Helios Towers (HTWS) Q3 2024 TU earnings summary

Executive summary

• Achieved over 2,000 tenancy additions year-to-date, with a tenancy ratio of 2.04, mainly driven by Oman and Tanzania, progressing toward the 2.2 target by 2026.

• Adjusted EBITDA grew 16% year-over-year to $311.9m, with margin up 3ppt to 53%, and operating profit increased 69% year-over-year.

• Net leverage reduced by 0.3x year-over-year to 4.2x, with a target below 4.0x for FY24.

• Business underpinned by $5.3bn in contracted revenues, with an average remaining contract life of 7.1 years.

• FY 2024 guidance for tenancy additions, Adjusted EBITDA, and portfolio free cash flow raised to the high end of prior ranges.

Financial highlights

• Revenue up 10% year-over-year to $585m, with Q3 revenue at $195m; Adjusted EBITDA reached $312m YTD (+16% YoY), margin at 53%.

• Portfolio free cash flow up 10% year-over-year to $218m; cash conversion at 70%.

• EBITDA margin increased by up to 3 percentage points year-over-year, driven by co-location lease-up and operational improvements.

• 98% of revenues from multinational MNOs; 68% of revenues in hard currency.

• CapEx for first nine months: $113m; full-year guidance $170–$180m.

Outlook and guidance

• FY 2024 guidance: >2,400 tenancy additions, Adjusted EBITDA c.$420m, portfolio free cash flow c.$290m, capex $170m–$180m.

• Net leverage expected below 4.0x by year-end, with further deleveraging planned for 2025.

• FY 2025: tenancy ratio >2.1x, low double-digit Adjusted EBITDA growth, c.1ppt ROIC expansion, c.3.5x net leverage.

• Targeting 2.2 tenancy ratio and ~3x leverage by 2026, opening potential for investor distributions.

• Free cash flow turning positive, with inflection point reached in 2024.