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Iron Mountain (IRM) Q1 FFO Beats Estimates, Revenues Lag

Iron Mountain Inc. IRM reported first-quarter 2016 normalized funds from operations (FFO) of 51 cents per share, above the Zacks Consensus Estimate of 48 cents and the year-ago quarter earnings of 50 cents.

 

 

Revenues of $751 million however lagged the Zacks Consensus Estimate of $758 million but improved 3.8% year over year.

The company reported adjusted OIBDA (operating income before depreciation and amortization) of $235 million compared with $231 million in the year-ago quarter.

Operating expenses increased 2.7% year over year to $620.6 million. Operating income in the quarter decreased 10.3% from the year-ago quarter to $130.1 million.

Balance Sheet

Iron Mountain exited the quarter with cash and cash equivalents of $117.9 million compared with $128.4 million as of Dec 31, 2015. Long-term debt was $4.9 billion.

Outlook

For 2016, the company expects normalized FFO per share in the range of $2.10 - $2.20 while revenues are projected to be in the range of $3,450 million - $3,550 million.

The guidance includes the impact from the pending acquisition of Recall Holdings, which is expected to close on May 2, 2016.

Our Take

Iron Mountain’s diversified revenue base is a positive. It is noteworthy that more than 95% of the Fortune 1000 companies are on Iron Mountain’s client list. In addition, its strong product portfolio, increasing market share, and promising international business are the primary growth catalysts. Moreover, the company’s entry into the data center market is likely to be a growth driver.

Furthermore, the company has recommenced merger and acquisition activities since the fourth quarter. But the costs of such initiatives are expected to weigh on financials, especially as it already has a highly leveraged balance sheet.

Also, volatile currency environment and competition from the likes of Cintas Corporation CTAS and others remain overhangs.

Currently, Iron Mountain has a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include Brookfield Canada Office Properties BOXC and Gaming and Leisure Properties, Inc GLPI, both sporting a Zacks Rank #1 (Strong Buy).

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IRON MOUNTAIN (IRM): Free Stock Analysis Report
 
CINTAS CORP (CTAS): Free Stock Analysis Report
 
BROOKFLD CDA OP (BOXC): Free Stock Analysis Report
 
GAMING AND LEIS (GLPI): Free Stock Analysis Report
 
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