QTS Reports First Quarter 2021 Operating Results - 27.04.21 - News

OVERLAND PARK, Kan., April 27, 2021

First Quarter GAAP & Other Highlights

Three Months Ended

March 31,

($ in thousands except per share data)

2021

2020

ARIVA.DE Börsen-Geflüster

Kurse

QTS RLTY TR.CL.A

-

0,00%

Total revenue

$

148,732

$

126,292

Net income

$

7,918

$

8,120

Net income attributable to common stockholders

$

794

$

965

Net loss per share attributable to basic common shares ⁽¹⁾

$

(0.07)

$

(0.01)

Net loss per share attributable to diluted common shares ⁽¹⁾

$

(0.07)

$

(0.01)

FFO available to common stockholders & OP unit holders ⁽²⁾

$

54,518

$

43,730

___________________________________
(1)	Basic and diluted net income (loss) per share were calculated using the two-class method.
(2)	Includes QTS' pro rata share of results from its unconsolidated entity.

Additional First Quarter Highlights

Recognized total consolidated revenues of $148.7 million for the quarter ended March 31, 2021, an increase of 17.8% compared to the same period in 2020. Total consolidated revenues do not include QTS' pro rata share of revenue attributable to its unconsolidated joint venture of $2.2 million and $1.5 million for the quarters ended March 31, 2021 and 2020, respectively.
Reported Adjusted EBITDA of $81.7 million for the quarter ended March 31, 2021, an increase of 22.4% compared to Adjusted EBITDA of $66.8 million for the same period in 2020.
Reported Operating FFO available to common stockholders and OP unit holders of $56.0 million for the quarter ended March 31, 2021, an increase of 27.5% compared to Operating FFO available to common stockholders and OP unit holders of $43.9 million for the same period in 2020.
Reported Operating FFO per fully diluted share of $0.76 for the quarter ended March 31, 2021, an increase of 15.2% compared to Operating FFO per fully diluted share of $0.66 in the same period of 2020.
Signed new and modified renewal leases during the first quarter of 2021 aggregating to $20.6 million of incremental annualized rent, net of downgrades.
The Company's annualized backlog on a GAAP rent basis was $80.8 million as of March 31, 2021, compared to $87.1 million as of December 31, 2020. In addition, the Company's annualized backlog on a cash rent basis was $152.3 million as of March 31, 2021, compared to $154.4 million as of December 31, 2020.
Through incremental sales of common stock sold on a forward basis as of the date of this report, the Company had access to approximately $493.0 million of undrawn net proceeds from forward sales.

"We are pleased to start the year with a strong performance during the first quarter with leasing momentum and a largely pre-leased development plan that materially de-risks our financial performance for the balance of the year," said Chad Williams, Chairman and CEO of QTS.

Williams added, "The acceleration we have seen in our signed leasing activity and funnel across our target customer verticals continues to demonstrate the differentiation of our platform and supports our strategic focus on delivering near-term value creation through consistent OFFO per share growth while investing back into our business at a robust level to support strong future growth."

Financial Results

QTS recognized net income of $7.9 million in the first quarter of 2021 compared to net income of $8.1 million recognized in the first quarter of 2020. Net income attributable to common stockholders recognized in the first quarter of 2021 was $0.8 million compared to net income attributable to common stockholders of $1.0 million recognized in the first quarter of 2020.

QTS generated total revenues of $148.7 million in the first quarter of 2021, an increase of 17.8% compared to total revenue of $126.3 million in the first quarter of 2020. MRR as of March 31, 2021 was $39.8 million compared to MRR as of March 31, 2020 of $35.0 million.

QTS generated $81.7 million of Adjusted EBITDA in the first quarter of 2021, an increase of 22.4% compared to Adjusted EBITDA of $66.8 million for the first quarter of 2020.

Additionally, QTS generated Operating FFO available to common stockholders and OP unit holders of $56.0 million in the first quarter of 2021, an increase of 27.5% compared to Operating FFO available to common stockholders and OP unit holders of $43.9 million in the first quarter of 2020.

Operating FFO per fully diluted share was $0.76 in the first quarter of 2021, an increase of 15.2% compared to Operating FFO per fully diluted share of $0.66 in the first quarter of 2020.

Leasing Activity

During the quarter ended March 31, 2021, QTS entered into new and modified renewal leases aggregating to $20.6 million of incremental annualized rent. The Company's first quarter leasing results were driven by balanced performance in its hyperscale and hybrid colocation customer verticals. Highlighting the first quarter leasing performance was the signing of an 8 megawatt lease with a hyperscale customer that will anchor the Company's Ashburn, Virginia (DC - 2) facility, as well as several larger enterprise hybrid colocation leases signed across various facilities.

During the quarter ended March 31, 2021, QTS renewed leases with total annualized rent of $23.0 million at an average rent per square foot which was 2.2% higher than the annualized rent prior to their renewals. There is variability in the Company's renewal rates based on the mix of product types renewed, and renewal rates are generally expected to increase in the low to mid-single digit percentage range as compared to pre-renewal pricing.

Rental Churn (which the Company defines as MRR lost in the period to a customer intending to fully exit the QTS platform in the near term compared to total MRR at the beginning of the period) was 0.7% for the three months ended March 31, 2021.

As of March 31, 2021, the Company's backlog (which represents MRR, excluding cost recoveries, for customer leases that have been signed but have not yet commenced as of period end) on a GAAP rent basis represented $6.7 million, or $80.8 million of annualized GAAP rent, compared to $7.3 million, or $87.1 million of annualized GAAP rent at December 31, 2020. Of the Company's March 31, 2021 annualized backlog of GAAP rent of $80.8 million, $35.8 million was attributable to 2021 (expected to contribute an incremental $16.5 million to MRR in 2021), $20.2 million was attributable to 2022 (expected to contribute an incremental $15.1 million to MRR in 2022), and $24.8 million was attributable to years thereafter. As of March 31, 2021, the Company's annualized backlog on a cash rent basis was $152.3 million, of which $73.0 million was attributable to 2021 (expected to contribute an incremental $29.3 million to MRR in 2021), $30.4 million was attributable to 2022 (expected to contribute an incremental $19.7 million to MRR in 2022), and $48.9 million was attributable to years thereafter.

Development

During the quarter ended March 31, 2021, the Company brought online approximately 18 megawatts of gross power and approximately 56,000 net rentable square feet ("NRSF") of raised floor at its Atlanta (DC - 2), Ashburn (DC - 1), Irving and Hillsboro facilities at an aggregate cost of approximately $112.4 million (excluding customer specific capital and leasing commissions).

During the first quarter of 2021, the Company's significant development activity continued at the Ashburn (DC - 2), Manassas (DC - 2), Atlanta (DC - 2), Richmond, Piscataway, Chicago, Fort Worth, Santa Clara, Hillsboro, Irving and Manassas (DC - 1) facilities to have space ready for customers in 2021 and beyond. Including the Company's proportionate share of development activity related to its unconsolidated entity, the Company expects to bring an additional 275,000 raised floor NRSF into service through the remainder of 2021 at an aggregate cost of approximately $543.0 million, excluding customer specific capital and leasing commissions, of which $283.0 million has already been spent as of March 31, 2021.

Balance Sheet and Liquidity

During 2020 and 2021, QTS issued shares on a forward basis through its "at-the-market" equity offering programs and via an underwritten offering in June 2020. The following table represents a summary of the Company's forward equity activity through those programs from February 16, 2021, the date of our previous earnings release, through the date of this report, April 27, 2021 (in thousands):

Offering Program	Forward Shares Sold/(Settled)		Net Proceeds Available/(Received) ⁽¹⁾
Shares and net proceeds available as of February 16, 2021	9,961		$	581,598	⁽²⁾
Forward Equity - Sales	2,077		127,347
Forward Equity - Settlements	(3,865)	⁽³⁾	(215,964)
Shares and net proceeds available as of April 27, 2021	8,173		$	492,981

______________________________________________
(1)	Proceeds available remain subject to certain adjustments until settled.
(2)	Proceeds available reported in the fourth quarter earnings release were $587.6 million. The $6 million decrease is due to QTS' declared dividends, which reduces cash expected to be received upon full physical settlement of the forward shares.
(3)	Represents the number of forward shares the Company elected to physically settle during the period.

As shown in the table above, as of April 27, 2021, the Company currently has access to approximately $493.0 million of undrawn net proceeds through forward stock sales, subject to certain adjustments.

As of March 31, 2021, the Company's total net indebtedness, inclusive of its pro rata share of joint venture net debt, was approximately $1.9 billion. The Company's net debt to annualized Adjusted EBITDA ratio pro forma for the effects of cash expected to be received upon the full physical settlement of, and issuance of 8.2 million shares of common stock pursuant to forward equity sales described above, assuming such proceeds were used to repay a portion of the Company's outstanding debt, is approximately 4.3x. The Company expects to use proceeds from these forward equity agreements to fund future capital expenditures. Excluding the proceeds available related to the aforementioned forward stock sales, the Company's leverage ratio is 5.8x.

As of March 31, 2021, the Company's total as adjusted available liquidity is over $1.1 billion, comprised of $493.0 million of available proceeds from forward equity sales, $634.6 million of available capacity under the Company's unsecured revolving credit facility and approximately $14.7 million of cash and cash equivalents.

Novel Coronavirus (COVID-19)

QTS continues to actively monitor developments with respect to COVID-19 and has taken numerous actions based on corporate policies specifically focusing on the safety and wellness of its customers, partners, and employees, as well as providing continuous and resilient services. Although the COVID-19 pandemic has caused significant disruptions to the United States and global economy and has contributed to significant volatility in financial markets, as of the date of this report, these developments have not had a known material adverse effect on the Company's business. As of the date of this report, each of the Company's data centers in North America and Europe is fully operational and operating in accordance with the Company's business continuity plans. Across each of the respective jurisdictions in which the Company operates, the Company's business has been deemed essential operations, which has allowed the Company to remain fully staffed with critical personnel in place to continue to provide service and support for its customers.

2021 Guidance

2021 Revised Guidance

2021 Original Guidance

($ in millions except per share amounts)

Low

High

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