Iron Mountain Reports First Quarter Results

Rhea-AI Summary

Iron Mountain (NYSE: IRM) reported strong Q1 2021 results, achieving a record quarterly revenue of $1.08 billion, up 1.2% YoY. Despite a 4.8% decline in service revenue, organic growth in new areas offset losses. Adjusted EBITDA rose 4% to $380.6 million, with a 100 basis point margin expansion, benefitting from Project Summit initiatives. However, net income fell 28% to $46.6 million due to restructuring charges. The company also increased its 2021 financial guidance, projecting total revenue between $4.365 - $4.515 billion.

Positive

• Record quarterly revenue of $1.08 billion, a 1.2% increase YoY.
• Adjusted EBITDA increased by 4% to $380.6 million with a 100bps margin expansion.
• Increased 2021 financial guidance for total revenue and adjusted EBITDA.

Negative

• Net income decreased by 28% to $46.6 million due to restructuring charges.
• Service revenue declined by 4.8%, impacting overall revenue stability.

Iron Mountain Incorporated (NYSE: IRM), the global leader in innovative storage and information management services, announces financial and operating results for the first quarter of 2021. The conference call / webcast details, earnings call presentation and supplemental financial information, which includes definitions of certain capitalized terms used in this release, are available on Iron Mountain’s Investor Relations website. Reconciliations of non-GAAP measures to the appropriate GAAP measures are included herein.

“We are pleased to have delivered a strong start to the year, with both revenue and profitability coming in ahead of our expectations for the first quarter, despite the impact from many parts of the world continuing to experience the effects from various levels of lockdown,” said William L. Meaney, president and CEO of Iron Mountain. "We achieved a record level of quarterly revenue. What this means effectively is that whilst our service revenue is still significantly impacted by various lockdowns across the world, our organic revenue growth in new areas more than offset those declines to deliver record revenue. In addition, we grew Adjusted EBITDA 2% year over year on a constant-currency basis, to a record first-quarter level - again, versus a previous record Q1 profitability last year before the impact of COVID. Our margin expanded 100 basis points, driven in part by the benefits from Project Summit and the flow through from revenue management."

Meaney continued, “Whilst the continued impact from COVID during this quarter was unprecedented before Q2 of last year, we are proud of the consistency and stability of our core business, and we continue to deliver on our strategic plan. This can be attributed to the diversity and scale of our portfolio, the depth and breadth of our service offerings, the investments we have made in both new product offerings as well as enhanced sales capacity, and the efficiencies that have been created through Project Summit - not just in financial terms but in the cultural shift we have continued to drive.”

Financial Performance Highlights for the First Quarter of 2021
($ in millions, except per share data)
		Three Months Ended
		3/31/21		3/31/20		Y/Y % Change
Storage Rental Revenue		$708		$684		4%
Service Revenue		$374		$385		(3)%
Total Revenue		$1,082		$1,069		1%
Net Income		$47		$65		(28)%
Adjusted EBITDA		$381		$366		4%
Adjusted EBITDA Margin		35.2%		34.2%		+100 bps
AFFO		$235		$231		2%
AFFO per share		$0.81		$0.80		2%

• Total reported Revenues for the first quarter were $1.08 billion, compared with $1.07 billion in the first quarter of 2020, an increase of 1.2%. Excluding the impact of foreign currency exchange (FX), total reported Revenues declined 0.5% compared to the prior year, driven by a 4.8% decline in Service revenue, partially offset by a 1.9% increase in Storage rental revenue.
• Net Income for the first quarter was $46.6 million compared with $64.9 million in the first quarter of 2020. The following items were included in Net Income:
  • Restructuring Charges of $39.8 million associated with the implementation of Project Summit compared to $41.0 million, in the first quarters of 2021 and 2020, respectively.
  • Intangible Impairment charge of $23.0 million related to the writedown of goodwill associated with the Fine Arts business in the first quarter of 2020.
  • Other Expense, Net of $4.7 million compared to Other Income, Net of $42.7 million, with the majority of the year-over-year change related to fluctuations in foreign currency transaction losses (gains), net.
• Adjusted EBITDA for the first quarter was $380.6 million, compared with $366.0 million in the first quarter of 2020, an increase of 4.0%. On a constant currency basis, Adjusted EBITDA increased by 2.1%, driven by the benefits from Project Summit and the flow through from revenue management, somewhat offset by the aforementioned decline in Service revenue.
• Reported EPS - Fully Diluted from Continuing Operations for the first quarter was $0.16, compared with $0.22 in the first quarter of 2020.
• Adjusted EPS for the first quarter was $0.32, compared with $0.28 in the first quarter of 2020. Adjusted EPS reflects a structural tax rate of 16.6% and 17.0%, in the first quarters of 2021 and 2020, respectively.
• FFO (Normalized) per share was $0.63 for the first quarter, compared with $0.60 in the first quarter of 2020, or an increase of 5.0%.
• AFFO was $235.4 million for the first quarter, compared with $230.7 million in the first quarter of 2020, an increase of 2.1%.
• AFFO per share was $0.81 for the first quarter, compared with $0.80 in the first quarter of 2020, an increase of 1.6%.

Dividend

On May 6, 2021, Iron Mountain's board of directors declared a quarterly cash dividend of $0.6185 per share for the second quarter. The second-quarter 2021 dividend is payable on July 6, 2021, for shareholders of record on June 15, 2021.

Guidance

Iron Mountain has increased its 2021 financial guidance ranges, reflecting first quarter outperformance and recently closed acquisitions; details are summarized in the table below. Additional guidance assumptions are available in the Company's Q1 2021 supplemental financial information.

2021 Guidance
($ in millions, except per share data)
		New		Y/Y % Change		Previous		Y/Y % Change
Total Revenue		$4,365 - $4,515		5% - 9%		$4,325 - $4,475		4% - 8%
Adjusted EBITDA		$1,585 - $1,635		7% - 11%		$1,575 - $1,625		7% - 10%
AFFO		$955 - $1,005		8% - 13%		$945 - $995		7% - 12%
AFFO Per Share		$3.28 - $3.45		7% - 12%		$3.25 - $3.42		6% - 11%

About Iron Mountain

Iron Mountain Incorporated (NYSE: IRM) is the global leader in innovative storage and information management services, storing and protecting billions of valued assets, including critical business information, highly sensitive data, and cultural and historical artifacts. Founded in 1951 and trusted by more than 225,000 customers worldwide, Iron Mountain helps customers CLIMB HIGHER™ to transform their businesses. Through a range of services including digital transformation, data centers, secure records storage, information management, secure destruction, and art storage and logistics, Iron Mountain helps businesses bring light to their dark data, enabling customers to unlock value and intelligence from their stored digital and physical assets at speed and with security, while helping them meet their environmental goals.

To learn more about Iron Mountain, please visit: www.IronMountain.com and follow @IronMountain on Twitter and LinkedIn.

Forward Looking Statements

We have made statements in this press release that constitute "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements concern our operations, economic performance, financial condition, goals, beliefs, future growth strategies, investment objectives, plans and current expectations, such as our (1) 2021 guidance as well as our expectations for growth, including growth opportunities and growth rates for revenue by segment, organic revenue, organic volume and other metrics, (2) expectations and assumptions regarding the impact from the COVID-19 pandemic on us and our customers, including on our businesses, financial position, results of operations and cash flows, (3) expected benefits, costs and actions related to, and timing of, Project Summit, (4) expectations as to our capital allocation strategy, including our future investments, leverage ratio, dividend payments and possible funding sources (including real estate monetization) and capital expenditures, (5) expectations regarding the closing of pending acquisitions and investments, and (6) other forward-looking statements related to our business, results of operations and financial condition.

These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors, and you should not rely upon them except as statements of our present intentions and of our present expectations, which may or may not occur. When we use words such as "believes," "expects," "anticipates," "estimates," “plans” or similar expressions, we are making forward-looking statements. Although we believe that our forward-looking statements are based on reasonable assumptions, our expected results may not be achieved, and actual results may differ materially from our expectations. In addition, important factors that could cause actual results to differ from expectations include, among others: (i) the severity and duration of the COVID-19 pandemic and its effects on the global economy, including its effects on us, the markets we serve and our customers and the third parties with whom we do business within those markets; (ii) our ability to execute on Project Summit and the potential impacts of Project Summit on our ability to retain and recruit employees; (iii) our ability to remain qualified for taxation as a real estate investment trust for United States federal income tax purposes; (iv) changes in customer preferences and demand for our storage and information management services, including as a result of the shift from paper and tape storage to alternative technologies that require less physical space; (v) our ability or inability to execute our strategic growth plan, including our ability to invest according to plan, incorporate new digital information technologies into our offerings, achieve satisfactory returns on new product offerings, continue our revenue management, expand internationally, complete acquisitions on satisfactory terms, integrate acquired companies efficiently and grow our business through joint ventures; (vi) changes in the amount of our capital expenditures; (vii) our ability to raise debt or equity capital and changes in the cost of our debt; (viii) the cost and our ability to comply with laws, regulations and customer demands, including those relating to data security and privacy issues, as well as fire and safety and environmental standards; (ix) the impact of litigation or disputes that may arise in connection with incidents in which we fail to protect our customers' information or our internal records or information technology systems and the impact of such incidents on our reputation and ability to compete; (x) changes in the price for our storage and information management services relative to the cost of providing such storage and information management services; (xi) changes in the political and economic environments in the countries in which our international subsidiaries operate and changes in the global political climate, particularly as we consolidate operations and move records and data across borders; (xii) our ability to comply with our existing debt obligations and restrictions in our debt instruments; (xiii) the impact of service interruptions or equipment damage and the cost of power on our data center operations; (xiv) the cost or potential liabilities associated with real estate necessary for our business; (xv) failures in our adoption of new IT systems; (xvi) other trends in competitive or economic conditions affecting our financial condition or results of operations not presently contemplated; and (xvii) the other risks described in our periodic reports filed with the SEC, including under the caption “Risk Factors” in Part I, Item 1A of our Annual Report. Except as required by law, we undertake no obligation to update any forward-looking statements appearing in this report.

Reconciliation of Non-GAAP Measures:

Throughout this release, Iron Mountain discusses (1) Adjusted EBITDA, (2) Adjusted Earnings per Share (“Adjusted EPS”), (3) Funds from Operations (“FFO Nareit”), (4) FFO (Normalized) and (5) Adjusted Funds from Operations (“AFFO”). These measures do not conform to accounting principles generally accepted in the United States (“GAAP”). These non-GAAP measures are supplemental metrics designed to enhance our disclosure and to provide additional information that we believe to be important for investors to consider in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as operating income, net income (loss) attributable to Iron Mountain Incorporated or cash flows from operating activities (as determined in accordance with GAAP). The reconciliation of these measures to the appropriate GAAP measure, as required by Regulation G under the Securities Exchange Act of 1934, as amended, and their definitions are included later in this release.

Consolidated Balance Sheets
(Unaudited; dollars in thousands)
		3/31/2021		12/31/2020
ASSETS

FAQ

What were Iron Mountain's Q1 2021 financial results?

Iron Mountain reported record revenue of $1.08 billion, a 1.2% increase YoY, with adjusted EBITDA of $380.6 million.

How did COVID-19 impact Iron Mountain's service revenue in Q1 2021?

Service revenue decreased by 4.8% compared to the previous year due to ongoing lockdown effects.

What guidance did Iron Mountain provide for 2021?

Iron Mountain updated its guidance, projecting total revenue of $4.365 - $4.515 billion for 2021.

What is Iron Mountain's stock symbol?

Iron Mountain is traded under the stock symbol 'IRM' on the NYSE.

When is Iron Mountain's next dividend payment?

The next quarterly cash dividend of $0.6185 per share is payable on July 6, 2021.