-- Net Income of $1 million; Achieves record
quarterly Revenue and Adjusted EBITDA --
-- Increases quarterly dividend per share by 5%
--
Iron Mountain Incorporated (NYSE: IRM), a global leader in
innovative storage, data center infrastructure, asset lifecycle
management and information management services, announces financial
and operating results for the second quarter of 2023. The
conference call / webcast details, earnings call presentation and
supplemental financial information, which includes definitions of
certain capitalized terms used in this release, are available on
Iron Mountain’s Investor Relations website. Reconciliations of
non-GAAP measures to the appropriate GAAP measures are included
herein.
"We are pleased to have delivered strong performance in the
second quarter, resulting in all-time record Revenue and Adjusted
EBITDA," said William L. Meaney, President and CEO of Iron
Mountain. "The dedication and drive of our team is unwavering. We
remain grateful to our Mountaineers for their service to our
customers, which has delivered these outstanding results today. The
resilience of our business model and the success of Project
Matterhorn are fueling our sustained growth trajectory."
Financial Performance Highlights for
the Second Quarter of 2023
($ in millions, except per share data)
Three Months Ended
Y/Y % Change
Year to Date
Y/Y % Change
6/30/23
6/30/22
Reported
$
Constant
Fx
6/30/23
6/30/22
Reported
$
Constant
Fx
Storage Rental Revenue
$831
$753
10%
11%
$1,641
$1,504
9%
11%
Service Revenue
$527
$536
(2)%
(1)%
$1,031
$1,033
—
1%
Total Revenue
$1,358
$1,290
5%
6%
$2,672
$2,538
5%
7%
Net Income
$1
$202
(99)%
$67
$244
(73)%
Reported EPS
$0.00
$0.68
(100)%
$0.22
$0.83
(73)%
Adjusted EPS
$0.40
$0.46
(13)%
$0.83
$0.85
(2)%
Adjusted EBITDA
$476
$455
5%
5%
$936
$886
6%
7%
Adjusted EBITDA Margin
35.0%
35.3%
(30) bps
35.0%
34.9%
10 bps
AFFO
$277
$271
2%
$561
$535
5%
AFFO per share
$0.94
$0.93
1%
$1.91
$1.83
4%
- Total reported revenues for the second quarter were $1.4
billion, compared with $1.3 billion in the second quarter of 2022,
an increase of 5.3%. Excluding the impact of foreign currency
exchange ("Fx"), total reported revenues increased 6.0% compared to
the prior year, driven by a 10.9% increase in storage rental
revenue, while service revenue decreased 1.0%, as a result of
year-on-year component price declines, which have now stabilized.
Service revenue growth increased 7.7% on a constant currency basis
excluding the ALM business. Year to date, total reported revenues
increased 5.3%, or 6.7% excluding the impact of Fx.
- Net Income for the second quarter was $1.1 million compared
with $201.9 million in the second quarter of 2022. Year to date,
net income was $66.7 million, compared with $243.6 million in
2022.
- Adjusted EBITDA for the second quarter was $475.7 million,
compared with $454.7 million in the second quarter of 2022, an
increase of 4.6%. On a constant currency basis, Adjusted EBITDA
increased by 4.7% in the second quarter, driven by the strong
increase in storage rental revenue and data center commencements.
On a constant currency basis, year to date Adjusted EBITDA
increased 6.6%.
- FFO (Normalized) per share was $0.71 for the second quarter,
compared with $0.74 in the second quarter of 2022. Year to date,
FFO (Normalized) per share was $1.42, compared with $1.41 in 2022,
or an increase of 0.7%.
- AFFO was $277.0 million for the second quarter, compared with
$270.9 million in the second quarter of 2022, an increase of 2.2%,
driven by improved Adjusted EBITDA and lower cash taxes. Year to
date, AFFO was $561.0 million, compared with $535.2 million in
2022, or an increase of 4.8%.
- AFFO per share was $0.94 for the second quarter, compared with
$0.93 in the second quarter of 2022, an increase of 1.1%, driven by
improved Adjusted EBITDA. Year to date, AFFO per share was $1.91,
compared with $1.83 in 2022, or an increase of 4.4%.
Dividend
On August 3, 2023, Iron Mountain's Board of Directors declared a
quarterly cash dividend of $0.65 per share for the third quarter,
representing an increase of 5%. The third quarter 2023 dividend is
payable on October 5, 2023, for shareholders of record on September
15, 2023.
Guidance
Iron Mountain affirmed full year 2023 guidance; details are
summarized in the table below.
2023 Guidance(1)
($ in millions, except per share data)
2023 Guidance
Y/Y % Change at
Midpoint
Total Revenue
$5,500 - $5,600
~9%
Adjusted EBITDA
$1,940 - $1,975
~7%
AFFO
$1,150 - $1,175
~5%
AFFO Per Share
$3.91 - $4.00
~4%
(1) Iron Mountain does not provide a
reconciliation of non-GAAP measures that it discusses as part of
its annual guidance or long term outlook because certain
significant information required for such reconciliation is not
available without unreasonable efforts or at all, including, most
notably, the impact of exchange rates on Iron Mountain’s
transactions, loss or gain related to the disposition of real
estate and other income or expense. Without this information, Iron
Mountain does not believe that a reconciliation would be
meaningful.
About Iron Mountain
Iron Mountain Incorporated (NYSE: IRM) is a global leader in
innovative storage, data center infrastructure, asset lifecycle
management and information management services. Founded in 1951 and
trusted by more than 225,000 customers worldwide, Iron Mountain
helps customers CLIMB HIGHER™ to transform their businesses.
Through a range of offerings including digital transformation, data
centers, secure records storage, information management, asset
lifecycle management, secure destruction, and art storage and
logistics, Iron Mountain helps businesses bring light to their dark
data, enabling customers to unlock value and intelligence from
their stored digital and physical assets at speed and with
security, while helping them meet their environmental goals.
To learn more about Iron Mountain, please visit:
www.IronMountain.com and follow @IronMountain on Twitter and
LinkedIn.
Forward Looking
Statements
We have made statements in this press release that constitute
"forward-looking statements" as that term is defined in the Private
Securities Litigation Reform Act of 1995 and other securities laws.
These forward-looking statements concern our current expectations
regarding our future results from operations, economic performance,
financial condition, goals, strategies, investment objectives,
plans and achievements.
These forward-looking statements are subject to various known
and unknown risks, uncertainties and other factors, and you should
not rely upon them except as statements of our present intentions
and of our present expectations, which may or may not occur. When
we use words such as “believes”, “expects”, “anticipates”,
“estimates”, “plans”, “intends”, “pursue”, “will” or similar
expressions, we are making forward-looking statements. Although we
believe that our forward-looking statements are based on reasonable
assumptions, our expected results may not be achieved, and actual
results may differ materially from our expectations. In addition,
important factors that could cause actual results to differ from
expectations include, among others: (i) our ability or inability to
execute our strategic growth plan, including our ability to invest
according to plan, grow our businesses (including through joint
ventures), incorporate alternative technologies into our offerings,
achieve satisfactory returns on new product offerings, continue our
revenue management, expand and manage our global operations,
complete acquisitions on satisfactory terms, integrate acquired
companies efficiently and transition to more sustainable sources of
energy; (ii) changes in customer preferences and demand for our
storage and information management services, including as a result
of the shift from paper and tape storage to alternative
technologies that require less physical space; (iii) the impact of
our distribution requirements on our ability to execute our
business plan; (iv) the costs of complying with and our ability to
comply with laws, regulations and customer requirements, including
those relating to data privacy and cybersecurity issues, as well as
fire and safety and environmental standards; (v) the impact of
attacks on our internal information technology (“IT”) systems,
including the impact of such incidents on our reputation and
ability to compete and any litigation or disputes that may arise in
connection with such incidents; (vi) our ability to fund capital
expenditures; (vii) our ability to remain qualified for taxation as
a real estate investment trust for United States federal income tax
purposes (“REIT”); (viii) changes in the political and economic
environments in the countries in which we operate and changes in
the global political climate; (ix) our ability to raise debt or
equity capital and changes in the cost of our debt; (x) our ability
to comply with our existing debt obligations and restrictions in
our debt instruments; (xi) the impact of service interruptions or
equipment damage and the cost of power on our data center
operations; (xii) the cost or potential liabilities associated with
real estate necessary for our business; (xiii) unexpected events,
including those resulting from climate change or geopolitical
events, could disrupt our operations and adversely affect our
reputation and results of operations; (xiv) failures to implement
and manage new IT systems; (xv) other trends in competitive or
economic conditions affecting our financial condition or results of
operations not presently contemplated; and (xvi) the other risks
described in our periodic reports filed with the SEC, including
under the caption “Risk Factors” in Part I, Item 1A of our Annual
Report. Except as required by law, we undertake no obligation to
update any forward-looking statements appearing in this
release.
Reconciliation of Non-GAAP
Measures
Throughout this release, Iron Mountain discusses (1) Adjusted
EBITDA, (2) Adjusted EPS, (3) FFO (Nareit), (4) FFO (Normalized),
and (5) AFFO. These measures do not conform to accounting
principles generally accepted in the United States (“GAAP”). These
non-GAAP measures are supplemental metrics designed to enhance our
disclosure and to provide additional information that we believe to
be important for investors to consider in addition to, but not as a
substitute for, other measures of financial performance reported in
accordance with GAAP, such as operating income, net income (loss)
attributable to Iron Mountain Incorporated or cash flows from
operating activities (as determined in accordance with GAAP). The
reconciliation of these measures to the appropriate GAAP measure,
as required by Regulation G under the Securities Exchange Act of
1934, as amended, and their definitions are included later in this
release.
Condensed Consolidated Balance
Sheets
(Unaudited; dollars in thousands)
6/30/2023
12/31/2022
ASSETS
Current Assets:
Cash and Cash Equivalents
$149,493
$141,797
Accounts Receivable, Net
1,182,154
1,174,915
Prepaid Expenses and Other
279,522
230,433
Total Current Assets
$1,611,169
$1,547,145
Property, Plant and Equipment:
Property, Plant and Equipment
$9,546,766
$9,025,765
Less: Accumulated Depreciation
(3,943,300)
(3,910,321)
Property, Plant and Equipment, Net
$5,603,466
$5,115,444
Other Assets, Net:
Goodwill
$4,928,145
$4,882,734
Customer and Supplier Relationships and
Other Intangible Assets
1,348,679
1,423,145
Operating Lease Right-of-Use Assets
2,671,371
2,583,704
Other
515,739
588,342
Total Other Assets, Net
$9,463,934
$9,477,925
Total Assets
$16,678,569
$16,140,514
LIABILITIES AND EQUITY
Current Liabilities:
Current Portion of Long-term Debt
$102,582
$87,546
Accounts Payable
482,244
469,198
Accrued Expenses and Other Current
Liabilities
1,141,613
1,031,910
Deferred Revenue
336,068
328,910
Total Current Liabilities
$2,062,507
$1,917,564
Long-term Debt, Net of Current Portion
11,144,230
10,481,449
Long-term Operating Lease Liabilities, Net
of Current Portion
2,513,975
2,429,167
Other Long-term Liabilities
164,242
317,376
Deferred Income Taxes
273,213
263,005
Redeemable Noncontrolling Interests
104,059
95,160
Total Long-term Liabilities
$14,199,719
$13,586,157
Total Liabilities
$16,262,226
$15,503,721
Equity
Total Equity
$416,343
$636,793
Total Liabilities and Equity
$16,678,569
$16,140,514
Quarterly Condensed Consolidated
Statements of Operations (Unaudited; dollars in
thousands, except per-share data)
Q2 2023
Q1 2023
Q/Q % Change
Q2 2022
Y/Y % Change
Revenues:
Storage Rental
$830,756
$810,089
2.6 %
$753,126
10.3 %
Service
527,180
504,260
4.5 %
536,408
(1.7) %
Total Revenues
$1,357,936
$1,314,349
3.3 %
$1,289,534
5.3 %
Operating Expenses:
Cost of Sales (excluding Depreciation and
Amortization)
$592,644
$571,626
3.7 %
$556,476
6.5 %
Selling, General and Administrative
311,805
294,520
5.9 %
295,394
5.6 %
Depreciation and Amortization
195,367
182,094
7.3 %
178,254
9.6 %
Acquisition and Integration Costs
1,511
1,595
(5.3) %
16,878
(91.0) %
Restructuring and Other Transformation
45,588
36,913
23.5 %
—
—
(Gain) Loss on Disposal/Write-Down of
PP&E, Net
(1,505)
(13,061)
(88.5) %
(51,249)
(97.1) %
Total Operating Expenses
$1,145,410
$1,073,687
6.7 %
$995,753
15.0 %
Operating Income (Loss)
$212,526
$240,662
(11.7) %
$293,781
(27.7) %
Interest Expense, Net
144,178
137,169
5.1 %
115,057
25.3 %
Other Expense (Income), Net
62,950
21,200
196.9 %
(41,217)
n/a
Net Income (Loss) Before Provision
(Benefit) for Income Taxes
$5,398
$82,293
(93.4) %
$219,941
(97.5) %
Provision (Benefit) for Income Taxes
4,255
16,758
(74.6) %
18,083
(76.5) %
Net Income (Loss)
$1,143
$65,535
(98.3) %
$201,858
(99.4) %
Less: Net Income (Loss) Attributable to
Noncontrolling Interests
1,029
940
9.5 %
1,777
(42.1) %
Net Income (Loss) Attributable to Iron
Mountain Incorporated
$114
$64,595
(99.8) %
$200,081
(99.9) %
Net Income (Loss) Per Share
Attributable to Iron Mountain Incorporated:
Basic
$0.00
$0.22
(100.0) %
$0.69
(100.0) %
Diluted
$0.00
$0.22
(100.0) %
$0.68
(100.0) %
Weighted Average Common Shares Outstanding
- Basic
291,825
291,442
0.1 %
290,756
0.4 %
Weighted Average Common Shares Outstanding
- Diluted
293,527
293,049
0.2 %
292,487
0.4 %
Year to Date Condensed Consolidated
Statements of Operations (Unaudited; dollars in
thousands, except per-share data)
YTD 2023
YTD 2022
% Change
Revenues:
Storage Rental
$1,640,845
$1,504,196
9.1 %
Service
1,031,440
1,033,384
(0.2) %
Total Revenues
$2,672,285
$2,537,580
5.3 %
Operating Expenses:
Cost of Sales (excluding Depreciation and
Amortization)
$1,164,270
$1,103,098
5.5 %
Selling, General and Administrative
606,325
576,117
5.2 %
Depreciation and Amortization
377,461
361,869
4.3 %
Acquisition and Integration Costs
3,106
32,539
(90.5) %
Restructuring and Other Transformation
82,501
—
—
(Gain) Loss on Disposal/Write-Down of
PP&E, Net
(14,566)
(51,954)
(72.0) %
Total Operating Expenses
$2,219,097
$2,021,669
9.8 %
Operating Income (Loss)
$453,188
$515,911
(12.2) %
Interest Expense, Net
281,347
229,499
22.6 %
Other Expense (Income), Net
84,150
14,684
n/a
Net Income (Loss) Before Provision
(Benefit) for Income Taxes
$87,691
$271,728
(67.7) %
Provision (Benefit) for Income Taxes
21,013
28,163
(25.4) %
Net Income (Loss)
$66,678
$243,565
(72.6) %
Less: Net Income (Loss) Attributable to
Noncontrolling Interests
1,969
1,185
66.2 %
Net Income (Loss) Attributable to Iron
Mountain Incorporated
$64,709
$242,380
(73.3) %
Net Income (Loss) Per Share
Attributable to Iron Mountain Incorporated:
Basic
$0.22
$0.83
(73.5) %
Diluted
$0.22
$0.83
(73.5) %
Weighted Average Common Shares Outstanding
- Basic
291,633
290,542
0.4 %
Weighted Average Common Shares Outstanding
- Diluted
293,288
292,166
0.4 %
Quarterly Reconciliation of Net Income
(Loss) to Adjusted EBITDA (Dollars in thousands)
Q2 2023
Q1 2023
Q/Q % Change
Q2 2022
Y/Y % Change
Net Income
$1,143
$65,535
(98.3) %
$201,858
(99.4) %
Add / (Deduct):
Interest Expense, Net
144,178
137,169
5.1 %
115,057
25.3 %
Provision (Benefit) for Income Taxes
4,255
16,758
(74.6) %
18,083
(76.5) %
Depreciation and Amortization
195,367
182,094
7.3 %
178,254
9.6 %
Acquisition and Integration Costs
1,511
1,595
(5.3) %
16,878
(91.0) %
Restructuring and Other Transformation
45,588
36,913
23.5 %
—
—
(Gain) Loss on Disposal/Write-Down of
PP&E, Net (Including Real Estate)
(1,505)
(13,061)
(88.5) %
(51,249)
(97.1) %
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
58,694
17,491
n/a
(46,103)
n/a
Stock-Based Compensation Expense
22,373
12,509
78.9 %
20,256
10.5 %
Our Share of Adjusted EBITDA Reconciling
Items from our Unconsolidated Joint Ventures
4,054
3,805
6.5 %
1,672
142.5 %
Adjusted EBITDA
$475,658
$460,808
3.2 %
$454,706
4.6 %
Adjusted EBITDA We define Adjusted
EBITDA as net income (loss) before interest expense, net, provision
(benefit) for income taxes, depreciation and amortization
(inclusive of our share of Adjusted EBITDA from our unconsolidated
joint ventures), and excluding certain items we do not believe to
be indicative of our core operating results, specifically: (i)
Acquisition and Integration Costs, (ii) Restructuring and other
transformation; (iii) (Gain) loss on disposal/write-down of
property, plant and equipment, net (including real estate); (iv)
Other expense (income), net; and (v) Stock-based compensation
expense. Adjusted EBITDA Margin is calculated by dividing Adjusted
EBITDA by total revenues. We use multiples of current or projected
Adjusted EBITDA in conjunction with our discounted cash flow models
to determine our estimated overall enterprise valuation and to
evaluate acquisition targets. We believe Adjusted EBITDA and
Adjusted EBITDA Margin provide our current and potential investors
with relevant and useful information regarding our ability to
generate cash flows to support business investment. These measures
are an integral part of the internal reporting system we use to
assess and evaluate the operating performance of our business.
Year to Date Reconciliation of Net
Income (Loss) to Adjusted EBITDA (Dollars in
thousands)
YTD 2023
YTD 2022
% Change
Net Income
$66,678
$243,565
(72.6) %
Add / (Deduct):
Interest Expense, Net
281,347
229,499
22.6 %
Provision (Benefit) for Income Taxes
21,013
28,163
(25.4) %
Depreciation and Amortization
377,461
361,869
4.3 %
Acquisition and Integration Costs
3,106
32,539
(90.5) %
Restructuring and Other Transformation
82,501
—
—
(Gain) Loss on Disposal/Write-Down of
PP&E, Net (Including Real Estate)
(14,566)
(51,954)
(72.0) %
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
76,185
7,412
n/a
Stock-Based Compensation Expense
34,882
31,597
10.4 %
Our Share of Adjusted EBITDA Reconciling
Items from our Unconsolidated Joint Ventures
7,859
3,010
161.1 %
Adjusted EBITDA
$936,466
$885,700
5.7 %
Quarterly Reconciliation of Reported
Earnings per Share to Adjusted Earnings per Share
Q2 2023
Q1 2023
Q/Q % Change
Q2 2022
Y/Y % Change
Reported EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.00
$0.22
(100.0) %
$0.68
(100.0) %
Add / (Deduct):
Acquisition and Integration Costs
0.01
0.01
—
0.06
(83.3) %
Restructuring and Other Transformation
0.16
0.13
23.1 %
—
—
(Gain) Loss on Disposal/Write-Down of
PP&E, Net
(0.01)
(0.04)
(75.0) %
(0.18)
(94.4)
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
0.20
0.06
n/a
(0.16)
n/a
Stock-Based Compensation Expense
0.08
0.04
100.0 %
0.07
14.3 %
Non-Cash Amortization Related to
Derivative Instruments
0.02
0.02
—
—
—
Tax Impact of Reconciling Items and
Discrete Tax Items (1)
(0.05)
(0.02)
150.0 %
(0.03)
66.7 %
Net Income Attributable to Noncontrolling
Interests
—
—
—
0.01
(100.0) %
Adjusted EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.40
$0.42
(4.8) %
$0.46
(13.0) %
(1) The difference between our effective
tax rates and our structural tax rate (or adjusted effective tax
rates) for the three months ended June 30, 2023 and 2022 is
primarily due to (i) the reconciling items above, which impact our
reported net income (loss) before provision (benefit) for income
taxes but have an insignificant impact on our reported provision
(benefit) for income taxes and (ii) other discrete tax items. Our
structural tax rate for purposes of the calculation of Adjusted EPS
for the quarters ended June 30, 2023 and 2022 was 14.0% and 16.5%,
respectively, and quarter ended March 31, 2023 was 15.2%. The Tax
Impact of Reconciling Items and Discrete Tax Items is calculated
using the current quarter’s estimate of the annual structural tax
rate. This may result in the current period adjustment plus prior
reported quarterly adjustments not summing to the year to date
adjustment.
Adjusted Earnings Per Share, or Adjusted EPSWe define
Adjusted EPS as reported earnings per share fully diluted from net
income (loss) attributable to Iron Mountain Incorporated (inclusive
of our share of adjusted losses (gains) from our unconsolidated
joint ventures) and excluding certain items, specifically: (i)
Acquisition and Integration Costs; (ii) Restructuring and other
transformation; (iii) Amortization related to the write-off of
certain customer relationship intangible assets; (iv) (Gain) loss
on disposal/write-down of property, plant and equipment, net
(including real estate); (v) Other expense (income), net; (vi)
Stock-based compensation expense; (vii) Non-cash amortization
related to derivative instruments and (viii) Tax impact of
reconciling items and discrete tax items. We do not believe these
excluded items to be indicative of our ongoing operating results,
and they are not considered when we are forecasting our future
results. We believe Adjusted EPS is of value to our current and
potential investors when comparing our results from past, present
and future periods. Figures may not foot due to rounding.
Year to Date Reconciliation of Reported
Earnings per Share to Adjusted Earnings per Share
YTD 2023
YTD 2022
% Change
Reported EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.22
$0.83
(73.5) %
Add / (Deduct):
Acquisition and Integration Costs
0.01
0.11
(90.9) %
Restructuring and Other Transformation
0.28
—
—
Amortization Related to the Write-Off of
Certain Customer Relationship Intangible Assets
—
0.02
(100.0) %
(Gain) Loss on Disposal/Write-Down of
PP&E, Net
(0.05)
(0.18)
(72.2) %
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
0.26
0.03
n/a
Stock-Based Compensation Expense
0.12
0.11
9.1 %
Non-Cash Amortization Related to
Derivative Instruments
0.04
—
—
Tax Impact of Reconciling Items and
Discrete Tax Items (1)
(0.06)
(0.07)
(14.3) %
Net Income Attributable to Noncontrolling
Interests
0.01
—
—
Adjusted EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.83
$0.85
(2.4) %
(1) The difference between our effective
tax rates and our structural tax rate (or adjusted effective tax
rates) for the three months ended June 30, 2023 and 2022 is
primarily due to (i) the reconciling items above, which impact our
reported net income (loss) before provision (benefit) for income
taxes but have an insignificant impact on our reported provision
(benefit) for income taxes and (ii) other discrete tax items. Our
structural tax rate for purposes of the calculation of Adjusted EPS
for the year to date periods ended June 30, 2023 and 2022 was 14.0%
and 16.5%, respectively. The Tax Impact of Reconciling Items and
Discrete Tax Items is calculated using the current year to date's
estimate of the annual structural tax rate. This may result in the
current period adjustment plus prior reported quarterly adjustments
not summing to the year to date adjustment.
Quarterly Reconciliation of Net Income
(Loss) to FFO and AFFO
(Dollars in thousands, except per-share data)
Q2 2023
Q1 2023
Q/Q % Change
Q2 2022
Y/Y % Change
Net Income
$1,143
$65,535
(98.3) %
$201,858
(99.4) %
Add / (Deduct):
Real Estate Depreciation (1)
81,558
76,129
7.1 %
75,008
8.7 %
(Gain) Loss on Sale of Real Estate, Net of
Tax
(1,853)
(15,746)
(88.2) %
(48,978)
(96.2) %
Data Center Lease-Based Intangible Assets
Amortization (2)
4,907
6,129
(19.9) %
4,040
21.5 %
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
562
132
n/a
—
—
FFO (Nareit)
$86,317
$132,179
(34.7) %
$231,928
(62.8) %
Add / (Deduct):
Acquisition and Integration Costs
1,511
1,595
(5.3) %
16,878
(91.0) %
Restructuring and Other Transformation
45,588
36,913
23.5 %
—
—
(Gain) Loss on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
(1,417)
4,550
(131.1) %
(2,270)
(37.6) %
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
58,694
17,491
n/a
(46,103)
n/a
Stock-Based Compensation Expense
22,373
12,509
78.9 %
20,256
10.5 %
Non-Cash Amortization Related to
Derivative Instruments
5,817
5,834
(0.3) %
—
—
Real Estate Financing Lease
Depreciation
3,008
2,988
0.7 %
3,427
(12.2) %
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(13,278)
(6,893)
92.6 %
(8,250)
60.9 %
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
(500)
226
n/a
374
n/a
FFO (Normalized)
$208,113
$207,392
0.3 %
$216,240
(3.8) %
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$0.29
$0.45
(35.6) %
$0.79
(63.3) %
FFO (Normalized)
$0.71
$0.71
—
$0.74
(4.1) %
Weighted Average Common Shares Outstanding
- Basic
291,825
291,442
0.1 %
290,756
0.4 %
Weighted Average Common Shares Outstanding
- Diluted
293,527
293,049
0.2 %
292,487
0.4 %
(1) Includes depreciation expense related
to owned real estate assets (land improvements, buildings, building
improvements, leasehold improvements and racking), excluding
depreciation related to real estate financing leases. (2) Includes
amortization expense for Data Center In-Place Lease Intangible
Assets and Data Center Tenant Relationship Intangible Assets. (3)
Represents the tax impact of (i) the reconciling items above, which
impact our reported net income (loss) before provision (benefit)
for income taxes but have an insignificant impact on our reported
provision (benefit) from income taxes and (ii) other discrete tax
items.
Funds From Operations, or FFO (Nareit), and FFO
(Normalized) Funds from operations ("FFO") is defined by the
National Association of Real Estate Investment Trusts as net income
(loss) excluding depreciation on real estate assets, losses and
gains on sale of real estate, net of tax, and amortization of data
center leased-based intangibles (“FFO (Nareit)”). We calculate our
FFO measure, including FFO (Nareit), adjusting for our share of
reconciling items from our unconsolidated joint ventures. FFO
(Nareit) does not give effect to real estate depreciation because
these amounts are computed, under GAAP, to allocate the cost of a
property over its useful life. Because values for well-maintained
real estate assets have historically increased or decreased based
upon prevailing market conditions, we believe that FFO (Nareit)
provides investors with a clearer view of our operating
performance. Our most directly comparable GAAP measure to FFO
(Nareit) is net income (loss).
We modify FFO (Nareit), as is common among REITs seeking to
provide financial measures that most meaningfully reflect their
particular business ("FFO (Normalized)"). Our definition of FFO
(Normalized) excludes certain items included in FFO (Nareit) that
we believe are not indicative of our core operating results,
specifically: (i) Acquisition and Integration Costs; (ii)
Restructuring and other transformation; (iii) (Gain) loss on
disposal/write-down of property, plant and equipment, net
(excluding real estate); (iv) Other expense (income), net; (v)
Stock-based compensation expense; (vi) Non-cash amortization r
elated to derivative instruments; (vii) Real estate financing lease
depreciation and (viii) Tax impact of reconciling items and
discrete tax items.
FFO (Normalized) per share FFO (Normalized) divided by
weighted average fully-diluted shares outstanding.
Quarterly Reconciliation of Net Income
(Loss) to FFO and AFFO (continued)
(Dollars in thousands, except per-share data)
Q2 2023
Q1 2023
Q/Q % Change
Q2 2022
Y/Y % Change
FFO (Normalized)
$208,113
$207,392
0.3 %
$216,240
(3.8) %
Add / (Deduct):
Non-Real Estate Depreciation
49,764
40,948
21.5 %
37,667
32.1 %
Amortization Expense (1)
46,070
44,657
3.2 %
48,332
(4.7) %
Amortization of Deferred Financing
Costs
3,763
4,332
(13.1) %
3,454
8.9 %
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
1,732
1,760
(1.6) %
1,821
(4.9) %
Non-Cash Rent Expense (Income)
6,603
7,436
(11.2) %
4,384
50.6 %
Reconciliation to Normalized Cash
Taxes
(8,575)
3,157
n/a
(9,422)
(9.0) %
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
2,525
1,981
27.5 %
857
194.6 %
Less:
Recurring Capital Expenditures
32,966
27,663
19.2 %
32,399
1.8 %
AFFO
$277,029
$284,000
(2.5) %
$270,934
2.2 %
Per Share Amounts (Fully Diluted
Shares):
AFFO Per Share
$0.94
$0.97
(3.1) %
$0.93
1.1 %
Weighted Average Common Shares Outstanding
- Basic
291,825
291,442
0.1 %
290,756
0.4 %
Weighted Average Common Shares Outstanding
- Diluted
293,527
293,049
0.2 %
292,487
0.4 %
(1) Includes customer and supplier
relationship value, intake costs, acquisition of customer
relationships and other intangibles. Excludes amortization of
capitalized commissions.
Adjusted Funds From Operations, or AFFO We define
adjusted funds from operations (“AFFO”) as FFO (Normalized) (1)
excluding (i) non-cash rent expense (income), (ii) depreciation on
non-real estate assets, (iii) amortization expense associated with
customer and supplier relationship value, intake costs,
acquisitions of customer and supplier relationships and other
intangibles (other than capitalized internal commissions), (iv)
amortization of deferred financing costs and debt discount/premium,
(v) revenue reduction associated with amortization of customer
inducements and above- and below-market data center leases and (vi)
the impact of reconciling to normalized cash taxes and (2)
including recurring capital expenditures. We also adjust for these
items to the extent attributable to our portion of unconsolidated
ventures. We believe that AFFO, as a widely recognized measure of
operations of REITs, is helpful to investors as a meaningful
supplemental comparative performance measure to other REITs,
including on a per share basis. AFFO should be considered in
addition to, but not as a substitute for, other measures of
financial performance reported in accordance with GAAP, such as
operating income, net income (loss) or cash flows from operating
activities (as determined in accordance with GAAP).
AFFO per share AFFO divided by weighted average
fully-diluted shares outstanding.
Year to Date Reconciliation of Net
Income (Loss) to FFO and AFFO (Dollars in thousands,
except per-share data)
YTD 2023
YTD 2022
% Change
Net Income
$66,678
$243,565
(72.6) %
Add / (Deduct):
Real Estate Depreciation (1)
157,687
154,341
2.2 %
(Gain) Loss on Sale of Real Estate, Net of
Tax
(17,599)
(48,764)
(63.9) %
Data Center Lease-Based Intangible Assets
Amortization (2)
11,036
8,163
35.2 %
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
694
—
—
FFO (Nareit)
$218,496
$357,305
(38.8) %
Add / (Deduct):
Acquisition and Integration Costs
3,106
32,539
(90.5) %
Restructuring and Other Transformation
82,501
—
—
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
3,133
(3,189)
(198.2) %
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
76,185
7,412
n/a
Stock-Based Compensation Expense
34,882
31,597
10.4 %
Non-Cash Amortization Related to
Derivative Instruments
11,651
—
—
Real Estate Financing Lease
Depreciation
5,996
7,207
(16.8) %
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(18,491)
(20,876)
(11.4) %
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
(274)
354
(177.4) %
FFO (Normalized)
$417,185
$412,349
1.2 %
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$0.74
$1.22
(39.3) %
FFO (Normalized)
$1.42
$1.41
0.7 %
Weighted Average Common Shares Outstanding
- Basic
291,633
290,542
0.4 %
Weighted Average Common Shares Outstanding
- Diluted
293,288
292,166
0.4 %
(1) Includes depreciation expense related
to owned real estate assets (land improvements, buildings, building
improvements, leasehold improvements and racking), excluding
depreciation related to real estate financing leases. (2) Includes
amortization expense for Data Center In-Place Lease Intangible
Assets and Data Center Tenant Relationship Intangible Assets. (3)
Represents the tax impact of (i) the reconciling items above, which
impact our reported net income (loss) before provision (benefit)
for income taxes but have an insignificant impact on our reported
provision (benefit) from income taxes and (ii) other discrete tax
items.
Year to Date Reconciliation of Net
Income (Loss) to FFO and AFFO (continued)
(Dollars in thousands, except per-share data)
YTD 2023
YTD 2022
% Change
FFO (Normalized)
$417,185
$412,349
1.2 %
Add / (Deduct):
Non-Real Estate Depreciation
90,712
74,947
21.0 %
Amortization Expense (1)
90,727
98,826
(8.2) %
Amortization of Deferred Financing
Costs
8,096
9,064
(10.7) %
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
3,492
3,681
(5.1) %
Non-Cash Rent Expense (Income)
14,039
7,510
86.9 %
Reconciliation to Normalized Cash
Taxes
(7,098)
(5,992)
18.5 %
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
4,506
1,967
129.1 %
Less:
Recurring Capital Expenditures
60,629
67,184
(9.8) %
AFFO
$561,030
$535,168
4.8 %
Per Share Amounts (Fully Diluted
Shares):
AFFO Per Share
$1.91
$1.83
4.4 %
Weighted Average Common Shares Outstanding
- Basic
291,633
290,542
0.4 %
Weighted Average Common Shares Outstanding
- Diluted
293,288
292,166
0.4 %
(1) Includes customer and supplier relationship value, intake
costs, acquisition of customer relationships and other intangibles.
Excludes amortization of capitalized commissions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803930739/en/
Investor Relations:
Gillian Tiltman SVP, Head of Investor Relations
Gillian.Tiltman@ironmountain.com (617) 286-4881
Sarah Barry Senior Manager, Investor Relations
Sarah.Barry@ironmountain.com (617) 237-6597
Grafico Azioni Iron Mountain Inc REIT (NYSE:IRM)
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Grafico Azioni Iron Mountain Inc REIT (NYSE:IRM)
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