Iron Mountain's Q2 AFFO Beat Estimates, Revenues Rise Y/Y

Iron Mountain Incorporated IRM reported second-quarter 2024 adjusted funds from operations (AFFO) per share of $1.08, beating the Zacks Consensus Estimate of $1.06.

Reflecting positive sentiments, shares of Iron Mountain have gained nearly 5% in the initial hours of the trading session today. The results reflect solid performances in the storage and service segments and the data center business. However, higher interest expenses in the quarter acted as a dampener. The company reaffirmed its outlook for 2024.

Quarterly total revenues of $1.53 billion outpaced the Zacks Consensus Estimate of $1.50 billion.

On a year-over-year basis, AFFO per share and total revenues increased 10.2% and 13%, respectively.

According to William L. Meaney, president and CEO of Iron Mountain, "We continue to execute well on our growth strategy and are pleased to report a very strong second quarter, again resulting in all-time record Revenue and Adjusted EBITDA. We are grateful to our team, who continue to drive toward our Project Matterhorn growth targets, including top-tier growth in AFFO, which enabled us to increase the dividend by 10%. This is in line with our long-term plan to increase the dividend alongside growth in AFFO per share."

Behind the Headlines

Storage rental revenues were $919.7 million in the second quarter, up 10.7% year over year. We had estimated quarterly storage rental revenues to be $910.4 million.

Service revenues increased 16.6% from the prior-year quarter to $614.7 million.

The Global Data Center business reported revenues of $152.7 million in the second quarter, rising 29.4% year over year. Our estimate was pegged at $157 million.

The adjusted EBITDA rose 14.4% year over year to $544.4 million. The adjusted EBITDA margin came at 35.5%, rising 50 basis points year over year.

However, interest expenses flared up 22.4% year over year to $176.5 million in the quarter. We projected the metric to be $158.2 million.

Balance-Sheet Position

IRM exited the second quarter with $144.3 million of cash and cash equivalents, down from $191.7 million as of Mar 31, 2024.

Dividend Update

Concurrently, IRM announced a quarterly cash dividend of 71.5 cents per share for the third quarter of 2024, indicating an increase of 10% from the prior payout. The dividend will be paid out on Oct 3, 2024, to its shareholders on record as of Sep 16, 2024.

2024 Guidance

Iron Mountain reaffirmed its guidance for 2024 and now expects to be toward the upper end of the 2024 guidance range.

It expects AFFO per share of $4.39-$4.51. The Zacks Consensus Estimate for the same is pegged at $4.44, which lies within the company's guided range.

Revenues are estimated to be $6.00-$6.15 billion, while adjusted EBITDA is anticipated to be $2.175-$2.225 billion.

Iron Mountain currently carries a Zacks Rank #3 (Hold).

Performance of Other REITs

American Tower Corporation AMT reported second-quarter AFFO per share, attributable to AMT common stockholders, of $2.79, beating the Zacks Consensus Estimate of $2.53. The figure climbed 13.4% year over year.

Results reflect better-than-anticipated revenues, aided by revenue growth across its Property segment. AMT recorded healthy year-over-year organic tenant billings growth of 5.3% and total tenant billings growth of 6.1%. It has also raised its 2024 outlook.

SBA Communications Corporation SBAC reported second-quarter 2024 AFFO per share of $3.29, beating the Zacks Consensus Estimate by a whisker. Moreover, the figure reflects a rise of 1.5% from the prior-year quarter.

Results reflected a decent improvement in site leasing revenues. It continues to benefit from the addition of sites to its portfolio. However, lower revenues posted by site development hurt the results to some extent. SBAC lowered its 2024 outlook.

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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