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Iron Mountain (IRM) Surpasses Q2 FFO & Revenue Estimates

Iron Mountain Incorporated IRM has reported second-quarter 2020 normalized funds from operations (FFO) per share of 53 cents, beating the Zacks Consensus Estimate of 42 cents. However, the reported figure was 1.9% lower than the year-ago quarter’s 54 cents.

Revenues of $982.2 million declined 7.9% year over year, outpacing the Zacks Consensus Estimate of $918.3 million.

Results reflect strength in the company’s core storage business. However, amid the coronavirus outbreak-led concerns, the service segment‘s performance was disappointing.

Adjusted FFO (AFFO) increased 19% year over year to $249.5 million.

Quarter Details

Storage revenues were $677 million in the June-end quarter, highlighting a 3.7% year-over-year increase on a constant-currency basis. The company recorded 2.3% organic growth year over year.

Service revenues amounted to $305 million in the reported quarter, indicating a year-over-year fall of 21.3% on a constant-currency basis. Further, organic service revenues declined 23.1% year over year.

Adjusted EBITDA margin expanded 200 basis points (bps) to 34.9%.

Liquidity

The company exited the second quarter with $907.2 million of cash and cash equivalents, up from $193.5 million recorded at 2019 end.

As of the second-quarter end, the company had total liquidity of $1.2 billion, pro forma for redemption of $1 billion of 2024 notes on Jul 2.

Dividend Update

On Aug 5, Iron Mountain announced a third-quarter common stock cash dividend of 61.85 cents per share. The dividend will be paid out on Oct 2 to shareholders of record at the close of business on Sep 15, 2020.

Project Summit Update

Iron Mountain’s transformation program — Project Summit — focuses on simplifying its global structure, streamlining managerial structure for the future and enhancing customer experience.

Project Summit is now anticipated to deliver annual adjusted EBITDA benefits of $375 million, exiting 2021. The total cost to implement the program is estimated to be $450 million.

Iron Mountain Incorporated Price, Consensus and EPS Surprise

 

Iron Mountain Incorporated Price, Consensus and EPS Surprise

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

Iron Mountain currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

American Tower Corporation AMT reported second-quarter 2020 FFO per share of $2.07, beating the Zacks Consensus Estimate of $2.05. Further, the reported figure improved 1.5% year over year.

Host Hotels & Resorts, Inc. HST reported second-quarter 2020 loss in terms of adjusted FFO per share of 26 cents, meeting the Zacks Consensus Estimate. Notably, the company reported adjusted FFO per share of 53 cents in the prior-year quarter.

SL Green Realty Corp. SLG reported second-quarter 2020 FFO per share of $1.70, surpassing the Zacks Consensus Estimate of $1.55. The figure, however, compares unfavorably with the year-ago quarter’s $1.82.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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