Iron Mountain Incorporated Reports First Quarter 2007 Financial Results
- Total revenues up 12% to $633 million driven by strong service
revenue growth and the 73rd consecutive quarter of increased storage
revenues
- OIBDA is $157 million, or 24.8% of revenues; strong performance supported by revenue growth and timing and control of expenses
- Operating income is $100 million and net income is up 27% to $35 million or $0.17 per diluted share
- The Company raises full year guidance
BOSTON, May 2 /PRNewswire-FirstCall/ - Iron Mountain Incorporated
(NYSE: IRM), the global leader in information protection and storage
services, today announced its financial results for the first quarter
ended March 31, 2007, reporting strong overall revenue performance,
solid operating income and net income for the quarter of $0.17 per
diluted share. The Company also announced the signing of a definitive
agreement to acquire ArchivesOne, Inc., a leading provider of records
and information management services in the United States.
Strong revenue performance, supported by solid storage revenue
growth and robust service revenue growth, highlighted Iron Mountain's
financial results for the first quarter of 2007 and was a contributing
factor in driving up operating income before depreciation and
amortization ("OIBDA"). Expense control and the timing of initiative
spending were also positive contributors to the Company's operating
performance.
Iron Mountain was very active in the capital markets in early 2007
as the Company continued the implementation of a multi-phase global
treasury program designed to create financial flexibility, reduce
foreign exchange risk and drive annual cash savings. In late 2006, the
Company established an international treasury center in Switzerland to
more effectively and efficiently manage the financing needs of its
international subsidiaries outside of North America, initially in
Europe. This was followed in the first quarter of 2007 by successful
senior subordinated debt offerings in Euros (euro 225 million) and
Canadian Dollars (C$175 million). In April 2007, the Company closed on
a $900 million global senior credit facility which consolidated its
existing senior credit facilities in the U.S. and the U.K.
"We are pleased with the performance of the business thus far, as
well as the ultimate potential of the markets we serve," said Richard
Reese, Chairman and CEO. "Our strong balance sheet will allow us to
address an expanding set of growth, productivity and acquisition
investment opportunities in the near to medium term. Capitalizing on
these opportunities will enhance our ability to drive long term,
increasingly profitable growth and therefore, shareholder value."
Iron Mountain's total consolidated revenues for the quarter ended
March 31, 2007 grew to $633 million, an increase of 12% compared to the
quarter ended March 31, 2006. For the quarter, storage revenues grew
10% and service revenues grew 15% compared to the same period in 2006.
For the first quarter of 2007, the storage and service revenue internal
growth rates were 9% and 10%, respectively, yielding a total internal
revenue growth rate of 9%.
OIBDA was $157 million, or 24.8% of revenues, for the quarter ended
March 31, 2007 compared to $142 million, or 25.2% of revenues, for the
quarter ended March 31, 2006. See Appendix A at the end of this press
release for a discussion of OIBDA and the required reconciliation to
the appropriate GAAP measures.
Operating income for the first quarter of 2007 was $100 million, or
16% of revenues, compared to $92 million, or 16% of revenues, for the
same period in 2006. Net income for the quarter was $35 million, or
$0.17 per diluted share, compared to $27 million, or $0.14 per diluted
share, for the same period in 2006. All per share amounts have been
adjusted to reflect the three-for-two stock split effected in the form
of a stock dividend on December 29, 2006.
Included in net income for the quarter of 2007 is $8 million, or
$0.02 per diluted share, of other income, net comprised primarily of $9
million of business interruption insurance recoveries related to the
London warehouse fire of July 2006, offset by $2 million of early debt
extinguishment charges related to our first quarter refinancing
activities. Net foreign currency gains for the three months ended March
31, 2007 were negligible. Included in net income for the first quarter
of 2006, is $3 million, or $0.01 per diluted share, of other income,
net comprised of $1 million of foreign currency related gains and $2
million of other non-operating net gains. The foreign currency related
gains were due primarily to the strengthening of the British Pound
Sterling and the Euro partially offset by a weakening of the Australian
Dollar.
Iron Mountain's acquisition strategy focuses on acquiring attractive
businesses that provide a strong platform for future growth by
expanding the Company's geographic footprint and service offerings
while enhancing its existing operations. Since the end of 2006, the
Company completed several small shredding and records management
business acquisitions in North America and the U.K. The Company also
signed a definitive agreement to acquire ArchivesOne, Inc., a leading
provider of records and information management services in the United
States and acquired Societa Italiana Archivi s.p.a. in Italy and
Gesellschaft fur beleglose Dokumentenbearbeitung gmbh ("GbD") in
Germany. The ArchivesOne transaction is subject to customary closing
conditions and is expected to be completed in May 2007.
Founded in 1991, ArchivesOne, is a leading records management
company based in Middlebury, Connecticut, that serves a customer base
of more than 8,500 customers in a variety of sectors including
professional services, healthcare, legal and finance. With 31
facilities located in 17 major metropolitan markets in 10 states and
the District of Columbia, ArchivesOne will be an important addition to
the Company in the U.S. For nearly 15 years Italiana Archivi has been
providing records management and DMS solutions to government, finance
and other corporate customers throughout Italy. Italiana Archivi gives
Iron Mountain a strong national presence in Italy with operations in
five major markets: Rome, Venice, Milan, Naples and Aosta. Based in
Hamburg, Germany, GbD provides document management solutions
specializing in scanning, processing and the subsequent archiving of
corporate documents.
Iron Mountain was advised exclusively by Lehman Brothers Inc. on the ArchivesOne transaction.
Financial Performance Outlook
The following statements are based on current expectations and do not
include the potential impact of any future acquisitions, except those
discussed above. These statements are forward-looking, and actual results may
differ materially. Please refer to the cautionary language included in this
press release when considering this information. Except as required by law,
the Company undertakes no obligation to update this information (dollars in
millions):
Full Year Ending December 31, 2007
Quarter Ending
June 30, 2007 Previous Current
Low High Low High Low High
Revenues $647 $662 $2,530 $2,600 $2,600 $2,660
Operating Income 103 110 427 452 434 457
Depreciation &
Amortization ~58 223 228 231 236
Capital Expenditures 390 420 395 425
Internal Revenue
Growth 8 % 10 % 8 % 10 %
Iron Mountain's conference call to discuss its first quarter 2007
financial results will be held today at 11:00 a.m. Eastern Time. In
order to further enhance the overall quality of its investor
communications, the Company will simulcast the conference call on its
Web site at http://www.ironmountain.com, the content of which is not
part of this earnings release. A slide presentation providing summary
financial and statistical information that will be discussed on the
conference call will also be posted to the Web site and available for
real-time viewing. The slide presentation and replays of the conference
call will be available on the Web site for future reference.
About Iron Mountain
Iron Mountain Incorporated (NYSE: IRM) helps organizations around
the world reduce the costs and risks associated with information
protection and storage. The Company offers comprehensive records
management and data protection solutions, along with the expertise and
experience to address complex information challenges such as rising
storage costs, litigation, regulatory compliance and disaster recovery.
Founded in 1951, Iron Mountain is a trusted partner to more than
100,000 corporate clients throughout North America, Europe, Latin
America and Asia Pacific. For more information, visit the Company's Web
site at http://www.ironmountain.com.
Forward Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995 and federal securities laws, and is subject to the safe-harbor
created by such Act. Forward-looking statements include our 2007
financial performance outlook and statements regarding our goals,
beliefs, future growth strategies, investments, objectives, plans or
current expectations. These statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results to be
materially different from those contemplated in the forward-looking
statements. Such factors include, but are not limited to: (i) changes
in customer preferences and demand for the Company's services; (ii)
changes in the price for the Company's services relative to the cost of
providing such services; (iii) in the various digital businesses in
which the Company is engaged, capital and technical requirements will
be beyond the Company's means, markets for the Company's services will
be less robust than anticipated, or competition will be more intense
than anticipated; (iv) the cost to comply with current and future
legislation or regulation relating to privacy issues; (v) the impact of
litigation that may arise in connection with incidents of inadvertent
disclosures of customers' confidential information; (vi) the Company's
ability or inability to complete acquisitions on satisfactory terms and
to integrate acquired companies efficiently; (vii) the cost and
availability of financing for contemplated growth; (viii) business
partners upon which the Company depends for technical assistance or
management and acquisition expertise outside the United States will not
perform as anticipated; (ix) changes in the political and economic
environments in the countries in which the Company's international
subsidiaries operate; (x) other trends in competitive or economic
conditions affecting Iron Mountain's financial condition or results of
operations not presently contemplated; and (xi) other risks described
more fully in the Company's Annual Report on Form 10-K for the year
ended December 31, 2006 under "Item 1A. Risk Factors". Except as
required by law, Iron Mountain undertakes no obligation to release
publicly the result of any revision to these forward-looking statements
that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Investor Relations Contact:
Stephen P. Golden
Director, Investor Relations
sgolden@ironmountain.com
(617) 535-4799
Iron Mountain Incorporated
Condensed Consolidated Statements of Operations
(Amounts in Thousands except Per Share Data)
(Unaudited)
Three Months Ended
March 31,
2006 2007
Revenues:
Storage $319,155 $352,165
Service and Storage Material Sales 244,502 280,347
Total Revenues 563,657 632,512
Operating Expenses:
Cost of Sales (Excluding Depreciation and
Amortization) 262,368 295,005
Selling, General and Administrative 158,843 180,505
Depreciation and Amortization 49,848 57,172
Loss on Disposal / Writedown of Property,
Plant and Equipment, Net 163 37
Total Operating Expenses 471,222 532,719
Operating Income 92,435 99,793
Interest Expense, Net 46,578 50,335
Other Income, Net (2,847) (7,723)
Income Before Provision for Income Taxes and
Minority Interest 48,704 57,181
Provision for Income Taxes 20,971 22,083
Minority Interest in Earnings of Subsidiaries, Net 460 391
Net Income $27,273 $34,707
Net Income Per Share - Basic $0.14 $0.17
Net Income Per Share - Diluted $0.14 $0.17
Weighted Average Common Shares Outstanding - Basic 197,522 199,230
Weighted Average Common Shares Outstanding - Diluted 199,971 201,416
Operating Income before Depreciation and
Amortization $142,283 $156,965
Iron Mountain Incorporated
Condensed Consolidated Balance Sheets
(Amounts in Thousands)
(Unaudited)
December 31, March 31,
2006 2007
ASSETS
Current Assets:
Cash and Cash Equivalents $45,369 $61,481
Accounts Receivable (less allowances of $15,157
and $15,106, respectively) 473,366 485,687
Other Current Assets 160,986 120,424
Total Current Assets 679,721 667,592
Property, Plant and Equipment:
Property, Plant and Equipment at Cost 2,965,995 3,051,944
Less: Accumulated Depreciation (950,760) (1,004,328)
Property, Plant and Equipment, net 2,015,235 2,047,616
Other Assets:
Goodwill, net 2,165,129 2,195,256
Other Non-current Assets, net 349,436 359,267
Total Other Assets 2,514,565 2,554,523
Total Assets $5,209,521 $5,269,731
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-term Debt $63,105 $99,883
Other Current Liabilities 575,542 565,812
Total Current Liabilities 638,647 665,695
Long-term Debt, Net of Current Portion 2,605,711 2,592,719
Other Long-term Liabilities 406,600 418,305
Minority Interests 5,290 5,503
Stockholders' Equity 1,553,273 1,587,509
Total Liabilities and Stockholders' Equity $5,209,521 $5,269,731
APPENDIX A
Operating Income Before Depreciation and Amortization
The Company uses Operating Income Before Depreciation and
Amortization ("OIBDA"), an integral part of its planning and reporting
systems, to evaluate the operating performance of the consolidated
business. As such, the Company believes OIBDA provides current and
potential investors with relevant and useful information regarding its
ability to grow revenues faster than operating expenses. Additionally,
the Company uses multiples of current and projected OIBDA in
conjunction with its discounted cash flow models to determine its
overall enterprise valuation and to evaluate acquisition targets. OIBDA
is not a measurement of financial performance under accounting
principles generally accepted in the United States, or GAAP, and should
not be considered as a substitute for operating or net income or cash
flows from operating activities (as determined in accordance with GAAP).
Following is a reconciliation of operating income before
depreciation and amortization to operating income and net income (in
millions):
Three Months Ended
March 31,
2006 2007
OIBDA (Operating Income Before Depreciation and
Amortization) (1) $142 $157
Less: Depreciation and Amortization 50 57
Operating Income (1) $92 $100
Less: Interest Expense, net 47 50
Other (Income), net (3) (8)
Provision for Income Taxes 21 22
Minority Interest -- --
Net Income (1) $27 $35
Major Components of Other (Income) Expense, net:
Foreign Currency Exchange Effects: $(1) $--
Debt Extinguishment Charges, net: $-- $2
Insurance related gains $-- $(9)
(1) Columns may not foot due to rounding.
Free Cash Flows Before Acquisitions and Discretionary Investments, or FCF
FCF is defined as Cash Flows From Operating Activities less capital
expenditures (excluding real estate), net of proceeds from the sales of
property and equipment and other, net, and additions to customer
acquisition costs. Our management uses this measure when evaluating the
operating performance and profitability of our consolidated business.
FCF is a useful measure in determining our ability to generate cash
flows in excess of our capital expenditures (both growth and
maintenance) and our customer acquisition costs. As such, we believe
this measure provides relevant and useful information to our current
and potential investors. FCF should be considered in addition to, but
not as a substitute for, other measures of financial performance
reported in accordance with GAAP, such as cash flows from operating
activities (as determined in accordance with GAAP).
Following is a reconciliation of Free Cash Flows Before Acquisitions and
Discretionary Investments to Cash Flows from Operating Activities (in
millions):
Three Months Ended
March 31,
2006 2007
Free Cash Flows Before Acquisitions and
Discretionary Investments $(12) $33
Add: Capital Expenditures (excluding real
estate), net 71 66
Additions to Customer Acquisition Costs 3 3
Cash Flows From Operating Activities (2) $62 $102
(2) Columns may not foot due to rounding.
SOURCE:
Iron Mountain Incorporated
CONTACT:
Investor Relations Contact -
Stephen P. Golden
Director
Investor Relations
sgolden@ironmountain.com
+1-617-535-4799