Iron Mountain (IRM) Misses Q4 EPS by 1c, Revenues Beat; Offers FY20 Revenue Guidance Above Consensus, Provides FY20 EPS Views

Iron Mountain (NYSE: IRM) reported Q4 EPS of $0.31, $0.01 worse than the analyst estimate of $0.32. Revenue for the quarter came in at $1.08 billion versus the consensus estimate of $1.07 billion.

Financial Performance Highlights for the Fourth Quarter and Full-Year 2019

• Total reported Revenues for the fourth quarter were $1.08 billion, compared with $1.06 billion in the fourth quarter of 2018. Excluding the impact of foreign exchange (FX), reported total Revenues grew 2.7% compared to the prior year, reflecting the benefits from revenue management and steady organic global volume trends. For full-year 2019, total reported Revenues were $4.26 billion, compared with $4.23 billion in 2018, an increase of 3.0% excluding the impact of FX.
• Income from Continuing Operations for the fourth quarter was $37.1 million, compared with $158.5 million in the fourth quarter of 2018. Income from Continuing Operations in both Q4 and full-year 2019 included Restructuring Charges of $48.6 million associated with the implementation of the Company\'s transformation program - Project Summit - designed to accelerate execution of Iron Mountain\'s strategy. In addition, Income from Continuing Operations included $4.7 million of Significant Acquisition Costs in the fourth quarter of 2019, compared with $12.0 million in the fourth quarter of 2018. For full-year 2019, Income from Continuing Operations was $268.2 million, compared with $367.6 million in 2018, with Significant Acquisition Costs of $13.3 million in 2019 and $50.7 million in 2018.
• Adjusted EBITDA for the fourth quarter was $386.5 million, compared with $359.4 million in the fourth quarter of 2018. On a constant currency basis, Adjusted EBITDA increased by 8.4%, driven in part by the flow through from revenue management and lower overhead costs. For full-year 2019, Adjusted EBITDA was $1.44 billion, compared with $1.42 billion in 2018, an increase of 2.7% excluding the impact of FX. Lower recycled paper prices impacted Adjusted EBITDA by approximately $28 million in 2019, which resulted in a drag of 2.0%.
• Reported EPS - Fully Diluted from Continuing Operations for the fourth quarter was $0.13, compared with $0.55 in the fourth quarter of 2018. For full-year 2019, Reported EPS - Fully Diluted from Continuing Operations was $0.93 compared with $1.28 in 2018.
• Adjusted EPS for the fourth quarter was $0.31, compared with $0.25 in the fourth quarter of 2018, or growth of 24.0%. For full-year 2019, Adjusted EPS was $1.02, compared with $1.07 in 2018. Adjusted EPS reflects a structural tax rate of 18.2% in both 2019 and 2018.
• Net Income for the fourth quarter was $37.1 million compared with $158.6 million in the fourth quarter of 2018. For full-year 2019, Net Income was $268.3 million compared with $355.1 million in 2018. Net Income in the fourth quarter and full-year 2019 was negatively impacted by Restructuring Charges related to Project Summit as well as Foreign Currency Transaction Losses.
• FFO (Normalized) per share was $0.65 for the fourth quarter, compared with $0.56 in the fourth quarter of 2018, or an increase of 16.1%. For full-year 2019, FFO (Normalized) per share was $2.29, compared with $2.26 in 2018.
• AFFO was $228.0 million for the fourth quarter compared with $193.8 million in the fourth quarter of 2018, an increase of 17.7%. For full-year 2019, AFFO decreased 0.7% to $856.3 million, compared with $862.6 million in 2018.

"We delivered a solid fourth-quarter, with constant-currency revenue growth of almost 3% year over year, in line with our guidance. In addition, we delivered strong growth in Adjusted EBITDA, Adjusted EPS, and AFFO, whilst simultaneously increasing investments to support future growth," said William L. Meaney, president and CEO of Iron Mountain. "Our results reflect steady organic volume trends and positive contribution from revenue management in all geographies, resulting in healthy total Organic Storage rental revenue growth of 2.5% in 2019. We continue to be pleased with the progress we have made in shifting our mix to faster growing businesses, which have increased to 24% of our sales compared to just 9% six years ago."

Meaney continued, "In the fourth quarter, we also took critical steps in the implementation of Project Summit, our comprehensive transformation program, which we expect will significantly reduce our cost structure, enhance our customer service capabilities and improve the overall speed of execution. Ultimately, we believe the simplification of our management structure and a concerted increase in dynamism will lead to higher levels of revenue growth."

GUIDANCE:

Iron Mountain sees FY2020 EPS of $1.15-$1.25, versus the consensus of $1.21. Iron Mountain sees FY2020 revenue of $4.375-4.475 billion, versus the consensus of $4.35 billion.

For earnings history and earnings-related data on Iron Mountain (IRM) click here.

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