Iron Mountain Inc.
) first quarter adjusted earnings per share of 29 cents came in
line with the Zacks Consensus Estimate. Reported earnings increased
3.6% from the year-ago quarter on the back of strong performance
from its international business segment.
Revenues increased by a marginal 0.7% from the year-ago quarter
to $746.5 million, but fell shy of the Zacks Consensus Estimates of
$751.0 million. On constant currency, quarterly revenues climbed
1%, which was offset by unfavorable currency fluctuations.
Segment wise, Storage revenue (57.0% of revenues) climbed 2.3%
year over year to $425.3 million. Storage revenue was driven by
continued strong performance in the International business segment
and persistent growth in the North America business. Global records
management net volumes inched up 1% year over year.
Service revenue (43.0% of revenues) dipped 2.8% year over year
to $321.2 million. Core service was negatively impacted by slump in
activity-based core service revenues and lower prices of recycled
paper, which offset the robust hybrid revenue and rise in revenues
Gross profit (excluding depreciation and amortization) edged up
0.2% year over year to $431.0 million in the reported quarter.
Gross margin for the quarter increased to 57.8% versus 57.6% in the
year-ago quarter, due to expansion in the storage gross margins on
the back of lower occupancy costs, which offset the deceleration of
the service gross margins.
Adjusted operating income before depreciation and amortization
(OIBDA) for the quarter increased 1.8% year over year to $221.0
million. Adjusted OIBDA margin for the quarter increased 40 basis
points on a year-over-year basis to 29.5%.
Selling, general and administrative (SG&A) expenses were
down nearly 1.0% from the prior-year period to $210.7 million,
attributable to stringent overhead cost controls.
Operating income in the quarter increased 2.9% year over year to
$142.0 million. Operating margin was 19.0% compared with 18.5% in
the previous-year quarter due to lower operating expenses.
Iron Mountain exited the quarter with cash and cash equivalents
of $178.3 million compared with $179.8 million at the end of the
previous quarter. Long-term debt (including the current portion)
remained flat on a sequential basis at $3.35 billion.
During the first quarter of 2012, the company repurchased 1.1
million shares for a total aggregate purchase price of $35.0
million under its existing share repurchase program. On April 13,
2012, the company paid a quarterly dividend of 25 cents per
Earlier this month, IRM acquired Grupo Store, an information
management business, based in Sao Paolo, Brazil for $80.0 million
in cash which will strengthen the company's international business
For fiscal 2012, Iron Mountain expects revenues in the range of
$2.99 billion to $3.07 billion. The company forecasts adjusted
OIBDA between $890.0 million and $930.0 million. Iron Mountain
expects earnings per share in the range of $1.20 to $1.36. The
Zacks Consensus Estimate projects earnings of $1.32 per share for
The company expects to spend approximately $220.0 million on
capital assets. Free cash flow is expected in the range of
$320.0 million to $360.0 million for fiscal 2012.
Moreover, management expects a decline in paper prices to
negatively impact the top line throughout the year.
We maintain our Neutral recommendation on a long-term basis
(6-12 months) due to tepid internal growth coupled with volatile
foreign exchange rates and a decline in paper price that is set to
partially negate the company's promising product portfolio, strong
market share and a promising International business segment.
Iron Mountain faces stiff competition from Anacomp Inc. and
Iron Mountain has a Zacks #3 Rank, which implies a short-term
'Hold' rating (for the next 1-3 months).
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