Iron Mountain (IRM) Stock Up 2.4% on Q1 FFO & Revenue Beat

Zacks Equity Research
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Iron Mountain Incorporated IRM shares gained 2.4% in response to better-than-anticipated first-quarter 2022 results.

The adjusted funds from operations (AFFO) per share totaled 91 cents, which surpassed the Zacks Consensus Estimate of 70 cents. This figure was 11.4% higher than the year-ago quarter’s 81 cents.

Both service and storage segments delivered solid performances in the quarter, while the data-center business witnessed continued momentum.

Quarterly total revenues of $1.25 billion increased 15.3% year over year. The top line beat the Zacks Consensus Estimate of $1.23 billion.

According to William L. Meaney, president and CEO of Iron Mountain, “We are delighted to report that we have delivered exceptional performance in the first quarter, including all-time record Revenue and Adjusted EBITDA. This result is reflective of our commitment to growth, the expansion of our offerings, continued resiliency in our storage businesses, deep customer relationships, and strength of our Mountaineers."

Behind the Headlines

Storage rental revenues came in at $751 million in the first quarter, up 6.1% year over year. Also, service revenues amounted to $497 million, reflecting a rise of 32.9%.

Operating expenses increased 12.5% year over year to $1.02 million during the reported quarter.

The Global Data Center business revenues climbed 36.4% in first-quarter 2022 or marked a 38.1% increase from the prior-year quarter, excluding the impacts of foreign-currency exchange.

Moreover, the company executed 35 megawatts of new and expansion leases at its global data-center portfolio. This includes the full lease-up of its 27-megawatt LON-2 site in the March-ended quarter.

The adjusted EBITDA improved 13.3% year over year to $431 million in the quarter, backed by a strong increase in service revenues and productivity benefits. The adjusted EBITDA margin contracted 70 basis points (bps) on a year-over-year basis to 34.5%.

Subsequent to the end of the first quarter, the company executed a 72-megawatt lease on its Northern Virginia campus. Based on such remarkable performance, IRM increased its projection for new leases for 2022 from 50 megawatts to 130 megawatts.

Liquidity

The company exited the first quarter with $195.7 million of cash and cash equivalents, down from $255.8 million as of Dec 31, 2021.

Dividend Update

Concurrent to first-quarter 2022 earnings release, IRM announced its second-quarter common stock cash dividend of 61.85 cents per share. The dividend will be paid out on Jul 6 to its shareholders on record as of Jun 15.

Guidance

Iron Mountain provided guidance for 2022. It projects AFFO per share to lie between $3.70 and $3.82. The Zacks Consensus Estimate for the same is pegged at $3.08.

Management predicts total revenues to be within $5,125-$5,275 million. The Zacks Consensus Estimate for the same is pegged at $5.17 billion. Also, adjusted EBITDA is estimated to be in the band of $1,800-$1,850 million.

Iron Mountain currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Iron Mountain Incorporated Price, Consensus and EPS Surprise

Iron Mountain Incorporated price-consensus-eps-surprise-chart | Iron Mountain Incorporated Quote

Performance of Other REITs

SL Green Realty SLG reported first quarter 2022 FFO per share of $1.65, beating the Zacks Consensus Estimate by a cent. However, the reported FFO per share compared unfavorably with the year-ago quarter’s $1.73.

SLG’s first-quarter performance was driven by a better-than-expected top line and healthy leasing activity.

Duke Realty Corporation’s DRE first-quarter 2022 core FFO per share of 44 cents met the Zacks Consensus Estimate. Moreover, the figure increased 12.8% from the year-ago tally of 39 cents.

DRE’s core FFO improvement was primarily driven by growth in the rental rate, increase in occupancy and highly leased new developments. However, lower revenues were a headwind.

Revenues of $278.2 million declined 3.8% on a year-over-year basis. Nonetheless, the figure surpassed the Zacks Consensus Estimate of $273.1 million.

Alexandria Real Estate Equities, Inc. ARE reported first-quarter 2022 adjusted FFO per share of $2.05, surpassing the Zacks Consensus Estimate of $2.00. The reported FFO per share also compared favorably with the year-ago quarter’s $1.91.

Rental revenues in the quarter were $615.1 million. Also, rental revenues climbed 28.2% from the prior-year quarter’s $479.8 million.

ARE witnessed continued healthy leasing activity and rental rate growth during the quarter.

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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