Best Idea Long IRM reported AFFO of $0.90/share, in-line with Hedgeye and +$0.06/share (+7%) vs. Consensus. Reaffirms guidance which we suppose could be a little bit of a negative near-term vs. the recent string of other REIT raises into year-end, but regardless the business is improving particularly on the Services side. It is REALLY tough to be in the ~14% short of float with a ~5.2% dividend yield and improving RoC on EBITDA and earnings heading into year-end along with Quad 2.
- Global RIM storage still a "melting ice cube" (which we love in Quad 2), with sequential organic CuFt volume down an estimated -20bp and up +1.3% including acquisitions. Records retention was unchanged at 94.4%, perhaps down a few basis points at the margin, and we estimate organic constant-FX average pricing up +1.5% y/y and +1.4% sequentially. Global RIM services grew +13.8% y/y on a constant-FX basis, which was a little better than we expected on easy base effects + an ongoing recovery in service utilization. Project Summit continuing to show its final benefits with segment EBITDA margins up +175bp y/y to 44.5%. So an improvement basically all-around, save for the ongoing few basis point quarterly "melt" on organic record volumes underneath the surface.
- We were a little surprised to see FY21 AFFO guidance unchanged in the range of $3.33 to $3.45/share setting up a potential beat in 4Q21, and think the ultimate number could trend above the ~$3.50/share range.
Figure 1: IRM 3Q21 Earnings Variances
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Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs