-- Net Income of $29 million; Achieves record
quarterly and full year Revenue and Adjusted EBITDA --
-- Data Center: Leased 124 megawatts for the
full year 2023 --
-- Issues Strong 2024 Guidance with Revenue
Growth of 10-12% --
Iron Mountain Incorporated (NYSE: IRM), a global leader in
information management services, announces financial results for
the fourth quarter and full year 2023. The conference call /
webcast details, earnings call presentation and supplemental
financial information, which includes definitions of certain
capitalized terms used in this release, are available on Iron
Mountain’s Investor Relations website. Reconciliations of non-GAAP
measures to the appropriate GAAP measures are included herein.
"We are pleased to report outstanding performance in both the
fourth quarter and the full year, again resulting in all-time
record Revenue and Adjusted EBITDA," said William L. Meaney,
President and CEO of Iron Mountain. "We are well positioned to
continue our growth trajectory in 2024, which is reflected in our
financial guidance for double digit revenue growth. Our Project
Matterhorn initiative is propelling us on our growth journey, and
our team's unwavering customer-first mindset continues to flourish
as we grow our portfolio of products to meet our customers' needs.
We are also pleased to confirm that our acquisition of Regency
Technologies closed in early January; this acquisition continues to
build on our leadership in Asset Lifecycle Management."
Financial Performance Highlights for the Fourth Quarter
and Full Year 2023
($ in millions, except per share
data)
Three Months Ended
Y/Y % Change
Full Year
Y/Y % Change
12/31/23
12/31/22
Reported
$
Constant
Fx
12/31/23
12/31/22
Reported
$
Constant
Fx
Storage Rental Revenue
$871
$769
13%
12%
$3,371
$3,034
11%
11%
Service Revenue
$549
$510
8%
7%
$2,109
$2,070
2%
2%
Total Revenue
$1,420
$1,279
11%
10%
$5,480
$5,104
7%
8%
Net Income
$29
$126
(77)%
$187
$562
(67)%
Reported EPS
$0.10
$0.42
(76)%
$0.63
$1.90
(67)%
Adjusted EPS
$0.52
$0.43
21%
$1.82
$1.79
2%
Adjusted EBITDA
$525
$472
11%
10%
$1,962
$1,827
7%
8%
Adjusted EBITDA Margin
37.0%
36.9%
10 bps
35.8%
35.8%
—
AFFO (Updated Calculation)
$328
$299
10%
$1,211
$1,151
5%
AFFO per share (Updated Calculation)
$1.11
$1.02
9%
$4.12
$3.93
5%
AFFO (Prior Calculation)
$317
$287
10%
$1,168
$1,110
5%
AFFO per share (Prior Calculation)
$1.07
$0.98
9%
$3.97
$3.80
4%
For details on our updated AFFO
calculation, please see page 2.
- Total reported revenues for the fourth quarter were $1.4
billion, compared with $1.3 billion in the fourth quarter of 2022,
an increase of 11.0%. Excluding the impact of foreign currency
exchange ("Fx"), total reported revenues increased 10.0% compared
to the prior year, driven by a 12.0% increase in storage rental
revenue. Service revenue growth increased 8.8% on a constant
currency basis excluding the ALM business. For the full year, total
reported revenues increased 7.4%, or 7.6% excluding the impact of
Fx.
- Net Income for the fourth quarter was $29.2 million, compared
with $125.7 million in the fourth quarter of 2022. For the full
year, net income was $187.3 million, compared with $562.1 million
in 2022, primarily driven by higher levels of restructuring and
other transformation costs, lower gains on asset recycling as
compared to the full year of 2022, and the negative impact from
changes in foreign exchange rates.
- Adjusted EBITDA for the fourth quarter was $525.2 million,
compared with $471.9 million in the fourth quarter of 2022, an
increase of 11.3%. On a constant currency basis, Adjusted EBITDA
increased by 10.3% in the fourth quarter, driven by the increase in
storage rental revenue and data center commencements. On a constant
currency basis, full year Adjusted EBITDA increased 7.5%.
- FFO (Normalized) per share was $0.83 for the fourth quarter,
compared with $0.74 in the fourth quarter of 2022. For the full
year, FFO (Normalized) per share was $3.04, compared with $2.93 in
2022, or an increase of 3.8%.
- AFFO was $327.6 million for the fourth quarter, compared with
$298.5 million in the fourth quarter of 2022, an increase of 10%.
For the full year, AFFO was $1.21 billion, compared with $1.15
billion in 2022, or an increase of 5%. Effective Q4 2023, our AFFO
definition has been updated to exclude amortization of capitalized
commissions. With this change, our calculation more accurately
represents our funds available to support growth, and is more
comparable to our peers, including those in the data center
industry. The updated calculation has resulted in an $11.0 million
increase to AFFO in the fourth quarter and a $43.4 million increase
for the full year. For comparability to our previously issued
financial guidance, please see the above table which includes the
AFFO results based on both our updated and prior calculations.
- AFFO per share was $1.11 for the fourth quarter, compared with
$1.02 in the fourth quarter of 2022. For the full year, AFFO per
share was $4.12, compared with $3.93 in 2022 or an increase of 5%.
Effective Q4 2023, our AFFO definition has been updated to exclude
amortization of capitalized commissions. With this change, our
calculation is more comparable to our peers, including those in the
data center industry. The updated calculation has resulted in a
$0.04 increase to AFFO per share in the fourth quarter and a $0.15
increase to AFFO per share for the full year. For comparability to
our previously issued financial guidance, please see the above
table which includes the AFFO per share results based on both our
updated and prior calculations.
Dividend
On February 22, 2024, Iron Mountain's Board of Directors
declared a quarterly cash dividend of $0.65 per share for the first
quarter. The first quarter 2024 dividend is payable on April 4,
2024, for shareholders of record on March 15, 2024.
Guidance
Iron Mountain issued full year 2024 guidance; details are
summarized in the table below.
2024 Guidance(1)
($ in millions, except per share
data)
2024 Guidance
Y/Y % Change at
Midpoint
Total Revenue
$6,000 - $6,150
11%
Adjusted EBITDA
$2,175 - $2,225
12%
AFFO
$1,300 - $1,335
9%
AFFO Per Share
$4.39 - $4.51
8%
(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. AFFO and AFFO per share are presented based on our
updated calculation, and growth is calculated on a comparable
basis.
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.
Consolidated Balance Sheets
(Audited; dollars in
thousands)
12/31/2023
12/31/2022
ASSETS
Current Assets:
Cash and Cash Equivalents
$222,789
$141,797
Accounts Receivable, Net
1,259,826
1,174,915
Prepaid Expenses and Other
252,930
230,433
Total Current Assets
$1,735,545
$1,547,145
Property, Plant and Equipment:
Property, Plant and Equipment
$10,373,989
$9,025,765
Less: Accumulated Depreciation
(4,059,120
)
(3,910,321
)
Property, Plant and Equipment, Net
$6,314,869
$5,115,444
Other Assets, Net:
Goodwill
$5,017,912
$4,882,734
Customer and Supplier Relationships and
Other Intangible Assets
1,279,800
1,423,145
Operating Lease Right-of-Use Assets
2,696,024
2,583,704
Other
429,652
588,342
Total Other Assets, Net
$9,423,388
$9,477,925
Total Assets
$17,473,802
$16,140,514
LIABILITIES AND EQUITY
Current Liabilities:
Current Portion of Long-term Debt
$120,670
$87,546
Accounts Payable
539,594
469,198
Accrued Expenses and Other Current
Liabilities
1,250,259
1,031,910
Deferred Revenue
325,665
328,910
Total Current Liabilities
$2,236,188
$1,917,564
Long-term Debt, Net of Current Portion
11,812,500
10,481,449
Long-term Operating Lease Liabilities, Net
of Current Portion
2,562,394
2,429,167
Other Long-term Liabilities
237,590
317,376
Deferred Income Taxes
235,410
263,005
Redeemable Noncontrolling Interests
177,947
95,160
Total Long-term Liabilities
$15,025,841
$13,586,157
Total Liabilities
$17,262,029
$15,503,721
Equity
Total Equity
$211,773
$636,793
Total Liabilities and Equity
$17,473,802
$16,140,514
Quarterly Consolidated Statements of
Operations
(Unaudited; dollars in thousands,
except per-share data)
Q4 2023
Q3 2023
Q/Q %
Change
Q4 2022
Y/Y %
Change
Revenues:
Storage Rental
$871,144
$858,656
1.5
%
$769,457
13.2
%
Service
548,685
529,519
3.6
%
509,592
7.7
%
Total Revenues
$1,419,829
$1,388,175
2.3
%
$1,279,049
11.0
%
Operating Expenses:
Cost of Sales (excluding Depreciation and
Amortization)
$601,329
$592,201
1.5
%
$539,982
11.4
%
Selling, General and Administrative
314,932
315,030
—
279,161
12.8
%
Depreciation and Amortization
199,941
198,757
0.6
%
190,649
4.9
%
Acquisition and Integration Costs
12,860
9,909
29.8
%
9,653
33.2
%
Restructuring and Other Transformation
53,853
38,861
38.6
%
38,551
39.7
%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net
6,157
(4,416
)
n/a
(27,144
)
(122.7
)%
Total Operating Expenses
$1,189,072
$1,150,342
3.4
%
$1,030,852
15.3
%
Operating Income (Loss)
$230,757
$237,833
(3.0
)%
$248,197
(7.0
)%
Interest Expense, Net
151,784
152,801
(0.7
)%
136,748
11.0
%
Other Expense (Income), Net
40,761
(16,271
)
n/a
(31,597
)
n/a
Net Income (Loss) Before Provision
(Benefit) for Income Taxes
$38,212
$101,303
(62.3
)%
$143,046
(73.3
)%
Provision (Benefit) for Income Taxes
9,018
9,912
(9.0
)%
17,392
(48.1
)%
Net Income (Loss)
$29,194
$91,391
(68.1
)%
$125,654
(76.8
)%
Less: Net Income (Loss) Attributable to
Noncontrolling Interests
712
348
104.6
%
3,216
(77.9
)%
Net Income (Loss) Attributable to Iron
Mountain Incorporated
$28,482
$91,043
(68.7
)%
$122,437
(76.7
)%
Net Income (Loss) Per Share
Attributable to Iron Mountain Incorporated:
Basic
$0.10
$0.31
(67.7
)%
$0.42
(76.2
)%
Diluted
$0.10
$0.31
(67.7
)%
$0.42
(76.2
)%
Weighted Average Common Shares Outstanding
- Basic
292,328
292,148
0.1
%
291,227
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
295,014
294,269
0.3
%
292,892
0.7
%
Full Year
Consolidated Statements of Operations
(Audited; dollars in thousands, except
per-share data)
Full Year 2023
Full Year 2022
% Change
Revenues:
Storage Rental
$3,370,645
$3,034,023
11.1
%
Service
2,109,644
2,069,551
1.9
%
Total Revenues
$5,480,289
$5,103,574
7.4
%
Operating Expenses:
Cost of Sales (excluding Depreciation and
Amortization)
$2,357,800
$2,189,120
7.7
%
Selling, General and Administrative
1,236,287
1,140,577
8.4
%
Depreciation and Amortization
776,159
727,595
6.7
%
Acquisition and Integration Costs
25,875
47,746
(45.8
)%
Restructuring and Other Transformation
175,215
41,933
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net
(12,825
)
(93,268
)
(86.2
)%
Total Operating Expenses
$4,558,511
$4,053,703
12.5
%
Operating Income (Loss)
$921,778
$1,049,871
(12.2
)%
Interest Expense, Net
585,932
488,014
20.1
%
Other Expense (Income), Net
108,640
(69,781
)
n/a
Net Income (Loss) Before Provision
(Benefit) for Income Taxes
$227,206
$631,638
(64.0
)%
Provision (Benefit) for Income Taxes
39,943
69,489
(42.5
)%
Net Income (Loss)
$187,263
$562,149
(66.7
)%
Less: Net Income (Loss) Attributable to
Noncontrolling Interests
3,029
5,168
(41.4
)%
Net Income (Loss) Attributable to Iron
Mountain Incorporated
$184,234
$556,981
(66.9
)%
Net Income (Loss) Per Share
Attributable to Iron Mountain Incorporated:
Basic
$0.63
$1.92
(67.2
)%
Diluted
$0.63
$1.90
(66.8
)%
Weighted Average Common Shares Outstanding
- Basic
291,936
290,812
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
293,965
292,444
0.5
%
Quarterly Reconciliation of Net Income (Loss) to Adjusted
EBITDA
(Dollars in thousands)
Q4 2023
Q3 2023
Q/Q %
Change
Q4 2022
Y/Y %
Change
Net Income (Loss)
$29,194
$91,391
(68.1
)%
$125,654
(76.8
)%
Add / (Deduct):
Interest Expense, Net
151,784
152,801
(0.7
)%
136,748
11.0
%
Provision (Benefit) for Income Taxes
9,018
9,912
(9.0
)%
17,392
(48.1
)%
Depreciation and Amortization
199,941
198,757
0.6
%
190,649
4.9
%
Acquisition and Integration Costs
12,860
9,909
29.8
%
9,653
33.2
%
Restructuring and Other Transformation
53,853
38,861
38.6
%
38,551
39.7
%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Including Real Estate)
6,157
(4,416
)
n/a
(27,144
)
(122.7
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
40,332
(17,626
)
n/a
(34,455
)
n/a
Stock-Based Compensation Expense
20,604
18,313
12.5
%
10,938
88.4
%
Our Share of Adjusted EBITDA Reconciling
Items from our Unconsolidated Joint Ventures
1,506
2,060
(26.9
)%
3,937
(61.7
)%
Adjusted EBITDA
$525,249
$499,962
5.1
%
$471,923
11.3
%
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 expense (income), 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.
Full
Year Reconciliation of Net Income (Loss) to Adjusted
EBITDA
(Dollars in thousands)
Full Year 2023
Full Year 2022
% Change
Net Income (Loss)
$187,263
$562,149
(66.7
)%
Add / (Deduct):
Interest Expense, Net
585,932
488,014
20.1
%
Provision (Benefit) for Income Taxes
39,943
69,489
(42.5
)%
Depreciation and Amortization
776,159
727,595
6.7
%
Acquisition and Integration Costs
25,875
47,746
(45.8
)%
Restructuring and Other Transformation
175,215
41,933
n/a
(Gain) Loss on Disposal/Write-Down of
PP&E, Net (Including Real Estate)
(12,825
)
(93,268
)
(86.2
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
98,891
(83,268
)
n/a
Stock-Based Compensation Expense
73,799
56,861
29.8
%
Our Share of Adjusted EBITDA Reconciling
Items from our Unconsolidated Joint Ventures
11,425
9,806
16.5
%
Adjusted EBITDA
$1,961,677
$1,827,057
7.4
%
Quarterly Reconciliation of Reported Earnings per Share
to Adjusted Earnings per Share
Q4 2023
Q3 2023
Q/Q %
Change
Q4 2022
Y/Y %
Change
Reported EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.10
$0.31
(67.7
)%
$0.42
(76.2
)%
Add / (Deduct):
Acquisition and Integration Costs
0.04
0.03
33.3
%
0.03
33.3
%
Restructuring and Other Transformation
0.18
0.13
38.5
%
0.13
38.5
%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net
0.02
(0.02
)
n/a
(0.09
)
(122.2
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
0.14
(0.06
)
n/a
(0.12
)
n/a
Stock-Based Compensation Expense
0.07
0.06
16.7
%
0.04
75.0
%
Non-Cash Amortization Related to
Derivative Instruments
0.01
0.02
(50.0
)%
0.03
(66.7
)%
Tax Impact of Reconciling Items and
Discrete Tax Items (1)
(0.04
)
(0.03
)
33.3
%
(0.02
)
100.0
%
Net Income Attributable to Noncontrolling
Interests
—
—
n/a
0.01
(100.0
)%
Adjusted EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.52
$0.45
15.6
%
$0.43
20.9
%
(1) The difference between our effective
tax rates and our structural tax rate (or adjusted effective tax
rates) for the quarters ended December 31, 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 December 31, 2023, September 30, 2023 and
December 31, 2022 was 12.3%, 13.3% and 15.2%, respectively.
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 expense
(income), 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.
Full Year
Reconciliation of Reported Earnings per Share to Adjusted Earnings
per Share
Full Year 2023
Full Year 2022
% Change
Reported EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$0.63
$1.90
(66.8
)%
Add / (Deduct):
Acquisition and Integration Costs
0.09
0.16
(43.8
)%
Restructuring and Other Transformation
0.60
0.14
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
(0.04
)
(0.31
)
(87.1
)%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
0.34
(0.28
)
n/a
Stock-Based Compensation Expense
0.25
0.19
31.6
%
Non-Cash Amortization Related to
Derivative Instruments
0.07
0.03
133.3
%
Tax Impact of Reconciling Items and
Discrete Tax Items (1)
(0.12
)
(0.08
)
50.0
%
Net Income Attributable to Noncontrolling
Interests
0.01
0.02
(50.0
)%
Adjusted EPS - Fully Diluted from Net
Income (Loss) Attributable to Iron Mountain Incorporated
$1.82
$1.79
1.7
%
(1) The difference between our effective
tax rates and our structural tax rate (or adjusted effective tax
rates) for the years ended December 31, 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
years ended December 31, 2023 and 2022 was 12.3% and 15.2%,
respectively. The Tax Impact of Reconciling Items and Discrete Tax
Items was calculated using the current quarter’s estimate of the
annual structural tax rate for the full year. This may result in
the current period adjustment plus prior reported quarterly
adjustments not summing to the full year adjustment.
Quarterly Reconciliation of Net Income (Loss) to FFO and
AFFO
(Dollars in thousands, except
per-share data)
Q4 2023
Q3 2023
Q/Q %
Change
Q4 2022
Y/Y %
Change
Net Income
$29,194
$91,391
(68.1
)%
$125,654
(76.8
)%
Add / (Deduct):
Real Estate Depreciation (1)
83,928
80,430
4.4
%
78,902
6.4
%
Loss (Gain) on Sale of Real Estate, Net of
Tax
193
750
(74.3
)%
(29,629
)
(100.7
)%
Data Center Lease-Based Intangible Assets
Amortization (2)
3,804
7,482
(49.2
)%
5,106
(25.5
)%
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
853
679
25.6
%
—
—
FFO (Nareit)
$117,972
$180,732
(34.7
)%
$180,033
(34.5
)%
Add / (Deduct):
Acquisition and Integration Costs
12,860
9,909
29.8
%
9,653
33.2
%
Restructuring and Other Transformation
53,853
38,861
38.6
%
38,551
39.7
%
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
6,290
(5,116
)
n/a
2,138
194.3
%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
40,332
(17,626
)
n/a
(34,455
)
n/a
Stock-Based Compensation Expense
20,604
18,313
12.5
%
10,938
88.4
%
Non-Cash Amortization Related to
Derivative Instruments
4,176
5,270
(20.8
)%
9,100
(54.1
)%
Real Estate Financing Lease
Depreciation
3,022
3,001
0.7
%
2,970
1.8
%
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(13,050
)
(10,220
)
27.7
%
(5,043
)
158.8
%
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
(56
)
(44
)
27.3
%
2,297
(102.4
)%
FFO (Normalized)
$246,005
$223,080
10.3
%
$216,182
13.8
%
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$0.40
$0.61
(34.4
)%
$0.61
(34.4
)%
FFO (Normalized)
$0.83
$0.76
9.2
%
$0.74
12.2
%
Weighted Average Common Shares Outstanding
- Basic
292,328
292,148
0.1
%
291,227
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
295,014
294,269
0.3
%
292,892
0.7
%
(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 expense (income) 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)
Q4 2023
Q3 2023
Q/Q %
Change
Q4 2022
Y/Y %
Change
FFO (Normalized)
$246,005
$223,080
10.3
%
$216,182
13.8
%
Add / (Deduct):
Non-Real Estate Depreciation
51,572
49,500
4.2
%
46,486
10.9
%
Amortization Expense (1)
57,613
58,344
(1.3
)%
57,186
0.7
%
Amortization of Deferred Financing
Costs
3,278
5,485
(40.2
)%
4,508
(27.3
)%
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
1,829
1,715
6.6
%
2,587
(29.3
)%
Non-Cash Rent Expense (Income)
4,982
6,119
(18.6
)%
6,024
(17.3
)%
Reconciliation to Normalized Cash
Taxes
7,090
(8,364
)
(184.8
)%
916
n/a
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
181
182
(0.5
)%
974
(81.4
)%
Less:
Recurring Capital Expenditures
44,916
34,861
28.8
%
36,340
23.6
%
AFFO
$327,634
$301,201
8.8
%
$298,523
9.8
%
Per Share Amounts (Fully Diluted
Shares):
AFFO Per Share
$1.11
$1.02
8.8
%
$1.02
8.8
%
Weighted Average Common Shares Outstanding
- Basic
292,328
292,148
0.1
%
291,227
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
295,014
294,269
0.3
%
292,892
0.7
%
(1) Includes customer and supplier
relationship value, intake costs, acquisition of customer
relationships, capitalized commissions and other intangibles.
Effective Q4 2023, our AFFO definition has been updated to exclude
the amortization of capitalized commissions. Amortization expense
of capitalized commissions was $11.0M and $11.7M for quarters ended
December 31, 2023 and 2022 respectively, and $11.0M for quarter
ended September 30, 2023.
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, (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).
Effective Q4 2023, our AFFO definition has been updated to exclude
amortization of capitalized commissions. With this change, our
calculation more accurately represents our funds available to
support growth, and is more comparable to our peers, including
those in the data center industry.
AFFO per share
AFFO divided by weighted average fully-diluted shares
outstanding.
Full
Year Reconciliation of Net Income (Loss) to FFO and
AFFO
(Dollars in thousands, except
per-share data)
Full Year 2023
Full Year 2022
% Change
Net Income
$187,263
$562,149
(66.7
)%
Add / (Deduct):
Real Estate Depreciation (1)
322,045
307,895
4.6
%
(Gain) Loss on Sale of Real Estate, Net of
Tax
(16,656
)
(94,059
)
(82.3
)%
Data Center Lease-Based Intangible Assets
Amortization (2)
22,322
16,955
31.7
%
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
2,226
—
n/a
FFO (Nareit)
$517,200
$792,940
(34.8
)%
Add / (Deduct):
Acquisition and Integration Costs
25,875
47,746
(45.8
)%
Restructuring and Other Transformation
175,215
41,933
n/a
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
4,307
1,564
175.4
%
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
98,891
(83,268
)
n/a
Stock-Based Compensation Expense
73,799
56,861
29.8
%
Non-Cash Amortization Related to
Derivative Instruments
21,097
9,100
131.8
%
Real Estate Financing Lease
Depreciation
12,019
13,197
(8.9
)%
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(35,307
)
(25,190
)
40.2
%
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
(374
)
2,874
(113.0
)%
FFO (Normalized)
$892,722
$857,757
4.1
%
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$1.76
$2.71
(35.1
)%
FFO (Normalized)
$3.04
$2.93
3.8
%
Weighted Average Common Shares Outstanding
- Basic
291,936
290,812
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
293,965
292,444
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.
Full
Year Reconciliation of Net Income (Loss) to FFO and AFFO
(continued)
(Dollars in thousands, except
per-share data)
Full Year 2023
Full Year 2022
% Change
FFO (Normalized)
$892,722
$857,757
4.1
%
Add / (Deduct):
Non-Real Estate Depreciation
191,785
157,892
21.5
%
Amortization Expense (1)
227,987
231,656
(1.6
)%
Amortization of Deferred Financing
Costs
16,859
18,044
(6.6
)%
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
7,036
8,119
(13.3
)%
Non-Cash Rent Expense (Income)
25,140
19,056
31.9
%
Reconciliation to Normalized Cash
Taxes
(14,826
)
(3,622
)
n/a
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
4,868
4,135
17.7
%
Less:
Recurring Capital Expenditures
140,406
142,496
(1.5
)%
AFFO
$1,211,165
$1,150,541
5.3
%
Per Share Amounts (Fully Diluted
Shares):
AFFO Per Share
$4.12
$3.93
4.8
%
Weighted Average Common Shares Outstanding
- Basic
291,936
290,812
0.4
%
Weighted Average Common Shares Outstanding
- Diluted
293,965
292,444
0.5
%
(1) Includes customer and supplier
relationship value, intake costs, acquisition of customer
relationships, capitalized commissions and other intangibles.
Effective Q4 2023, our AFFO definition has been updated to exclude
the amortization of capitalized commissions. Amortization expense
of capitalized commissions was $43.4M and $40.6M for full year 2023
and 2022, respectively.
Reconciliation of Net Income (Loss) to FFO and AFFO
(Recast to Updated Calculation)
(Dollars in thousands, except
per-share data)
Full Year
2022
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Full Year
2023
Net Income
$562,149
$65,535
$1,143
$91,391
$29,194
$187,263
Add / (Deduct):
Real Estate Depreciation (1)
307,895
76,129
81,558
80,430
83,928
322,045
(Gain) Loss on Sale of Real Estate, Net of
Tax
(94,059
)
(15,746
)
(1,853
)
750
193
(16,656
)
Data Center Lease-Based Intangible Assets
Amortization (2)
16,955
6,129
4,907
7,482
3,804
22,322
Our Share of FFO (Nareit) Reconciling
Items from our Unconsolidated Joint Ventures
—
132
562
679
853
2,226
FFO (Nareit)
$792,940
$132,179
$86,317
$180,732
$117,972
$517,200
Add / (Deduct):
Acquisition and Integration Costs
47,746
1,595
1,511
9,909
12,860
25,875
Restructuring and Other Transformation
41,933
36,913
45,588
38,861
53,853
175,215
Loss (Gain) on Disposal/Write-Down of
PP&E, Net (Excluding Real Estate)
1,564
4,550
(1,417
)
(5,116
)
6,290
4,307
Other Expense (Income), Net, Excluding our
Share of Losses (Gains) from our Unconsolidated Joint Ventures
(83,268
)
17,491
58,694
(17,626
)
40,332
98,891
Stock-Based Compensation Expense
56,861
12,509
22,373
18,313
20,604
73,799
Non-Cash Amortization Related to
Derivative Instruments
9,100
5,834
5,817
5,270
4,176
21,097
Real Estate Financing Lease
Depreciation
13,197
2,988
3,008
3,001
3,022
12,019
Tax Impact of Reconciling Items and
Discrete Tax Items (3)
(25,190
)
(6,893
)
(13,278
)
(10,220
)
(13,050
)
(35,307
)
Our Share of FFO (Normalized) Reconciling
Items from our Unconsolidated Joint Ventures
2,874
226
(500
)
(44
)
(56
)
(374
)
FFO (Normalized)
$857,757
$207,392
$208,113
$223,080
$246,005
$892,722
Add / (Deduct):
Non-Real Estate Depreciation
157,892
40,948
49,765
49,500
51,572
191,785
Amortization Expense (1)
231,656
55,899
56,131
58,344
57,613
227,987
Amortization of Deferred Financing
Costs
18,044
4,332
3,763
5,485
3,278
16,859
Revenue Reduction Associated with
Amortization of Customer Inducements and Above- and Below-Market
Leases
8,119
1,760
1,732
1,715
1,829
7,036
Non-Cash Rent Expense (Income)
19,056
7,436
6,603
6,119
4,982
25,140
Reconciliation to Normalized Cash
Taxes
(3,622
)
3,157
(8,575
)
(8,364
)
7,090
(14,826
)
Our Share of AFFO Reconciling Items from
our Unconsolidated Joint Ventures
4,135
1,981
2,525
182
181
4,868
Less:
Recurring Capital Expenditures
142,496
27,663
32,967
34,861
44,916
140,406
AFFO
$1,150,541
$295,242
$287,090
$301,201
$327,634
$1,211,165
Per Share Amounts (Fully Diluted
Shares):
FFO (Nareit)
$2.71
$0.45
$0.29
$0.61
$0.40
$1.76
FFO (Normalized)
$2.93
$0.71
$0.71
$0.76
$0.83
$3.04
AFFO Per Share
$3.93
$1.01
$0.98
$1.02
$1.11
$4.12
Weighted Average Common Shares Outstanding
- Basic
290,812
291,442
291,825
292,148
292,328
291,936
Weighted Average Common Shares Outstanding
- Diluted
292,444
293,049
293,527
294,269
295,014
293,965
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222831982/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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Iron Mountain Inc REIT (NYSE:IRM)
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