Iron Mountain (IRM) to Post Q3 Earnings: What's in Store?
Iron Mountain Incorporated IRM is slated to release third-quarter 2023 results on Nov 2, before the opening bell. The quarterly results are likely to display year-over-year revenue growth and funds from operations (FFO) per share.
In the last reported quarter, this real estate investment trust (REIT) delivered a surprise of 1.08% in terms of adjusted FFO (AFFO) per share. Its results reflected solid performance in the storage segment and the data center business.
Over the trailing four quarters, Iron Mountain’s FFO per share surpassed the Zacks Consensus Estimate on all occasions, the average beat being 2.93%. The graph below depicts this surprise history:
Iron Mountain Incorporated Price and EPS Surprise
Iron Mountain Incorporated price-eps-surprise | Iron Mountain Incorporated Quote
Factors to Note
During the third quarter, Iron Mountain is expected to have benefited from its stable and resilient core storage and records management businesses. Storage rental revenue growth, which accounts for the lion’s share of IRM’s revenues, is likely to have been supported by healthy revenue management and volume trends.
The company’s new and existing digital offerings, and healthy demand for traditional services, which comprise charges for related core service activities and a wide array of complementary products and services, are likely to have aided service revenue growth.
Moreover, robust demand for connectivity, interconnection and colocation space is likely to have driven healthy data center leasing activity in the quarter, boosting the company’s Global Data Center business quarterly performance.
Further, Iron Mountain’s diversified tenant and revenue base across different industries is expected to have led to stable revenues during the quarter.
The Zacks Consensus Estimate for storage rental revenues is pegged at $851.4 million, suggesting a 2.5% rise from the prior quarter’s $830.8 million and 12% from the year-ago period’s $760.0 million. Our estimate for quarterly storage rental revenues is pegged at $837.3 million, indicating an increase of 10.1% year over year.
The consensus estimate for service revenues is pegged at $557.8 million, indicating a rise of 5.8% from the prior-year quarter’s $527.0 million. We estimate quarterly service revenues to be $569.5 million, implying growth of 8.2% year over year.
In the second-quarter 2023 earnings presentation, management projected total revenues to be around $1.4 billion, adjusted EBITDA to approach $500 million, AFFO to be nearly $290 million and AFFO per share to be 99 cents for the third quarter.
The consensus estimate for quarterly total revenues is pegged at $1.41 billion, suggesting an increase of 9.5% from the prior-quarter’s reported figure.
Nonetheless, given that a major part of the company’s business lies outside the United States, adverse foreign currency exchange rate fluctuations are anticipated to have impeded its quarterly performance to some extent.
Also, higher interest expenses are likely to have been a spoilsport. We estimate third-quarter interest expenses to rise 23.6% on a year-over-year basis.
The company’s activities during the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at $1.00 over the past month. However, the figure implies growth of 2.04% from the year-ago quarter’s reported number.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an FFO beat for Iron Mountain this time. The right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: IRM has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: IRM currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Performance of Other REITs
American Tower Corporation AMT reported AFFO per share, attributable to AMT common stockholders, of $2.58, which beat the Zacks Consensus Estimate of $2.35 and climbed 9.3% year over year.
Results reflected better-than-anticipated revenues, aided by revenue growth across its Property segment. American Tower recorded healthy year-over-year organic tenant billings growth of 6.3% and total tenant billings growth of 7.3%. It also raised its outlook for 2023.
Equinix Inc.’s EQIX third-quarter 2023 AFFO per share of $8.19 surpassed the Zacks Consensus Estimate of $7.79. The figure improved nearly 6% from the prior-year quarter.
EQIX’s results reflected steady growth in colocation and inter-connection revenues as enterprises and service providers look to integrate artificial intelligence into their strategies and offerings. During the quarter, Equinix’s total interconnections reached 460,500, rising 1% sequentially and 4% year over year. The company also raised its AFFO per share guidance for 2023.
Healthpeak Properties, Inc. PEAK reported third-quarter 2023 FFO as adjusted per share of 45 cents, beating the Zacks Consensus Estimate by a whisker. The reported figure rose 4.6% from the prior-year quarter.
Results reflected better-than-anticipated revenues. Moreover, growth in same-store portfolio cash (adjusted) net operating income was witnessed across the portfolio. The company raised its outlook for the current year.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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