01—Abstract
Summary
Summary of the 10-K filed March 1, 2007. Cited figures are marked; the original filing is the authoritative source.
Iron Mountain Incorporated (IRM) reported its 2006 results in this Form 10-K filed March 1, 2007.
The company describes itself as the global leader in information protection and storage services, with total 2006 revenues of $2.35 billiona (up from $2.08 billion in 2005), operating income of $407.2 million, and net income of $128.9 million, compared with $111.1 million in 2005. OIBDA rose to $615.6 million, though its margin declined to 26.2% from 27.6%. Storage revenues were $1.33 billion and service and storage material sales were $1.02 billion.
Internal revenue growth was 9% for 2006, and the company says storage revenues have grown for 72 consecutive quarters. The balance sheet shows total assets of $5.21 billionb, long-term debt of $2.67 billion and stockholders' equity of $1.55 billion. The company describes itself as highly leveraged, with a bond leverage ratio of 4.6 as of December 31, 2006 against a maximum allowable ratio of 6.5.
Cash flow from operations was $374.3 millionc, capital expenditures were $382.0 million, and the company expects 2007 capital expenditures of $390 million to $420 million excluding acquisitions. The company has never paid cash dividends and does not expect to. Its stock traded on the NYSE under "IRM" and was subject to a three-for-two stock split in December 2006.
Investors should note the risks the filing highlights: heavy reliance on real estate, exposure to international operations, debt covenants, and the July 2006 fire at a London facility, which the company does not expect to have a material impact. In January 2007 the company issued 225.0 million Euro of senior subordinated notes and used the proceeds to repay IMI term loan and revolving credit facility borrowings.
02—Key points
Key Highlights
- Total 2006 revenues of $2.35 billion, up 13.1% from $2.08 billion in 2005
- Net income of $128.9 million in 2006, up 16.0% from $111.1 million in 2005
- OIBDA of $615.6 million in 2006, up 7.3%, though OIBDA margin declined to 26.2% from 27.6%
- Storage revenues of $1.33 billion, representing over 56% of total consolidated revenues in each of the last five years
- Long-term debt of $2.67 billion against stockholders' equity of $1.55 billion; debt to equity ratio of 1.72x; bond leverage ratio of 4.6 versus a 6.5 maximum
- 2007 capital expenditures expected between $390 million and $420 million, excluding acquisitions
- International operations provided approximately 30% of 2006 total revenues
03—Questions
Frequently Asked Questions
What is Iron Mountain's core business?
Iron Mountain describes itself as the global leader in information protection and storage services. Its three service categories are records management, data protection and recovery, and information destruction, which includes secure shredding. It serves more than 90,000 corporate clients.
How much debt does Iron Mountain carry and how is it managed?
Long-term debt was $2.67 billion at December 31, 2006, and the company states it is highly leveraged and expects to remain so. Its bond leverage ratio was 4.6 at year-end 2006, within a target range of 4.5 to 5.5 and below the 6.5 maximum allowed under its bond indentures. As of December 31, 2006, 80.6% of total debt was fixed-rate.
Does Iron Mountain pay dividends?
No. The company has never declared or paid cash dividends on its capital stock and does not anticipate doing so in the foreseeable future. The only distribution in the last two years was the stock dividend tied to the three-for-two stock split in December 2006.
What were the main risks cited in the filing?
Key risks include customer competition from internal storage capabilities, a possible shift from paper storage to alternative technologies, real estate and environmental liabilities, risks in international expansion, the ability to integrate acquisitions, the cost of data security regulation, and restrictive debt covenants. The company also notes a July 2006 London facility fire, which it does not expect to have a material impact.
What drove the growth in 2006 revenue?
Storage revenues rose $145.6 million, or 12.3%, to $1.33 billion, mainly from internal growth of 10% and acquisitions. Service and storage material sales rose $126.6 million, or 14.1%, to $1.02 billion, driven by acquisitions and internal growth of 7%. Internal revenue growth overall was 9% in 2006.
04—Continue