Iron Mountain Incorporated (NYSE: IRM), a global leader in
information management services, announces financial results for
the third quarter of 2024. 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.
Financial Performance Highlights for
the Third Quarter of 2024
($ in millions, except per share data)
Three Months Ended
Y/Y % Change
Year to Date
Y/Y % Change
9/30/24
9/30/23
Reported
$
Constant
Fx
9/30/24
9/30/23
Reported
$
Constant
Fx
Storage Rental Revenue
$936
$859
9%
9%
$2,740
$2,500
10%
10%
Service Revenue
$622
$530
17%
18%
$1,828
$1,561
17%
17%
Total Revenue
$1,557
$1,389
12%
13%
$4,569
$4,061
13%
13%
Net Income
$(34)
$91
(137)%
$78
$158
(51)%
Reported EPS
$(0.11)
$0.31
(136)%
$0.26
$0.53
(51)%
Adjusted EPS
$0.44
$0.45
(2)%
$1.28
$1.28
—
Adjusted EBITDA
$568
$500
14%
14%
$1,631
$1,436
14%
14%
Adjusted EBITDA Margin
36.5%
36.0%
50 bps
35.7%
35.4%
30 bps
AFFO
$332
$301
10%
$977
$884
11%
AFFO per share
$1.13
$1.02
11%
$3.30
$3.01
10%
"We are pleased to report a very strong third quarter and
continued strong momentum in the second half of 2024, resulting in
all-time record Revenue, Adjusted EBITDA, and AFFO," said William
L. Meaney, President and CEO of Iron Mountain. "Our team is making
outstanding progress toward our accelerated growth objectives and
our Project Matterhorn operating model continues to drive our
business to greater heights by providing new and enhanced solutions
for our customers."
- Total reported revenues for the third quarter were $1.6
billion, compared with $1.4 billion in the third quarter of 2023,
an increase of 12.2%. Excluding the impact of foreign currency
exchange ("Fx"), total reported revenues increased 12.5% compared
to the prior year, driven by a 9.3% increase in storage rental
revenue and a 17.6% increase in service revenue. Year to date,
total reported revenues increased 12.5%, or 12.8% excluding the
impact of Fx.
- Net Income for the third quarter was $(33.7) million, compared
with $91.4 million in the third quarter of 2023. Unfavorable
changes in foreign currency exchange rates resulted in an
approximate $76.0 million dollar impact to Other Expense (Income),
Net, year over year. Year to date, net income was $78.0 million,
compared with $158.1 million in 2023.
- Adjusted EBITDA for the third quarter was $568.1 million,
compared with $500.0 million in the third quarter of 2023, an
increase of 13.6%. On a constant currency basis, Adjusted EBITDA
increased by 13.9% in the third quarter, compared to the third
quarter of 2023, driven by increased revenue in Global RIM, ALM,
and data center. On a constant currency basis, year to date
Adjusted EBITDA increased 13.9%.
- FFO (Normalized) per share was $0.79 for the third quarter,
compared with $0.76 in the third quarter of 2023. Year to date, FFO
(Normalized) per share was $2.31, compared with $2.19 in 2023, or
an increase of 5.5%.
- AFFO was $332.0 million for the third quarter, compared with
$301.2 million in the third quarter of 2023, an increase of 10.2%
driven by improved Adjusted EBITDA. Year to date, AFFO was $976.6
million compared with $883.5 million, or an increase of 10.5%.
- AFFO per share was $1.13 for the third quarter, compared with
$1.02 in the third quarter of 2023. Year to date, AFFO per share
was $3.30, compared to $3.01 in 2023, or an increase of 9.6%.
Dividend
On November 6, 2024, Iron Mountain's Board of Directors declared
a quarterly cash dividend of $0.715 per share for the fourth
quarter. The fourth quarter 2024 dividend is payable on January 7,
2025, for shareholders of record on December 16, 2024.
Guidance
Iron Mountain affirmed full year 2024 guidance, and now expects
to be on track to achieve the high end of full year 2024 guidance
range; details are summarized in the table below.
2024 Guidance(1)
($ in millions, except per share data)
2024 Guidance
Total Revenue
$6,000 - $6,150
Adjusted EBITDA
$2,175 - $2,225
AFFO
$1,300 - $1,335
AFFO Per Share
$4.39 - $4.51
(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 services. Founded in 1951 and trusted by
more than 240,000 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 (formerly
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”, “projects”, “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 or other co-investment
vehicles), incorporate alternative technologies (including
artificial intelligence) 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 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; (iv) 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; (v) our ability to fund
capital expenditures; (vi) the impact of our distribution
requirements on our ability to execute our business plan; (vii) our
ability to remain qualified for taxation as a real estate
investment trust for United States federal income tax purposes;
(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 press release.
Reconciliation of Non-GAAP
Measures
Throughout this press 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)
9/30/2024
12/31/2023
ASSETS
Current Assets:
Cash and Cash Equivalents
$168,515
$222,789
Accounts Receivable, Net
1,243,464
1,259,826
Prepaid Expenses and Other
306,867
252,930
Total Current Assets
$1,718,846
$1,735,545
Property, Plant and Equipment:
Property, Plant and Equipment
$11,549,081
$10,373,989
Less: Accumulated Depreciation
(4,354,477)
(4,059,120)
Property, Plant and Equipment, Net
$7,194,604
$6,314,869
Other Assets, Net:
Goodwill
$5,198,460
$5,017,912
Customer and Supplier Relationships and
Other Intangible Assets
1,276,963
1,279,800
Operating Lease Right-of-Use Assets
2,591,238
2,696,024
Other
489,518
429,652
Total Other Assets, Net
$9,556,179
$9,423,388
Total Assets
$18,469,629
$17,473,802
LIABILITIES AND EQUITY
Current Liabilities:
Current Portion of Long-term Debt
$136,547
$120,670
Accounts Payable
586,793
539,594
Accrued Expenses and Other Current
Liabilities
1,288,176
1,250,259
Deferred Revenue
294,545
325,665
Total Current Liabilities
$2,306,061
$2,236,188
Long-term Debt, Net of Current Portion
13,245,462
11,812,500
Long-term Operating Lease Liabilities, Net
of Current Portion
2,438,905
2,562,394
Other Long-term Liabilities
277,588
237,590
Deferred Income Taxes
233,484
235,410
Redeemable Noncontrolling Interests
70,537
177,947
Total Long-term Liabilities
$16,265,976
$15,025,841
Total Liabilities
$18,572,037
$17,262,029
(Deficit) Equity
Total (Deficit) Equity
($102,408)
$211,773
Total Liabilities and Equity
(Deficit)
$18,469,629
$17,473,802
Quarterly
Condensed Consolidated Statements of Operations
(Unaudited; dollars in thousands, except
per-share data)
Q3 2024
Q2 2024
Q/Q % Change
Q3 2023
Y/Y % Change
Revenues:
Storage Rental
$935,701
$919,746
1.7
%
$858,656
9.0
%
Service
621,657
614,663
1.1
%
529,519
17.4
%
Total Revenues
$1,557,358
$1,534,409
1.5
%
$1,388,175
12.2
%
Operating Expenses:
Cost of Sales (excluding Depreciation and
Amortization)
$678,390
$675,971
0.4
%
$592,201
14.6
%
Selling, General and Administrative
341,929
344,838
(0.8
)%
315,030
8.5
%
Depreciation and Amortization
232,240
224,501
3.4
%
198,757
16.8
%
Acquisition and Integration Costs
11,262
9,502
18.5
%
9,909
13.7
%
Restructuring and Other Transformation
37,282
46,513
(19.8
)%
38,861
(4.1
)%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net
5,091
2,790
82.5
%
(4,416
)
n/a
Total Operating Expenses
$1,306,194
$1,304,115
0.2
%
$1,150,342
13.5
%
Operating Income (Loss)
$251,164
$230,294
9.1
%
$237,833
5.6
%
Interest Expense, Net
186,067
176,521
5.4
%
152,801
21.8
%
Other Expense (Income), Net
86,362
5,833
n/a
(16,271
)
n/a
Net (Loss) Income Before Provision
(Benefit) for Income Taxes
$(21,265
)
$47,940
(144.4
)%
$101,303
(121.0
)%
Provision (Benefit) for Income Taxes
12,400
13,319
(6.9
)%
9,912
25.1
%
Net (Loss) Income
$(33,665
)
$34,621
(197.2
)%
$91,391
(136.8
)%
Less: Net (Loss) Income Attributable to
Noncontrolling Interests
(45
)
(1,162
)
(96.1
)%
348
(112.9
)%
Net (Loss) Income Attributable to Iron
Mountain Incorporated
$(33,620
)
$35,783
(194.0
)%
$91,043
(136.9
)%
Net (Loss) Income Per Share
Attributable to Iron Mountain Incorporated:
Basic
$(0.11
)
$0.12
(191.7
)%
$0.31
(135.5
)%
Diluted
$(0.11
)
$0.12
(191.7
)%
$0.31
(135.5
)%
Weighted Average Common Shares Outstanding
- Basic
293,603
293,340
0.1
%
292,148
0.5
%
Weighted Average Common Shares Outstanding
- Diluted
293,603
295,838
(0.8
)%
294,269
(0.2
)%
Year to Date
Condensed Consolidated Statements of Operations
(Unaudited; dollars in thousands, except
per-share data)
YTD 2024
YTD 2023
% Change
Revenues:
Storage Rental
$2,740,289
$2,499,501
9.6
%
Service
1,828,341
1,560,959
17.1
%
Total Revenues
$4,568,630
$4,060,460
12.5
%
Operating Expenses:
Cost of Sales (excluding Depreciation and
Amortization)
$2,007,616
$1,756,471
14.3
%
Selling, General and Administrative
1,006,232
921,355
9.2
%
Depreciation and Amortization
666,296
576,218
15.6
%
Acquisition and Integration Costs
28,573
13,015
119.5
%
Restructuring and Other Transformation
124,562
121,362
2.6
%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net
8,270
(18,982
)
(143.6
)%
Total Operating Expenses
$3,841,549
$3,369,439
14.0
%
Operating Income (Loss)
$727,081
$691,021
5.2
%
Interest Expense, Net
527,107
434,148
21.4
%
Other Expense (Income), Net
79,665
67,879
17.4
%
Net Income (Loss) Before Provision
(Benefit) for Income Taxes
$120,309
$188,994
(36.3
)%
Provision (Benefit) for Income Taxes
42,328
30,925
36.9
%
Net Income (Loss)
$77,981
$158,069
(50.7
)%
Less: Net Income (Loss) Attributable to
Noncontrolling Interests
1,757
2,317
(24.2
)%
Net Income (Loss) Attributable to Iron
Mountain Incorporated
$76,224
$155,752
(51.1
)%
Net Income (Loss) Per Share
Attributable to Iron Mountain Incorporated:
Basic
$0.26
$0.53
(50.9
)%
Diluted
$0.26
$0.53
(50.9
)%
Weighted Average Common Shares Outstanding
- Basic
293,229
291,805
0.5
%
Weighted Average Common Shares Outstanding
- Diluted
295,912
293,615
0.8
%
Quarterly
Reconciliation of Net Income (Loss) to Adjusted
EBITDA
(Dollars in thousands)
Q3 2024
Q2 2024
Q/Q % Change
Q3 2023
Y/Y % Change
Net (Loss) Income
$(33,665
)
$34,621
(197.2
)%
$91,391
(136.8
)%
Add / (Deduct):
Interest Expense, Net
186,067
176,521
5.4
%
152,801
21.8
%
Provision (Benefit) for Income Taxes
12,400
13,319
(6.9
)%
9,912
25.1
%
Depreciation and Amortization
232,240
224,501
3.4
%
198,757
16.8
%
Acquisition and Integration Costs
11,262
9,502
18.5
%
9,909
13.7
%
Restructuring and Other Transformation
37,282
46,513
(19.8
)%
38,861
(4.1
)%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Including Real Estate)
5,091
2,790
82.5
%
(4,416
)
n/a
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
85,532
4,532
n/a
(17,626
)
n/a
Stock-Based Compensation Expense
29,563
29,889
(1.1
)%
18,313
61.4
%
Our Share of Adjusted EBITDA Reconciling
Items from our Unconsolidated Joint Ventures
2,341
2,173
7.7
%
2,060
13.6
%
Adjusted EBITDA
$568,113
$544,361
4.4
%
$499,962
13.6
%
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) Loss (gain) on
disposal/write-down of property, plant and equipment, net
(including real estate); (iv) Other expense (income), net; (v)
Stock-based compensation expense; and (vi) Intangible impairments.
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 2024
YTD 2023
% Change
Net Income (Loss)
$77,981
$158,069
(50.7
)%
Add / (Deduct):
Interest Expense, Net
527,107
434,148
21.4
%
Provision (Benefit) for Income Taxes
42,328
30,925
36.9
%
Depreciation and Amortization
666,296
576,218
15.6
%
Acquisition and Integration Costs
28,573
13,015
119.5
%
Restructuring and Other Transformation
124,562
121,362
2.6
%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Including Real Estate)
8,270
(18,982
)
(143.6
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
76,954
58,559
31.4
%
Stock-Based Compensation Expense
73,491
53,195
38.2
%
Our Share of Adjusted EBITDA Reconciling
Items from our Unconsolidated Joint Ventures
5,767
9,919
(41.9
)%
Adjusted EBITDA
$1,631,329
$1,436,428
13.6
%
Quarterly
Reconciliation of Reported Earnings per Share to Adjusted Earnings
per Share
Q3 2024
Q2 2024
Q/Q % Change
Q3 2023
Y/Y % Change
Reported EPS - Fully Diluted from Net
(Loss) Income Attributable to Iron Mountain Incorporated
$(0.11
)
$0.12
(191.7
)%
$0.31
(135.5
)%
Add / (Deduct):
Acquisition and Integration Costs
0.04
0.03
33.3
%
0.03
33.3
%
Restructuring and Other Transformation
0.13
0.16
(18.8
)%
0.13
—
Loss (Gain) on Disposal/Write-Down of
PP&E, Net
0.02
0.01
100.0
%
(0.02
)
n/a
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
0.29
0.02
n/a
(0.06
)
n/a
Stock-Based Compensation Expense
0.10
0.10
—
0.06
66.7
%
Non-Cash Amortization Related to
Derivative Instruments
0.01
0.01
—
0.02
(50.0
)%
Tax Impact of Reconciling Items and
Discrete Tax Items (1)
(0.04
)
(0.03
)
33.3
%
(0.03
)
33.3
%
Adjusted EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.44
$0.42
4.8
%
$0.45
(2.2
)%
(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, 2024 and 2023 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, 2024 and 2023 was 15.1% and
13.3%, respectively, and the quarter ended June 30, 2024 was 14.5%.
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) Loss (gain) on
disposal/write-down of property, plant and equipment, net
(including real estate); (iv) Other expense (income), net; (v)
Stock-based compensation expense; (vi) Non-cash amortization
related to derivative instruments; (vii) Tax impact of reconciling
items and discrete tax items; and (viii) Amortization related to
the write-off of certain customer relationship intangible assets.
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 2024
YTD 2023
% Change
Reported EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.26
$0.53
(50.9
)%
Add / (Deduct):
Acquisition and Integration Costs
0.10
0.04
150.0
%
Restructuring and Other Transformation
0.42
0.41
2.4
%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net
0.03
(0.06
)
(150.0
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
0.26
0.20
30.0
%
Stock-Based Compensation Expense
0.25
0.18
38.9
%
Non-Cash Amortization Related to
Derivative Instruments
0.04
0.06
(33.3
)%
Tax Impact of Reconciling Items and
Discrete Tax Items (1)
(0.08
)
(0.09
)
(11.1
)%
Income (Loss) Attributable to
Noncontrolling Interests
0.01
0.01
—
Adjusted EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$1.28
$1.28
—
(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, 2024 and 2023 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 ending September 30, 2024 and 2023 was
15.1% and 13.3%, respectively. The Tax Impact of Reconciling Items
and Discrete Tax Items was 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 2024
Q2 2024
Q/Q % Change
Q3 2023
Y/Y % Change
Net (Loss) Income
$(33,665
)
$34,621
(197.2
)%
$91,391
(136.8
)%
Add / (Deduct):
Real Estate Depreciation (1)
93,864
97,771
(4.0
)%
80,430
16.7
%
Loss (Gain) on Sale of Real Estate, Net of
Tax
531
579
(8.3
)%
750
(29.2
)%
Data Center Lease-Based Intangible Assets
Amortization (2)
5,604
5,571
0.6
%
7,482
(25.1
)%
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
1,422
1,112
27.9
%
679
109.4
%
FFO (Nareit)
$67,756
$139,654
(51.5
)%
$180,732
(62.5
)%
Add / (Deduct):
Acquisition and Integration Costs
11,262
9,502
18.5
%
9,909
13.7
%
Restructuring and Other Transformation
37,282
46,513
(19.8
)%
38,861
(4.1
)%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
4,554
2,211
106.0
%
(5,116
)
(189.0
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
85,532
4,532
n/a
(17,626
)
n/a
Stock-Based Compensation Expense
29,563
29,889
(1.1
)%
18,313
61.4
%
Non-Cash Amortization Related to
Derivative Instruments
4,176
4,177
—
5,270
(20.8
)%
Real Estate Financing Lease
Depreciation
3,692
3,236
14.1
%
3,001
23.0
%
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(10,465
)
(8,643
)
21.1
%
(10,220
)
2.4
%
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
(83
)
(50
)
(66.0
)%
(44
)
88.6
%
FFO (Normalized)
$233,269
$231,021
1.0
%
$223,080
4.6
%
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$0.23
$0.47
(51.1
)%
$0.61
(62.3
)%
FFO (Normalized)
$0.79
$0.78
1.3
%
$0.76
3.9
%
Weighted Average Common Shares Outstanding
- Basic
293,603
293,340
0.1
%
292,148
0.5
%
Weighted Average Common Shares Outstanding
- Diluted
293,603
295,838
(0.8
)%
294,269
(0.2
)%
(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) Loss (gain) 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
related to derivative instruments; (vii) Real estate financing
lease depreciation; (viii) Tax impact of reconciling items and
discrete tax items; (ix) Intangible impairments; and (x) (Income)
loss from discontinued operations, net of tax.
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 2024
Q2 2024
Q/Q % Change
Q3 2023
Y/Y % Change
FFO (Normalized)
$233,269
$231,021
1.0
%
$223,080
4.6
%
Add / (Deduct):
Non-Real Estate Depreciation
66,787
57,923
15.3
%
49,500
34.9
%
Amortization Expense (1)
62,293
60,001
3.8
%
58,344
6.8
%
Amortization of Deferred Financing
Costs
6,666
6,143
8.5
%
5,485
21.5
%
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
1,321
1,475
(10.4
)%
1,715
(23.0
)%
Non-Cash Rent Expense (Income)
4,984
3,658
36.2
%
6,119
(18.5
)%
Reconciliation to Normalized Cash
Taxes
(2,166
)
(2,524
)
(14.2
)%
(8,364
)
(74.1
)%
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
183
180
1.7
%
182
0.5
%
Less:
Recurring Capital Expenditures
41,337
36,976
11.8
%
34,861
18.6
%
AFFO
$332,000
$320,901
3.5
%
$301,201
10.2
%
Per Share Amounts (Fully Diluted
Shares):
AFFO Per Share
$1.13
$1.08
4.6
%
$1.02
10.8
%
Weighted Average Common Shares Outstanding
- Basic
293,603
293,340
0.1
%
292,148
0.5
%
Weighted Average Common Shares Outstanding
- Diluted
293,603
295,838
(0.8
)%
294,269
(0.2
)%
(1) Includes customer and supplier
relationship value, intake costs, acquisition of customer
relationships, capitalized commissions and other intangibles.
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,
capitalized commissions and other intangibles, (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 2024
YTD 2023
% Change
Net Income (Loss)
$77,981
$158,069
(50.7
)%
Add / (Deduct):
Real Estate Depreciation (1)
275,208
238,117
15.6
%
(Gain) Loss on Sale of Real Estate, Net of
Tax
(84
)
(16,849
)
(99.5
)%
Data Center Lease-Based Intangible Assets
Amortization (2)
16,751
18,518
(9.5
)%
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
2,975
1,373
116.7
%
FFO (Nareit)
$372,831
$399,228
(6.6
)%
Add / (Deduct):
Acquisition and Integration Costs
28,573
13,015
119.5
%
Restructuring and Other Transformation
124,562
121,362
2.6
%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
8,583
(1,983
)
n/a
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
76,954
58,559
31.4
%
Stock-Based Compensation Expense
73,491
53,195
38.2
%
Non-Cash Amortization Related to
Derivative Instruments
12,529
16,921
(26.0
)%
Real Estate Financing Lease
Depreciation
9,914
8,997
10.2
%
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(24,992
)
(26,825
)
(6.8
)%
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
(92
)
(319
)
(71.5
)%
FFO (Normalized)
$682,353
$642,150
6.3
%
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$1.26
$1.36
(7.4
)%
FFO (Normalized)
$2.31
$2.19
5.5
%
Weighted Average Common Shares Outstanding
- Basic
293,229
291,805
0.5
%
Weighted Average Common Shares Outstanding
- Diluted
295,912
293,615
0.8
%
(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 2024
YTD 2023
% Change
FFO (Normalized)
$682,353
$642,150
6.3
%
Add / (Deduct):
Non-Real Estate Depreciation
181,783
140,213
29.6
%
Amortization Expense (1)
182,640
170,374
7.2
%
Amortization of Deferred Financing
Costs
18,909
13,580
39.2
%
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
4,118
5,207
(20.9
)%
Non-Cash Rent Expense (Income)
14,301
20,158
(29.1
)%
Reconciliation to Normalized Cash
Taxes
(1,045
)
(17,348
)
(94.0
)%
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
545
4,688
(88.4
)%
Less:
Recurring Capital Expenditures
107,050
95,490
12.1
%
AFFO
$976,554
$883,532
10.5
%
Per Share Amounts (Fully Diluted
Shares):
AFFO Per Share
$3.30
$3.01
9.6
%
Weighted Average Common Shares Outstanding
- Basic
293,229
291,805
0.5
%
Weighted Average Common Shares Outstanding
- Diluted
295,912
293,615
0.8
%
(1) Includes customer and supplier
relationship value, intake costs, acquisition of customer
relationships, capitalized commissions and other intangibles.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106639909/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
Iron Mountain Inc REIT (NYSE:IRM)
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