01—Abstract
Summary
Summary of the 10-K filed February 16, 2018. Cited figures are marked; the original filing is the authoritative source.
Iron Mountain Incorporated reported total revenues of $3,845.6 milliona for 2017, up from $3,511.5 million in 2016, with operating income of $649.1 million and net income attributable to Iron Mountain Incorporated of $183.8 million.
Adjusted EBITDA rose to $1,260.2 millionb, an Adjusted EBITDA margin of 32.8%. Storage rental revenue was $2,377.6 million and service revenue was $1,468.0 million. Management described internal revenue growth of 2.3% for the year, with internal storage rental revenue growth of 3.9%.
The company's strategy centers on storage rental as the recurring revenue base, with growth from fold-in acquisitions in developed markets, emerging-market acquisitions, and expansion of its data center business and adjacent businesses. Subsequent to year-end, on January 10, 2018, Iron Mountain completed the IODC Transaction for approximately $1,340.0 millionc of total consideration, which the filing describes as a transformative step in its data center platform. Funding came from the December 2017 equity offering, the over-allotment option and 5¼% senior notes due 2028, and the company had total long-term debt of $7,043.3 million at December 31, 2017.
The filing also highlights ongoing risks, including the shift from paper and tape storage to alternative technologies, declining service activity as records become less active, foreign currency exposure, REIT qualification requirements, and increased indebtedness following acquisitions. The company reported that its disclosure controls and internal control over financial reporting were effective as of December 31, 2017.
02—Key points
Key Highlights
- Total revenues increased to $3,845.6 million in 2017 from $3,511.5 million in 2016; the filing attributes the increase to the net impact of acquisitions, primarily Recall, and internal growth of 2.3%.
- Adjusted EBITDA rose to $1,260.2 million (32.8% margin) from $1,087.3 million (31.0% margin) in 2016.
- Net income attributable to Iron Mountain Incorporated was $183.8 million, or $0.69 per diluted share, compared with $104.8 million in 2016.
- Total long-term debt was $7,043.3 million at December 31, 2017, and the weighted average interest rate was 5.0%; approximately 81% of total debt was fixed.
- The IODC Transaction closed January 10, 2018 for approximately $1,340.0 million, adding 728,000 square feet and 62 MW of existing data center capacity in Arizona, New Jersey and Ohio.
- Dividends declared per common share were $2.2706 in 2017 versus $2.0427 in 2016; the board declared a $0.5875 dividend on February 14, 2018.
- The company operated in 53 countries with more than 225,000 customers, including approximately 95% of the Fortune 1000, and no single customer exceeded 1% of consolidated revenues.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 16, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $3.85B$3.51B | +9.5% |
| SG&A Expenses | $937.18M$988.33M | −5.2% |
| Operating Expenses | $3.21B$3.01B | +6.7% |
| Operating Income | $634.05M$501.61M | +26.4% |
| Net Income | $170.11M$104.82M | +62.3% |
| EPS (Basic) | $0.64$0.43 | +48.8% |
| EPS (Diluted) | $0.64$0.42 | +52.4% |
| Shares Outstanding (Basic) | 265.90M246.18M | +8.0% |
| Shares Outstanding (Diluted) | 266.84M247.27M | +7.9% |
05—Questions
Frequently Asked Questions
How did Iron Mountain perform financially in 2017?
Revenues grew 9.5% to $3,845.6 million, operating income rose to $649.1 million from $501.6 million, and income from continuing operations was $191.7 million. Adjusted EBITDA reached $1,260.2 million, a 32.8% margin.
What drove revenue growth in 2017?
The filing attributes most growth to acquisitions, primarily the Recall Transaction, which contributed 6.6% to consolidated revenue growth. Internal revenue growth was 2.3%, with internal storage rental growth of 3.9% offset by negative internal service revenue growth of 0.3%.
What is the IODC Transaction and how was it financed?
IODC is a Phoenix-based data center colocation provider. Iron Mountain completed the acquisition on January 10, 2018 for approximately $1,340.0 million of total consideration, financed by the December 2017 equity offering, the over-allotment option and the 5¼% Senior Notes due 2028 issued for $825.0 million.
What are the main risks highlighted in the filing?
Key risks include customers shifting to alternative storage technologies, declining service activity as stored records become less active, data security and breach liability, foreign currency fluctuations, substantial indebtedness, integration of acquisitions, and the requirement to remain qualified as a REIT.
What dividend did the company pay and declare?
Dividends declared per share were $2.2706 for 2017, up from $2.0427 in 2016. The board declared a quarterly dividend of $0.5875 per share on February 14, 2018, payable April 2, 2018 to holders of record as of March 15, 2018.
06—Continue