01—Abstract
Summary
Summary of the 10-K filed March 1, 2013. Cited figures are marked; the original filing is the authoritative source.
Iron Mountain Incorporated reported total revenues of $3,005.3 milliona for 2012, down $9.4 million, or 0.3%, from $3,014.7 million in 2011.
Operating income was $557.0 millionb and Adjusted OIBDA was $912.2 million (30.4% of revenues), down from $950.4 million (31.5%) in 2011. Net income attributable to Iron Mountain was $171.7 million, or $0.98 per diluted share, compared with $395.5 million in 2011, which included a $200.6 million gain on sale of discontinued operations. Storage rental revenue grew 3.0% to $1,733.1 million, while service revenue fell 4.5% to $1,272.1 million, driven by lower recycled paper prices and declining activity-based core services.
The company is pursuing conversion to a REIT, with a Special Dividend of $700 millionc paid in November 2012, of which $140.0 million was cash and $560.0 million was common stock (approximately 17.0 million shares). The filing estimates total Conversion Plan costs of $375.0 million to $475.0 million, including $225.0 million to $275.0 million of related tax payments, and states the company may not qualify for REIT status effective January 1, 2014 if the IRS does not issue favorable private letter rulings.
Total long-term debt rose to $3,825.0 milliond at year-end 2012 from $3,353.6 million, and total equity declined to $1,162.4 million, giving a debt-to-equity ratio of 3.29 as stated in the filing. Management expects 2013 internal revenue growth of approximately (1)% to 2% and capital expenditures of about $325.0 million.
02—Key points
Key Highlights
- Total revenues were $3,005.3 million in 2012, down 0.3% from $3,014.7 million in 2011, with internal revenue growth of negative 0.3%.
- Storage rental revenue rose 3.0% to $1,733.1 million, with storage rental internal growth of 3.0%; service revenue fell 4.5% to $1,272.1 million.
- Adjusted OIBDA declined 4.0% to $912.2 million, and Adjusted OIBDA margin fell to 30.4% from 31.5%, partly due to $34.4 million of REIT Costs.
- Net income attributable to Iron Mountain Incorporated was $171.7 million ($0.98 diluted EPS), versus $395.5 million in 2011, which included a $200.6 million gain on sale of discontinued operations.
- The Special Dividend of $700 million was paid November 21, 2012, with about $140.0 million in cash and about 17.0 million shares issued.
- Total long-term debt increased to $3,825.0 million, including $1.0 billion of 5¾% Senior Subordinated Notes due 2024 issued in August 2012.
- Conversion Plan costs are estimated at $375.0 million to $475.0 million, and the company says REIT election may be delayed if IRS private letter rulings are not favorable in time.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2012filed March 1, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $3.00B$3.01B | −0.4% |
| SG&A Expenses | $850.37M$834.59M | +1.9% |
| Operating Expenses | $2.45B$2.44B | +0.2% |
| Operating Income | $555.47M$571.20M | −2.8% |
| Interest Expense | $242.60M$205.26M | +18.2% |
| Net Income | $170.92M$399.59M | −57.2% |
| EPS (Basic) | $0.98$2.03 | −51.7% |
| EPS (Diluted) | $0.98$2.02 | −51.5% |
| Shares Outstanding (Basic) | 173.60M194.78M | −10.9% |
| Shares Outstanding (Diluted) | 174.87M195.94M | −10.8% |
05—Questions
Frequently Asked Questions
What is the status of Iron Mountain's proposed REIT conversion?
The board unanimously approved the Conversion Plan in June 2012 and the company plans to elect REIT status no sooner than the taxable year beginning January 1, 2014. PLR requests were submitted to the IRS in Q3 2012, and the IRS may not respond favorably until the second half of 2013 or at all.
How did revenue and profitability change in 2012?
Total revenues decreased $9.4 million, or 0.3%, to $3,005.3 million. Operating income fell 2.5% to $557.0 million, and income from continuing operations fell 25.5% to $183.5 million, mainly due to higher interest expense and REIT Costs.
What drove the decline in service revenue?
Service revenue declined 4.5% to $1,272.1 million. The filing attributes this mainly to a significant decrease in recycled paper prices, which reduced complementary service revenue by $30.0 million, and to expected declines in activity-based core services, particularly in North America.
How much capital has been returned to stockholders?
The company purchased 37.7 million shares for approximately $1.1 billion under its program, with $66.0 million remaining available as of December 31, 2012. Dividends declared in 2012 totaled $5.12 per share, including the Special Dividend, and the quarterly dividend was raised to $0.27 per share in June 2012.
What are the main leverage metrics and covenant headroom?
Total long-term debt was $3,825.0 million and the debt-to-equity ratio was 3.29. The revolving credit and term loan leverage ratio was 3.9 versus a maximum of 5.5, and the bond leverage ratio was 5.3 versus a maximum of 6.5. The fixed charge coverage ratio was 1.3 versus a minimum of 1.2.
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