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Iron Mountain (IRM) Misses Q1 FFO and Revenue Estimates

Zacks Equity Research

Iron Mountain Incorporated IRM reported first-quarter 2019 normalized funds from operations (FFO) per share of 48 cents, missing the Zacks Consensus Estimate of 53 cents. The reported figure also compares unfavorably with the year-ago reported tally of 53 cents. Results reflect higher labor costs in its North America businesses in March and lower-than-expected growth in revenues.

Adjusted FFO fell 12.7% year over year to $193.4 million.

Revenues of $1.05 billion missed the Zacks Consensus Estimate of $1.06 billion. However, the reported figure improved 4.5% year over year, excluding the impact of foreign exchange. The year-over-year results reflect data-center and adjacent business buyouts as well as growth in Other International Business segment.

Quarter Details

Storage revenues came in at $663 million in the first quarter and denoted 5.1% increase on a constant-currency basis. The company recorded 2% organic growth, year over year. In developed markets, storage organic revenue growth came in at 1.1%, while in Other International markets, storage organic revenue growth was 4.6% year over year.

Service revenues amounted to $391 million in the reported quarter, indicating an increase of 3.5% on a constant-currency basis. Moreover, it witnessed organic growth of 1.8%, year over year. Service organic revenue growth in developed markets came in at 1.8%, while in Other International markets, the figure was down 0.6%.

Adjusted EBITDA margin shrunk 210 basis points (bps) to 30.8%, suggesting higher costs. The company experienced a 40-basis point decline in North America Records and Information management (RIM), 230-basis point contraction in Western Europe and a 230-basis point slip in Global Data Center.


Iron Mountain has maintained its guidance for 2019. The company expects, on a constant currency basis, revenue growth of 1-6%, constant currency adjusted EBITDA growth to be flat to 8% and adjusted FFO increase of 1-8%.

Particularly, the company projects revenues at $4,200-$4,400 million, adjusted EBITDA of $1,420-$1,530 million and adjusted FFO of $870 - $930 million in 2019. Specifically, the company forecasts stronger adjusted EBITDA growth in the second half of the year, following elevated expenses in March and the current quarter.

Our Take

Iron Mountain is making diligent efforts to strengthen its fast-growing businesses on the back of acquisitions and development. The company is expanding its data-center footprint in international markets. Although such efforts are encouraging for long-term growth, near-term rise in costs from such efforts will likely dampen the company’s financials, especially as it already has a highly-leveraged balance sheet.

Iron Mountain currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Iron Mountain Incorporated Price, Consensus and EPS Surprise

Iron Mountain Incorporated Price, Consensus and EPS Surprise | Iron Mountain Incorporated Quote

We now look forward to the earnings releases of other REITs like Vornado Realty Trust VNO, Boston Properties, Inc. BXP and Extra Space Storage Inc. EXR. Vornado Realty is slated to report first-quarter earnings on Apr 29, while Boston Properties and Extra Space Storage are scheduled to release their quarterly numbers on Apr 30.

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.

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