFO is updated each quarter. Each column here represents the change in the outlook compared to the prior value, except for the last column:

For instance, reading from left to right we can see:

• Cash Adjusted EBITDA / Other was expected to grow by $405 relative to 2022. 

• In Q1 2023, they decreased that figure by $25. 

• In Q2 2023, they increased it by $35. 

• In Q3 2023, they increased it by $61.

• The cumulative impact of those adjustments is an increase of $476 compared to 2022.

Red numbers represent a change that negatively impacts AFFO. We calculate the new value after each change.

Other Key Guidance Updates

I have another presentation I like to use to include the revenue growth and adjust AFFO to remove stock compensation adjustments. It pulls interest expenses from a different part of the statement, so the numbers there don’t quite match. 

Three observations:

1. Most of the revenue improvement is driven by cash revenue. That’s good.

2. Interest expense headwinds are getting a bit higher, which makes sense given the surge in rates.

3. Projected AFFO continues to improve. The majority of that improvement does not come from using stock compensations. That’s good. That kind of AFFO growth would not impress us.

Revenue Growth Driven by Tower Growth

AMT is delivering strong growth in revenues, adjusted EBITDA, and modest growth in AFFO. The growth in revenue and adjusted EBITDA is fueled by the growth in tenant billings on their towers: