Iron Mountain's (IRM) Q4 FFO And Revenues Beat Estimates
Zacks Investment Research | Feb 12, 2020 09:39PM ET
Iron Mountain Incorporated (NYSE:IRM) reported fourth-quarter 2019 normalized funds from operations (FFO) per share of 65 cents, beating the Zacks Consensus Estimate of 63 cents. The reported figure also compares favorably with the year-ago quarter’s 56 cents.
Revenues of $1.08 billion inched up 1.7% year over year, surpassing the Zacks Consensus Estimate of $1.07 billion. However, excluding the impact of foreign exchange, total revenues are up 2.7% year over year.
Results reflect decent organic volume trends and positive contribution from revenue management across all geographies. However, Service revenues were negatively impacted by paper prices. The company is also on track in shifting its mix to faster-growing businesses, which increased to 24% of the company’ sales, up from the 9% witnessed six years ago.
Adjusted FFO (AFFO) increased 17.7% year over year to $228 million.
For full-year 2019, Iron Mountain reported normalized FFO per share of $2.29, up from the prior year’s $2.26. This was backed by a 0.9% year-on-year increase in revenues to $4.26 billion. The tally, however, increased 3% excluding the impact of foreign exchange.
Quarter Details
Storage revenues came in at $676 million in the December-end quarter, highlighting a 3.5% year-on-year increase on a constant currency basis. The company recorded 2.5% organic growth, year on year.
Service revenues amounted to $404 million in the reported quarter, indicating a year-over-year increase of 1.5% on a constant currency basis. However, organic Service revenues edged down 0.7%, marred by paper prices.
Adjusted EBITDA margin expanded 190 basis points (bps) to 35.8%.
Guidance
Iron Mountain has issued its guidance for 2020. The company projects revenues at $4,375-$4,475 million, denoting a 3-5% change, year on year, and adjusted EBITDA of $1,520-$1,570, suggesting a 6-9% increase from the prior-year level. Further, AFFO is estimated in the range of $930-$960 million, indicating 9-12% year-on-year growth.
Project Summit Update
Iron Mountain’s transformation program — Project Summit — focuses on simplifying its global structure, streamlining managerial structure for the future and enhancing customer experience.
Project Summit is anticipated to deliver annual adjusted EBITDA benefits of $200 million. Considerably, all of the benefits will be realized by 2022, with $80 million of benefits projected to be delivered in 2020. The total cost to implement the program is estimated to be approximately $240 million over the next two years, inclusive of roughly $50 million charge incurred in fourth-quarter 2019. Moreover, the company estimates that the 2020 restructuring charge would be around $130 million, with associated benefit commencing in the second half of this year.
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Iron Mountain currently carries a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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