In a bid to expand its presence in the emerging markets,
) recently acquired Archivum, a Brazilian document storage
company. This is Iron Mountain's second acquisition in Brazil.
The company acquired Grupo Store, an information management
company in Apr 2012.
The Archivum acquisition strengthens Iron Mountain's presence
in Sao Paulo, touted as Brazil's business capital. Moreover, the
company would gain approximately 700 customers from the current
Iron Mountain has been pursuing an aggressive acquisition
strategy to supplement organic revenues from the storage
business. Some of Iron Mountain's recent acquisitions include
Safe Records Center, Archives USA and The Document Bank in May
2013, Datastore and Data Technology Services in Jan 2013 and IG2
Data Security Inc., DATAPROS Storage and Staffing LLC, and Data
Backup Inc in late 2012.
We believe that the company will continue to pursue accretive
acquisitions in this segment. Storage is an integral part of Iron
Mountain's revenue structure and contributes nearly 57% to its
total revenue. The company recorded a 4% increase in revenues
from storage in the first quarter.
We expect Iron Mountain to drive significant growth through
acquisitions ($60 million spent on acquisitions year to date) in
the fast-growing countries like Brazil, Russia, China and India,
which will boost its international revenues, going forward.
We believe that diversification and expansion of its business
will help the company to counter sluggish growth from the
domestic and European markets over the long term.
However, tepid internal growth coupled with volatile foreign
exchange rates and a decline in recycled paper prices are
expected to partially negate the company's strong product
portfolio, increasing market share and a promising international
Moreover, competition from
Hertz Global Holdings
Pitney Bowes Inc
Guidance Software Inc
) are headwinds for the company. Additionally, the recent enquiry
by Internal Revenue Service on its REIT conversion request will
remain an overhang on the stock in the near term.
Currently, Iron Mountain carries a Zacks Rank #3 (Hold).
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