Iron Mountain's (IRM) AFFO & Revenues Miss Estimates in Q3
Iron Mountain Incorporated IRM reported third-quarter adjusted funds from operations (AFFO) per share of 99 cents, missing the Zacks Consensus Estimate by a whisker.
Despite solid performance in the storage segment and the data center business, higher interest expenses during the quarter acted as a dampener, partially offsetting AFFO growth. The company reaffirmed its outlook for 2023.
Quarterly total revenues of $1.39 billion, too, lagged the Zacks Consensus Estimate of $1.41 billion.
On a year-over-year basis, AFFO per share and total revenues increased 1% and 7.9%, respectively. Shares of the company are trending upward in the pre-market trading session today.
According to William L. Meaney, president and CEO of Iron Mountain, “We are delighted to have achieved outstanding performance in the third quarter, again resulting in all-time record Revenue and Adjusted EBITDA.”
Concurrent with the earnings release, Iron Mountain entered into a definitive agreement to acquire Regency Technologies for an initial purchase price of $200 million, of which $125 million is to be paid at close and the remainder is due in 2025. This represents an EBITDA multiple of around 7.5X.
Regency Technologies is a leading provider of IT asset disposition services in the United States, with trailing four-quarter revenues of more than $100 million. The transaction, subject to customary closing conditions, is expected to add operational scale and enhance IRM’s capabilities in Asset Lifecycle Management.
Behind the Headlines
Storage rental revenues were $858.7 million in the third quarter, up 12.9% year over year. We had estimated quarterly storage rental revenues of $837.3 million.
Service revenues increased marginally from the prior-year quarter to $529.5 million. Our estimate was pegged at $569.5 million.
The Global Data Center business reported revenues of $127.5 million in the third quarter, rising 27.1% year over year.
The adjusted EBITDA rose 6.5% year over year to nearly $500 million. The adjusted EBITDA margin contracted 50 basis points to 36%.
However, interest expenses flared up 25.5% year over year to $152.8 million in the quarter.
Balance-Sheet Position
IRM exited the third quarter with $170.5 million of cash and cash equivalents, up from $149.5 million as of Jun 30, 2023.
Dividend Update
Concurrently, IRM announced a quarterly cash dividend of 65 cents per share for the fourth quarter of 2023. The dividend will be paid out on Jan 4, 2024, to its shareholders on record as of Dec 15, 2023.
2023 Guidance
Iron Mountain issued its outlook for the fourth quarter of 2023 and reaffirmed its guidance for the current year.
For the fourth quarter, it expects AFFO per share of $1.05. The Zacks Consensus Estimate presently stands at $1.07.
Revenues and adjusted EBITDA are projected to be $1.44 billion and $520 million, respectively.
For the full year, the company projects AFFO per share in the range of $3.91-$4.00. The Zacks Consensus Estimate is currently pegged at $3.97, which lies within expectations.
Revenues are estimated to be $5,500 -$5,600 million, while adjusted EBITDA is anticipated to be $1,940-$1,975 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
American Tower Corporation AMT reported AFFO per share, attributable to AMT common stockholders, of $2.58, beating the Zacks Consensus Estimate of $2.35. The figure 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.
Crown Castle Inc. CCI reported AFFO per share of $1.77, lagging the Zacks Consensus Estimate by a whisker. The reported figure declined 4.3% from the year-ago quarter.
Results reflected lower-than-anticipated revenues. Higher interest expense and lower contribution from adjusted EBITDA were undermining factors. While CCI maintained its outlook for 2023, it issued 2024 AFFO per share guidance below the consensus mark.
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.
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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