Iron Mountain Incorporated (IRM)

IRM 
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Exchange: NYSE
Industry: Consumer Services
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Iron Mountain (IRM)

Q4 2012 Earnings Call

February 28, 2013 8:30 am ET

Executives

Melissa Marsden

William L. Meaney - Chief Executive Officer, President and Director

Brian P. McKeon - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Stephen P. Golden - Vice President of Investor Relations

Analysts

Kevin D. McVeigh - Macquarie Research

James Samford - Citigroup Inc, Research Division

Gary E. Bisbee - Barclays Capital, Research Division

George K. Tong - Piper Jaffray Companies, Research Division

Andrew C. Steinerman - JP Morgan Chase & Co, Research Division

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division

Presentation

Operator

Good morning. My name is Bonnie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Iron Mountain Fourth Quarter 2012 Earnings Call Webcast. [Operator Instructions] Thank you. I would now like to turn the conference over to Ms. Melissa Marsden, SVP of IR. Please go ahead, ma'am.

Melissa Marsden

Thank you, Bonnie, and welcome, everyone, to our fourth quarter and year-end 2012 earnings conference call. As Bonnie noted, I'm Melissa Marsden, Senior Vice President of Investor Relations, and I just joined the company's IR team a few weeks ago.

This morning, we'll hear from Bill Meaney, our new CEO, who will discuss highlights and the early focus areas; followed by Brian McKeon, our CFO, who will cover financial results and guidance. After their prepared remarks, we'll open up the phones for Q&A.

Per our custom, we have a user-controlled slide presentation at the Investor Relations page of our website at www.ironmountain.com.

Referring now to Slide 2, today's earnings call and slide presentation will contain a number of forward-looking statements, most notably our outlook for our 2013 financial performance. All forward-looking statements are subject to risks and uncertainties. Please refer to today's press release, the Safe Harbor language on this slide and our most recently filed annual report on Form 10-K for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements.

In addition, we use several non-GAAP measures when presenting our financial results, and the reconciliations of these non-GAAP measures, as required by Reg G, can also be found at the Investor Relations page of our website, in addition to today's press release.

With that, I'd like introduce our new CEO, Bill Meaney.

William L. Meaney

Thank you, Melissa. It's great to be here today. I've had the opportunity to meet with several of you since joining the company in January, and I look forward to getting to know our investors and analysts over the coming months.

Before I get started, I'd like to just take a minute to welcome Melissa Marsden to Iron Mountain. Brian and his team have been working with Melissa as a consultant for some time, and she officially joined us in her current capacity as Senior Vice President of Investor Relations earlier this year. Melissa brings more than 25 years of Investor Relations experience across a range of industries, and most recently, she served as Managing Director of IR of ProLogis, which, as some of you probably know, is the global leader, the largest global industrial REIT, where she was named the top REIT IR officer by Institutional Investor. So we're very pleased to have Melissa here and the capabilities that she brings to our team as we work to expand Iron Mountain's investor base.

Now that is the introduction to Melissa. Let me just kick off with a couple of comments on our performance, and then Brian will cover the details in a few minutes.

Iron Mountain wrapped up another solid year, with revenues of $3 billion and adjusted OIBDA of $912 million and adjusted earnings per share of $1.21, all in line with our expectations.

In the fourth quarter, we continued to achieve strong constant dollar storage rental growth of 5%, underscoring the long-term durability of our business and providing a sturdy foundation for our overall financial performance. Our storage rental revenue growth reflected both healthy increases in our International business, as well as steady growth in our North American business, and offset a modest decline in our total service revenue, which was driven mainly by lower recycled paper prices.

These stable fundamentals are what attracted me to Iron Mountain, namely a track record of durable growth, strong cash flow generation, high return opportunities in the international market and a great franchise with a strong culture. While many companies experienced wild swings in revenues as global economies peak and trough, Iron Mountain has the unique ability to sustain its growth rate throughout business cycles due to the attractive underlying stability of our storage business. I did my due diligence, and I believe we can sustain the durability of the business through opportunities in both the mature and emerging markets, as well as potential adjacencies. Be assured that as we pursue these opportunities, we will continue to view them through our capital allocation approach, which focuses on maximizing cash flow, generating strong returns and supporting the steady long-term growth of our core business.

My near-term focus upon joining the company is to spend a good deal of time with customers, investors and our associates around the globe. I came away with a sense of opportunity related to the significant amount of unvended records that remain in the mature markets in both private and public sectors.

One way in which we are addressing that is organizing our sales efforts into vertical segments such as health care, financial services, energy and government and a closer alignment between our sales and product management groups. It's early in the process, but we are pleased with the progress to date. This sector focus and Iron Mountain's strong customer relationships should, in time, give us permission to handle more data in record management processes for our customers and provide some higher value-added services.

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