-- Net Income of $91 million; Achieves record
quarterly Revenue and Adjusted EBITDA --
-- Data Center: Leased 65 megawatts in 3Q for a
total of 120 megawatts year to date --
–Signs Agreement to Acquire Regency
Technologies to expand ALM business –
Iron Mountain Incorporated (NYSE: IRM), a global leader in
information management, innovative storage, data center
infrastructure, and asset lifecycle management, announces financial
results for the third quarter of 2023. The conference call /
webcast details, earnings call presentation and supplemental
financial information, which includes definitions of certain
capitalized terms used in this release, are available on Iron
Mountain’s Investor Relations website. Reconciliations of non-GAAP
measures to the appropriate GAAP measures are included herein.
"We are delighted to have achieved outstanding performance in
the third quarter, again resulting in all-time record Revenue and
Adjusted EBITDA," said William L. Meaney, President and CEO of Iron
Mountain. “The results of Project Matterhorn's enhanced operating
model characterized by cross-selling our products and services is
succeeding, and our strong growth reflects the drive and dedication
of our Mountaineers as we continue our climb toward ever greater
heights. We are also pleased to announce that we have signed an
agreement to acquire Regency Technologies, which will add
operational scale and deepen our capabilities in Asset Lifecycle
Management."
Financial Performance Highlights for
the Third Quarter of 2023
($ in millions, except per share data)
Three Months Ended
Y/Y % Change
Year to Date
Y/Y % Change
9/30/23
9/30/22
Reported
$
Constant
Fx
9/30/23
9/30/22
Reported
$
Constant
Fx
Storage Rental Revenue
$859
$760
13%
12%
$2,500
$2,265
10%
11%
Service Revenue
$530
$527
1%
—
$1,561
$1,560
—
1%
Total Revenue
$1,389
$1,287
8%
7%
$4,061
$3,825
6%
7%
Net Income
$91
$193
(53)%
$158
$436
(64)%
Reported EPS
$0.31
$0.66
(53)%
$0.53
$1.49
(64)%
Adjusted EPS
$0.45
$0.48
(6)%
$1.28
$1.34
(4)%
Adjusted EBITDA
$500
$469
7%
6%
$1,436
$1,355
6%
7%
Adjusted EBITDA Margin
36.0%
36.5%
-50 bps
35.4%
35.4%
0 bps
AFFO
$290
$288
1%
$851
$823
3%
AFFO per share
$0.99
$0.98
1%
$2.90
$2.82
3%
- Total reported revenues for the third quarter were $1.4
billion, compared with $1.3 billion in the third quarter of 2022,
an increase of 7.9%. Excluding the impact of foreign currency
exchange ("Fx"), total reported revenues increased 6.8% compared to
the prior year, driven by a 11.6% increase in storage rental
revenue. Service revenue growth increased 3.8% on a constant
currency basis excluding the ALM business. Year to date, total
reported revenues increased 6.2%, or 6.8% excluding the impact of
Fx.
- Net Income for the third quarter was $91.4 million, compared
with $192.9 million in the third quarter of 2022. Year to date, net
income was $158.1 million, compared with $436.5 million in
2022.
- Adjusted EBITDA for the third quarter was $500.0 million,
compared with $469.4 million in the third quarter of 2022, an
increase of 6.5%. On a constant currency basis, Adjusted EBITDA
increased by 5.6% in the third quarter, driven by the 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 $0.76 for the third quarter,
compared with $0.76 in the third quarter of 2022. Year to date, FFO
(Normalized) per share was $2.19, compared with $2.17 in 2022, or
an increase of 0.9%.
- AFFO was $290.1 million for the third quarter, compared with
$288.0 million in the third quarter of 2022, an increase of 0.8%,
driven by improved Adjusted EBITDA partially offset by higher cash
taxes and higher interest expenses. Year to date, AFFO was $851.2
million, compared with $823.1 million in 2022, or an increase of
3.4%.
- AFFO per share was $0.99 for the third quarter, compared with
$0.98 in the third quarter of 2022. Year to date, AFFO per share
was $2.90, compared with $2.82 in 2022, or an increase of
2.8%.
- Announcing the acquisition (subject to customary closing
conditions) of Regency Technologies, a company with trailing four
quarter revenues in excess of $100 million in the ALM space. The
initial purchase price is $200 million, with $125 million to be
paid at close and the remainder due in 2025, which represents an
approximate 7.5x multiple of EBITDA. The acquisition also features
a potential performance based earn-out, which would be payable in
2027, if earned.
Dividend
On November 2, 2023, Iron Mountain's Board of Directors declared
a quarterly cash dividend of $0.65 per share for the fourth
quarter. The fourth quarter 2023 dividend is payable on January 4,
2024, for shareholders of record on December 15, 2023.
Guidance
Iron Mountain affirmed full year 2023 guidance; details are
summarized in the table below.
2023 Guidance(1)
($ 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
information management, innovative storage, data center
infrastructure, and asset lifecycle management. Founded in 1951 and
trusted by more than 225,000 customers worldwide, Iron Mountain
serves to protect and elevate the power of our customers’ work.
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 X (formally
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)
9/30/2023
12/31/2022
ASSETS
Current Assets:
Cash and Cash Equivalents
$170,502
$141,797
Accounts Receivable, Net
1,167,654
1,174,915
Prepaid Expenses and Other
278,888
230,433
Total Current Assets
$1,617,044
$1,547,145
Property, Plant and Equipment:
Property, Plant and Equipment
$9,877,866
$9,025,765
Less: Accumulated Depreciation
(3,986,450
)
(3,910,321
)
Property, Plant and Equipment, Net
$5,891,416
$5,115,444
Other Assets, Net:
Goodwill
$4,938,075
$4,882,734
Customer and Supplier Relationships and
Other Intangible Assets
1,353,139
1,423,145
Operating Lease Right-of-Use Assets
2,620,582
2,583,704
Other
456,662
588,342
Total Other Assets, Net
$9,368,458
$9,477,925
Total Assets
$16,876,918
$16,140,514
LIABILITIES AND EQUITY
Current Liabilities:
Current Portion of Long-term Debt
$107,984
$87,546
Accounts Payable
448,319
469,198
Accrued Expenses and Other Current
Liabilities
1,109,492
1,031,910
Deferred Revenue
325,493
328,910
Total Current Liabilities
$1,991,288
$1,917,564
Long-term Debt, Net of Current Portion
11,548,229
10,481,449
Long-term Operating Lease Liabilities, Net
of Current Portion
2,479,223
2,429,167
Other Long-term Liabilities
158,446
317,376
Deferred Income Taxes
273,831
263,005
Redeemable Noncontrolling Interests
163,270
95,160
Total Long-term Liabilities
$14,622,999
$13,586,157
Total Liabilities
$16,614,287
$15,503,721
Equity
Total Equity
$262,631
$636,793
Total Liabilities and Equity
$16,876,918
$16,140,514
Quarterly Condensed Consolidated Statements of
Operations
(Unaudited; dollars in thousands,
except per-share data)
Q3 2023
Q2 2023
Q/Q %
Change
Q3 2022
Y/Y %
Change
Revenues:
Storage Rental
$858,656
$830,756
3.4
%
$760,370
12.9
%
Service
529,519
527,180
0.4
%
526,575
0.6
%
Total Revenues
$1,388,175
$1,357,936
2.2
%
$1,286,945
7.9
%
Operating Expenses:
Cost of Sales (excluding Depreciation and
Amortization)
$592,201
$592,644
(0.1
)%
$546,041
8.5
%
Selling, General and Administrative
315,030
311,805
1.0
%
285,299
10.4
%
Depreciation and Amortization
198,757
195,367
1.7
%
175,077
13.5
%
Acquisition and Integration Costs
9,909
1,511
n/a
5,554
78.4
%
Restructuring and Other Transformation
38,861
45,588
(14.8
)%
3,382
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net
(4,416
)
(1,505
)
193.4
%
(14,170
)
(68.8
)%
Total Operating Expenses
$1,150,342
$1,145,410
0.4
%
$1,001,183
14.9
%
Operating Income (Loss)
$237,833
$212,526
11.9
%
$285,762
(16.8
)%
Interest Expense, Net
152,801
144,178
6.0
%
121,767
25.5
%
Other (Income) Expense, Net
(16,271
)
62,950
(125.8
)%
(52,870
)
(69.2
)%
Net Income (Loss) Before Provision
(Benefit) for Income Taxes
$101,303
$5,398
n/a
$216,865
(53.3
)%
Provision (Benefit) for Income Taxes
9,912
4,255
132.9
%
23,934
(58.6
)%
Net Income (Loss)
$91,391
$1,143
n/a
$192,931
(52.6
)%
Less: Net Income (Loss) Attributable to
Noncontrolling Interests
348
1,029
(66.1
)%
767
(54.6
)%
Net Income (Loss) Attributable to Iron
Mountain Incorporated
$91,043
$114
n/a
$192,164
(52.6
)%
Net Income (Loss) Per Share
Attributable to Iron Mountain Incorporated:
Basic
$0.31
$0.00
n/a
$0.66
(53.0
)%
Diluted
$0.31
$0.00
n/a
$0.66
(53.0
)%
Weighted Average Common Shares Outstanding
- Basic
292,148
291,825
0.1
%
290,937
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
294,269
293,527
0.3
%
292,552
0.6
%
Year to
Date Condensed Consolidated Statements of Operations
(Unaudited; dollars in thousands,
except per-share data)
YTD 2023
YTD 2022
% Change
Revenues:
Storage Rental
$2,499,501
$2,264,566
10.4
%
Service
1,560,959
1,559,959
0.1
%
Total Revenues
$4,060,460
$3,824,525
6.2
%
Operating Expenses:
Cost of Sales (excluding Depreciation and
Amortization)
$1,756,471
$1,649,139
6.5
%
Selling, General and Administrative
921,355
861,416
7.0
%
Depreciation and Amortization
576,218
536,946
7.3
%
Acquisition and Integration Costs
13,015
38,093
(65.8
)%
Restructuring and Other Transformation
121,362
3,382
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net
(18,982
)
(66,124
)
(71.3
)%
Total Operating Expenses
$3,369,439
$3,022,852
11.5
%
Operating Income (Loss)
$691,021
$801,673
(13.8
)%
Interest Expense, Net
434,148
351,266
23.6
%
Other Expense (Income), Net
67,879
(38,186
)
n/a
Net Income (Loss) Before Provision
(Benefit) for Income Taxes
$188,994
$488,593
(61.3
)%
Provision (Benefit) for Income Taxes
30,925
52,097
(40.6
)%
Net Income (Loss)
$158,069
$436,496
(63.8
)%
Less: Net Income (Loss) Attributable to
Noncontrolling Interests
2,317
1,952
18.7
%
Net Income (Loss) Attributable to Iron
Mountain Incorporated
$155,752
$434,544
(64.2
)%
Net Income (Loss) Per Share
Attributable to Iron Mountain Incorporated:
Basic
$0.53
$1.49
(64.4
)%
Diluted
$0.53
$1.49
(64.4
)%
Weighted Average Common Shares Outstanding
- Basic
291,805
290,673
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
293,615
292,294
0.5
%
Quarterly
Reconciliation of Net Income (Loss) to Adjusted
EBITDA
(Dollars in thousands)
Q3 2023
Q2 2023
Q/Q %
Change
Q3 2022
Y/Y %
Change
Net Income (Loss)
$91,391
$1,143
n/a
$192,931
(52.6
)%
Add / (Deduct):
Interest Expense, Net
152,801
144,178
6.0
%
121,767
25.5
%
Provision (Benefit) for Income Taxes
9,912
4,255
133.0
%
23,934
(58.6
)%
Depreciation and Amortization
198,757
195,367
1.7
%
175,077
13.5
%
Acquisition and Integration Costs
9,909
1,511
n/a
5,554
78.4
%
Restructuring and Other Transformation
38,861
45,588
(14.8
)%
3,382
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net (Including Real Estate)
(4,416
)
(1,505
)
193.3
%
(14,170
)
(68.8
)%
Other (Income) Expense, Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
(17,626
)
58,694
(130.0
)%
(56,226
)
(68.7
)%
Stock-Based Compensation Expense
18,313
22,373
(18.2
)%
14,326
27.8
%
Our Share of Adjusted EBITDA Reconciling
Items from our Unconsolidated Joint Ventures
2,060
4,054
(49.2
)%
2,859
(28.0
)%
Adjusted EBITDA
$499,962
$475,658
5.1
%
$469,434
6.5
%
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 (income) expense, 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 (Loss)
$158,069
$436,496
(63.8
)%
Add / (Deduct):
Interest Expense, Net
434,148
351,266
23.6
%
Provision (Benefit) for Income Taxes
30,925
52,097
(40.6
)%
Depreciation and Amortization
576,218
536,946
7.3
%
Acquisition and Integration Costs
13,015
38,093
(65.8
)%
Restructuring and Other Transformation
121,362
3,382
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net (Including Real Estate)
(18,982
)
(66,124
)
(71.3
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
58,559
(48,814
)
n/a
Stock-Based Compensation Expense
53,195
45,923
15.8
%
Our Share of Adjusted EBITDA Reconciling
Items from our Unconsolidated Joint Ventures
9,919
5,869
69.0
%
Adjusted EBITDA
$1,436,428
$1,355,134
6.0
%
Quarterly Reconciliation of Reported Earnings per Share
to Adjusted Earnings per Share
Q3 2023
Q2 2023
Q/Q %
Change
Q3 2022
Y/Y %
Change
Reported EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.31
$0.00
n/a
$0.66
(53.0
)%
Add / (Deduct):
Acquisition and Integration Costs
0.03
0.01
n/a
0.02
50.0
%
Restructuring and Other Transformation
0.13
0.16
(18.8
)%
0.01
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net
(0.02
)
(0.01
)
100.0
%
(0.05
)
(60.0
)%
Other (Income) Expense, Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
(0.06
)
0.20
(130.0
)%
(0.19
)
(68.4
)%
Stock-Based Compensation Expense
0.06
0.08
(25.0
)%
0.05
20.0
%
Non-Cash Amortization Related to
Derivative Instruments
0.02
0.02
—
—
—
Tax Impact of Reconciling Items and
Discrete Tax Items (1)
(0.03
)
(0.05
)
(40.0
)%
(0.01
)
n/a
Adjusted EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.45
$0.40
12.5
%
$0.48
(6.3
)%
(1) The difference between our
effective tax rates and our structural tax rate (or adjusted
effective tax rates) for the nine months ended September 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 September 30, 2023 and 2022 was
13.3% and 16.5%, respectively, and quarter ended June 30, 2023 was
14.0%. 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 EPS
We 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 (income)
expense, 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
$0.53
$1.49
(64.4
)%
Add / (Deduct):
Acquisition and Integration Costs
0.04
0.13
(69.2
)%
Restructuring and Other Transformation
0.41
0.01
n/a
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
(0.06
)
(0.22
)
(72.7
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
0.20
(0.17
)
n/a
Stock-Based Compensation Expense
0.18
0.16
12.5
%
Non-Cash Amortization Related to
Derivative Instruments
0.06
—
n/a
Tax Impact of Reconciling Items and
Discrete Tax Items (1)
(0.09
)
(0.09
)
—
Net Income Attributable to Noncontrolling
Interests
0.01
0.01
—
Adjusted EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$1.28
$1.34
(4.5
)%
(1) The difference between our
effective tax rates and our structural tax rate (or adjusted
effective tax rates) for the nine months ended September 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 September 30, 2023
and 2022 was 13.3% 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)
Q3 2023
Q2 2023
Q/Q %
Change
Q3 2022
Y/Y %
Change
Net Income
$91,391
$1,143
n/a
$192,931
(52.6
)%
Add / (Deduct):
Real Estate Depreciation (1)
80,430
81,558
(1.4
)%
74,652
7.7
%
(Gain) Loss on Sale of Real Estate, Net of
Tax
750
(1,853
)
(140.5
)%
(15,666
)
(104.8
)%
Data Center Lease-Based Intangible Assets
Amortization (2)
7,482
4,907
52.5
%
3,687
102.9
%
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
679
562
20.9
%
—
—
FFO (Nareit)
$180,732
$86,317
109.4
%
$255,604
(29.3
)%
Add / (Deduct):
Acquisition and Integration Costs
9,909
1,511
n/a
5,554
78.4
%
Restructuring and Other Transformation
38,861
45,588
(14.8
)%
3,382
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
(5,116
)
(1,417
)
n/a
2,616
n/a
Other (Income) Expense, Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
(17,626
)
58,694
(130.0
)%
(56,226
)
(68.7
)%
Stock-Based Compensation Expense
18,313
22,373
(18.1
)%
14,326
27.8
%
Non-Cash Amortization Related to
Derivative Instruments
5,270
5,817
(9.4
)%
—
—
Real Estate Financing Lease
Depreciation
3,001
3,008
(0.2
)%
3,020
(0.6
)%
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(10,220
)
(13,278
)
(23.0
)%
(5,184
)
97.1
%
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
(44
)
(500
)
(91.2
)%
223
(119.7
)%
FFO (Normalized)
$223,080
$208,113
7.2
%
$223,315
(0.1
)%
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$0.61
$0.29
110.3
%
$0.87
(29.9
)%
FFO (Normalized)
$0.76
$0.71
7.0
%
$0.76
—
Weighted Average Common Shares Outstanding
- Basic
292,148
291,825
0.1
%
290,937
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
294,269
293,527
0.3
%
292,552
0.6
%
(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 (income) expense net; (v)
Stock-based compensation expense; (vi) Non-cash amortization
related 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)
Q3 2023
Q2 2023
Q/Q %
Change
Q3 2022
Y/Y %
Change
FFO (Normalized)
$223,080
$208,113
7.2
%
$223,315
(0.1
)%
Add / (Deduct):
Non-Real Estate Depreciation
49,500
49,764
(0.5
)%
36,458
35.8
%
Amortization Expense (1)
47,280
46,070
2.6
%
46,764
1.1
%
Amortization of Deferred Financing
Costs
5,485
3,763
45.8
%
4,472
22.6
%
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
1,715
1,732
(1.0
)%
1,851
(7.4
)%
Non-Cash Rent Expense (Income)
6,119
6,603
(7.3
)%
5,522
10.8
%
Reconciliation to Normalized Cash
Taxes
(8,364
)
(8,575
)
(2.5
)%
7,366
n/a
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
182
2,525
(92.8
)%
1,193
(84.7
)%
Less:
Recurring Capital Expenditures
34,861
32,966
5.7
%
38,972
(10.5
)%
AFFO
$290,136
$277,029
4.7
%
$287,971
0.8
%
Per Share Amounts (Fully Diluted
Shares):
AFFO Per Share
$0.99
$0.94
5.3
%
$0.98
1.0
%
Weighted Average Common Shares Outstanding
- Basic
292,148
291,825
0.1
%
290,937
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
294,269
293,527
0.3
%
292,552
0.6
%
(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
$158,069
$436,496
(63.8
)%
Add / (Deduct):
Real Estate Depreciation (1)
238,117
228,993
4.0
%
(Gain) Loss on Sale of Real Estate, Net of
Tax
(16,849
)
(64,430
)
(73.8
)%
Data Center Lease-Based Intangible Assets
Amortization (2)
18,518
11,850
56.3
%
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
1,373
—
—
FFO (Nareit)
$399,228
$612,909
(34.9
)%
Add / (Deduct):
Acquisition and Integration Costs
13,015
38,093
(65.8
)%
Restructuring and Other Transformation
121,362
3,382
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
(1,983
)
(573
)
n/a
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
58,559
(48,814
)
n/a
Stock-Based Compensation Expense
53,195
45,923
15.8
%
Non-Cash Amortization Related to
Derivative Instruments
16,921
—
—
Real Estate Financing Lease
Depreciation
8,997
10,227
(12.0
)%
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(26,825
)
(26,090
)
2.8
%
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
(319
)
577
(155.3
)%
FFO (Normalized)
$642,150
$635,634
1.0
%
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$1.36
$2.10
(35.2
)%
FFO (Normalized)
$2.19
$2.17
0.9
%
Weighted Average Common Shares Outstanding
- Basic
291,805
290,673
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
293,615
292,294
0.5
%
(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)
$642,150
$635,634
1.0
%
Add / (Deduct):
Non-Real Estate Depreciation
140,213
111,406
25.9
%
Amortization Expense (1)
138,007
145,590
(5.2
)%
Amortization of Deferred Financing
Costs
13,580
13,536
0.3
%
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
5,207
5,532
(5.9
)%
Non-Cash Rent Expense (Income)
20,158
13,033
54.7
%
Reconciliation to Normalized Cash
Taxes
(17,348
)
1,405
n/a
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
4,688
3,160
48.3
%
Less:
Recurring Capital Expenditures
95,490
106,156
(10.0
)%
AFFO
$851,165
$823,140
3.4
%
Per Share Amounts (Fully Diluted
Shares):
AFFO Per Share
$2.90
$2.82
2.8
%
Weighted Average Common Shares Outstanding
- Basic
291,805
290,673
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
293,615
292,294
0.5
%
(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/20231102458199/en/
Investor Relations: Gillian Tiltman SVP, Head of Investor
Relations Gillian.Tiltman@ironmountain.com (617) 286-4881
Erika Crabtree Manager, Investor Relations
Erika.Crabtree@ironmountain.com (617) 535-2845
Grafico Azioni Iron Mountain Inc REIT (NYSE:IRM)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Iron Mountain Inc REIT (NYSE:IRM)
Storico
Da Giu 2023 a Giu 2024