Iron Mountain (IRM) Closes Regency Buyout, Boosts ALM Business
Iron Mountain IRM recently closed the earlier announced acquisition of Regency Technologies, a leading provider of IT asset disposition services in the United States, for an initial purchase price of $200 million. The buyout boosts its IT Asset Lifecycle Management (“ALM”) business.
The combined platform further enhances IRM’s extensive logistics network and establishes a market-leading position in the IT asset disposition customer solutions. With the volume of e-waste continuing to rise, the move is expected to enhance environmental sustainability and increase the value recovery at the end of the IT asset lifecycle, making it a strategic fit for Iron Mountain.
Per Mark Kidd, EVP & general manager of ALM & data centers at Iron Mountain, “The completion of this acquisition is a defining moment in Iron Mountain's growth story. This is a strategic move that will propel us to the next frontier in Asset Lifecycle Management. The synergy between our two organizations will result in a wider network that provides our clients with faster services while significantly reducing environmental impact. Together, we are poised to redefine excellence in IT asset lifecycle management and disposition, offering a more comprehensive, secure, and efficient solution to our valued clients.”
Of the $200 million, Iron Mountain was required to pay $125 million at close while the remainder is due in 2025. The purchase price represents an EBITDA multiple of around 7.5X. The transaction also features a potential performance-based earn-out. If earned, this would be payable in 2027.
Regency Technologies, a preferred ALM partner by several Fortune 500 corporations, government agencies, defense contractors and educational institutions, generated trailing four-quarter revenues of more than $100 million. It presently processes more than 50,000 metric tons of material annually and resells more than 2,000,000 units across eight locations spanning the United States. The company also follows the environmental protocols of e-Stewards, RIOS, NAID and ISO 14001 across its footprint.
The purchase of Regency adds to Iron Mountain’s operational scale and will help it capitalize on the large and growing IT asset disposition market. Moreover, it will boost IRM’s platform strength.
Iron Mountain is also poised to ride the growth curve with its stable and resilient core storage and records management business. Healthy revenue management and volume trends are likely to continue aiding the company in the near term.
Further, efforts to expand its fast-growing businesses, especially the data center segment, to supplement its storage segment performance are encouraging. The strong demand for connectivity, interconnection and colocation space is driving leasing activity for the company’s data center business, boosting the segment’s growth.
However, the fragmentation of the storage and information management services industry and a slowdown in the service business are concerning for the company. A high interest rate environment adds to its woes.
Iron Mountain currently carries a Zacks Rank #4 (Sell).
The company’s shares have gained 13.2% in the past six months compared with its industry’s growth of 4.3%.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Rexford Industrial Realty REXR, Stag Industrial STAG and Park Hotels & Resorts PK. While PK sports a Zacks Rank #1 (Strong Buy) at present, REXR and STAG carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Rexford Industrial Realty’s 2023 FFO per share is pegged at $2.18, indicating a year-over-year increase of 11.2%.
The Zacks Consensus Estimate for Stag Industrial’s 2023 FFO per share stands at $2.28, suggesting year-over-year growth of 3.2%.
The Zacks Consensus Estimate for Park Hotels & Resorts’ 2023 FFO per share is pegged at $2.03, implying a year-over-year rise of 31.8%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Iron Mountain Incorporated (IRM) : Free Stock Analysis Report
Stag Industrial, Inc. (STAG) : Free Stock Analysis Report
Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report
Park Hotels & Resorts Inc. (PK) : Free Stock Analysis Report
