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Iron Mountain (IRM) Beats on Q4 FFO, Eyes Expansion in India

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Iron Mountain Incorporated (IRM - Free Report) reported fourth-quarter 2020 adjusted funds from operations (AFFO) per share of 66 cents, which surpassed the Zacks Consensus Estimate of 60 cents. However, the reported figure was 18% lower than the year-ago quarter’s 81 cents.

Revenues of $1.06 billion too declined 2.2% year over year.  Nonetheless, the top line outpaced the Zacks Consensus Estimate of $1.04 billion.

Continued resilience in the company’s core storage business aided results. However, the service segment‘s performance was disappointing.

For 2020, the company reported AFFO per share of $3.07, up 2% from the prior year’s $3.01. Also, the figure beat the Zacks Consensus Estimate of $2.30. However, total revenues of $4.14 billion decreased 2.7% year over year.

Concurrent with its earnings release, Iron Mountain announced that it entered into a joint venture agreement with Web Werks, one of India’s top colocation data-center providers. With anticipated investments of $150 million over the next two years, this agreement expands the company’s data-center footprint to India.

Quarter in Detail

Storage revenues were $697 million in the December quarter, highlighting a 2.9% year-over-year increase on a constant-currency basis. The company recorded 1.7% organic growth year over year.

Service revenues amounted to $362 million in the reported quarter, indicating a year-over-year fall of 10.8% on a constant-currency basis. Further, organic service revenues declined 12.1% year over year.

Adjusted EBITDA margin shrunk 110 basis points (bps) to 35.3%.

The company exited the fourth quarter with $205.1 million of cash and cash equivalents, up from $193.6 million at 2019 end.

Dividend Update

On Feb 24, Iron Mountain announced its first-quarter common stock cash dividend of 61.85 cents per share. The dividend will be paid out on Apr 6, 2021 to its shareholders of record at the close of business on Mar 15, 2021.

Project Summit Update

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

Project Summit generated adjusted EBITDA benefits of $165 million in 2020 and is anticipated to deliver annual adjusted EBITDA benefits of $375 million exiting 2021. The total cost to implement the program is estimated to be approximately $450 million.

Outlook

Iron Mountain provided an initial guidance for 2021 and expects the current-year AFFO per share of $3.25-$3.42. The Zacks Consensus Estimate for the same is pegged at $2.60.

Revenues are projected at $4,325-$4,475 million and adjusted EBITDA is predicted to be $1,575-$1,625 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

Ventas, Inc. (VTR - Free Report) reported fourth-quarter 2020 normalized FFO per share of 83 cents, surpassing the Zacks Consensus Estimate of 73 cents. However, the figure declined 10%fromthe year-ago quarter’s number.

Healthpeak Properties, Inc. (PEAK - Free Report) reported fourth-quarter 2020 FFO as adjusted per share of 41 cents, surpassing the Zacks Consensus Estimate of 40 cents. However, the reported figure compared unfavorably with FFO as adjusted of 44 cents per share recorded in the prior-year quarter.

Highwoods Properties, Inc.’s (HIW - Free Report) fourth-quarter 2020 FFO per share of 87 cents missed the Zacks Consensus Estimate of 88 cents. Also, the reported figure declined 4.4% from 91 cents recorded in the year-ago period.

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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