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Iron Mountain's (IRM) Q4 Earnings Miss, Revenues In Line - Analyst Blog

Iron Mountain Inc. ( IRM ) reported fourth-quarter 2014 adjusted earnings from continuing operations of 25 cents per share, which missed the Zacks Consensus Estimate of 31 cents. However, adjusted earnings per share increased from 21 cents in the year-ago quarter.

For 2014, the company reported adjusted earnings of $1.36 per share, down from $1.40 a year ago.

Revenue Details

Revenues of $778 million came in line with the Zacks Consensus Estimate but increased from $768 million in the year-ago quarter. For 2014, reported revenues of $3,118 million increased from $3,025 million in 2013.

In the fourth quarter, revenues increased on the back of higher storage rental revenues of $469 million (up 5.2% year over year) and higher service revenues of $313.6 million (up 3.7% year over year).

Of late, Iron Mountain's service revenue growth rate has moderated due to lower activity rates as stored records are becoming less active with the increase in Internet usage. Internal service revenues in North American Records and Information Management Business (RIM) improved 3% year over year.

Margin

Adjusted OIBDA (operating income before depreciation and amortization) was $220 million compared with $195 million in the year-ago quarter.

Operating expenses declined 3.1% year over year to $650.1 million due to lower Selling, General and Administrative expenses (down 10.4% year over year).

Operating income increased 31.7% from the year-ago quarter to $127.8 million.

Balance Sheet

Iron Mountain exited the year with cash and cash equivalents of $125 million compared with $120.5 million at the end of 2013. Long-term debt was $4.12 billion.

Outlook

For 2015, Iron Mountain expects its adjusted earnings per share to be same as adjusted OIBDA growth rate of 1-5%.

Our Take

We believe that Iron Mountain's strong product portfolio, increasing market share and promising international business are the primary growth drivers. Moreover, the company's entry into the data center market could act as a positive factor.

Additionally, the company's aggressive acquisition policy should extend its foothold in the emerging markets, in our view, in turn driving top-line growth.

However, costs related to conversion and fluctuations in recycled paper prices are the near-term headwinds. Moreover, volatile foreign exchange rates and competition from Guidance Software Inc. ( GUID ), Pitney Bowes Inc. ( PBI ) and Cintas Corp. ( CTAS ) are the other concerns.

Currently, IRM has a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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