Iron Mountain Inc.
) reported fourth quarter 2012 adjusted earnings per share from
continuing operations of 20 cents, which fell shy of the Zacks
Consensus Estimate of 25 cents. Earnings in the quarter slumped
39.4% from the year-ago quarter due to higher interest expense
and higher operational costs.
Revenues for the quarter increased a modest 2.3% from the
year-ago quarter to $758.5 million and surpassed the Zacks
Consensus Estimate of $751.0 million. The better-than-expected
result was aided by higher storage rental revenues (up 4.5% year
over year), which fully offset the 0.7% dip in service
During the quarter, Iron Mountain witnessed robust growth in
Document Management Solutions segment and storage-related
services in Latin America. Moreover, increase in international
storage rental volumes (up 9% year over year) helped Global
storage volume growth of 1.8% from the year-ago period. However,
decrease in activity-based service revenues and lower recycled
paper revenues were primarily responsible for the decline in
Adjusted OIBDA was down 13.1% year over year to $207 million.
Adjusted OIBDA margin declined 480 basis points on a
year-over-year basis to 27.2%, due to lower service revenue and
shut down costs related to facilities in the United Kingdom and
the southeast United States. Moreover, higher-than-expected
selling, general and administrative (SG&A) expenses and
acquisition costs also led to the decline.
Operating income in the quarter decreased 31.4% from the
year-ago quarter to $102 million, due to higher operating
expenses (up 10.7% year over year). Interest expense increased
10.7% on a year-over-year basis on borrowings related to
stockholder payout programs and costs related to Iron Mountain's
proposed conversion to real estate investment trust ("REIT").
Net income from continuing operations was $27 million versus
$47 million earned in the previous-year quarter.
Iron Mountain exited the quarter with cash and cash
equivalents of $243.4 million compared with $334.6 million at the
end of the previous quarter. Long-term debt (including the
current portion) was $3.35 billion compared with $3.74 billion in
the previous quarter.
For fiscal 2013, Iron Mountain expects revenues in the range
of $3.02 billion to $3.10 billion. The company forecasts adjusted
OIBDA between $905.0 million and $935.0 million. Iron Mountain
expects earnings per share in the range of $1.13 to $1.24.
The company expects to spend approximately $290 million on
capital assets. Free cash flow is expected in the range of $320
million to $360 million for fiscal 2013.
We believe that Iron Mountain's strong product portfolio,
increasing market share and promising international business are
the primary growth catalysts for the company. The company's
decision to convert to REIT to reduce tax burden and increase
share holders value are the other positives.
However, costs related to the conversion and decline in
recycled paper prices are the near-term headwinds for the
company. Additionally, volatile foreign exchange rates and
Hertz Global Holdings
Guidance Software Inc
) are the other headwinds.
Currently, Iron Mountain has a Zacks Rank #3 (Hold).
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