01—Abstract
Summary
Summary of the 10-K filed March 2, 2009. Cited figures are marked; the original filing is the authoritative source.
Iron Mountain Incorporated (NYSE: IRM) reported total revenues of $3.06 billiona for the year ended December 31, 2008, up 11.9% from $2.73 billion in 2007, with internal revenue growth of 8%.
Storage revenues reached $1.66 billionb and service revenues $1.40 billion. Operating income rose 8.3% to $492.5 million and OIBDA increased 11.3% to $783.3 million, with OIBDA margin at 25.6%. Net income, however, fell 46.4% to $82.0 million from $153.1 million, primarily due to higher other expense of $31.0 million (mainly foreign currency transaction losses of $28.9 million) and a provision for income taxes of $142.9 million, reflecting an effective tax rate of 63.6%.
The company carried total long-term debt of $3.24 billionc against stockholders' equity of $1.80 billion at year-end, a debt-to-equity ratio of 1.80x. Management stated it was in compliance with all debt covenants, with its IMI revolving credit and term leverage ratio at 3.8x against a maximum allowable 5.5x. Management expects 2009 internal revenue growth of 5% to 7% and planned capital expenditures of approximately $420 million excluding acquisitions.
The filing also notes that a 2009 commodity price decline, including recycled paper and fuel, is expected to reduce revenue growth by about 2%d. The filing describes Iron Mountain as a global provider of records management, data protection and recovery, and information destruction services, serving more than 120,000 corporate clients in 38 countries.
The company has never paid cash dividends on its common stock. Its London fire litigation remains pending, and management does not expect it to have a material impact on results.
02—Key points
Key Highlights
- Total revenues rose 11.9% to $3.06 billion in 2008, with internal revenue growth of 8%.
- Operating income increased 8.3% to $492.5 million, and OIBDA rose 11.3% to $783.3 million (25.6% margin).
- Net income declined 46.4% to $82.0 million, driven by $31.0 million of other expense and a 63.6% effective tax rate.
- Storage revenues of $1.66 billion provide a recurring base; storage has accounted for over 54% of revenues in each of the last five years.
- Total long-term debt was $3.24 billion; the debt-to-equity ratio was 1.80x, with covenant leverage ratios well within limits.
- Management expects 2009 internal revenue growth of 5% to 7% and capital expenditures of about $420 million excluding acquisitions.
- The company has never paid cash dividends on its common stock.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2008filed March 2, 2009Financial Statements
| Revenue | $3.06B |
| SG&A Expenses | $882.36M |
| Operating Expenses | $2.56B |
| Operating Income | $492.53M |
| Interest Expense | $236.63M |
| Net Income | $82.04M |
| EPS (Basic) | $0.41 |
| EPS (Diluted) | $0.40 |
| Shares Outstanding (Basic) | 201.28M |
| Shares Outstanding (Diluted) | 203.29M |
05—Questions
Frequently Asked Questions
Why did net income fall sharply despite revenue and OIBDA growth?
Net income decreased 46.4% to $82.0 million from $153.1 million. The filing attributes this mainly to higher other expense of $31.0 million, which includes foreign currency transaction losses of $28.9 million, and a provision for income taxes of $142.9 million, producing an effective tax rate of 63.6%. The tax rate increase is primarily due to foreign exchange gains and losses recorded in jurisdictions with different tax rates.
How is the company's debt position and covenant compliance?
Total long-term debt was $3.24 billion at December 31, 2008, against stockholders' equity of $1.80 billion. The IMI revolving credit and term leverage ratio was 3.8x versus a maximum allowable 5.5x, and the bond leverage ratio was 4.5x versus a maximum of 6.5x. Management states the company was in compliance with all debt covenants as of year-end.
What does the company expect for 2009?
Management expects consolidated internal revenue growth of 5% to 7% for 2009. Lower commodity prices, including recycled paper and fuel surcharges, are expected to reduce revenue growth by approximately 2% compared with 2008. Capital expenditures are expected to be about $420 million excluding acquisitions, and interest expense and depreciation are expected to rise modestly from reclassifying certain vehicle leases as capital leases.
Does Iron Mountain pay dividends?
No. The company has never declared or paid cash dividends on its capital stock and does not anticipate paying them in the foreseeable future. It intends to retain earnings for business development or debt repayment, and its credit agreement and indentures contain limits on dividend payments.
What is the status of the London fire litigation?
A July 2006 fire destroyed a leased London records facility. Several customer claims are pending in UK courts, and the company denies liability while its primary warehouse legal liability insurer defends the claims under a reservation of rights. A preliminary trial on the enforceability of contractual liability limits is tentatively scheduled for June 2009. Management does not expect the matter to have a material impact on results or financial condition.
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