Iron Mountain Reports First Quarter 2014 Financial Results

  Iron Mountain Reports First Quarter 2014 Financial Results

  First Quarter Performance Driven by Strong Constant Dollar Storage Rental
                                    Growth

               Core Acquisition Activity Supports Future Growth

Business Wire

BOSTON -- May 1, 2014

Iron Mountain Incorporated (NYSE: IRM), the storage and information management
services company announces financial and operating results for the first
quarter of 2014.

  *Total reported revenues were $770 million, compared with $747 million in
    2013. On a constant dollar (C$) basis, total revenue growth was 4.7%,
    reflecting solid storage rental revenue gains of 5.3% and service revenue
    growth of 3.8%.
  *Adjusted OIBDA was $229 million, compared with $227 million in 2013.
  *Adjusted EPS was $0.26 per share ($0.22 per share on a GAAP basis),
    compared with $0.27 per share ($0.10 per share on a GAAP basis), in 2013.

Reconciliations of supplemental non-GAAP measures to GAAP measures may be
found in Appendix A or by visiting the Investor Relations page at
www.ironmountain.com under “Supplemental Data.”

“Our first quarter results reflect the durability of our storage rental
business and our continued focus on preserving and extending that durability.
During the quarter we closed on acquisitions in both developed and emerging
markets, maintained our high profitability and delivered solid financial and
operating results in line with our expectations,” said William L. Meaney, Iron
Mountain’s president and chief executive officer. “We continued to execute on
the key pillars of our strategic plan – getting more from our developed
markets, extending our reach into emerging markets and capitalizing on
emerging business opportunities – and believe our approach will continue to
deliver consistent, long-term growth with low volatility and attractive
stockholder returns.”

First quarter C$ total storage rental growth reflected strong increases of
12.7% in the company’s International business and growth in the North American
Records and Information Management (RIM) and Data Management (DM) segments of
3.0% and 2.8%, respectively. “We are pleased with the performance of the
business in the first quarter, as we made progress on integration of
acquisitions completed in late 2013 and are beginning to see the benefits of
our organizational realignment,” Meaney said.

Since the beginning of 2014, the company has invested more than $60 million in
five international storage related businesses and acquired the records
inventory of five document storage companies in the United States for an
additional $5 million. The international transactions include three deals in
Turkey and Poland, which enhanced the company’s leadership position in these
emerging markets, and the acquisition of a leading provider of offsite data
storage and data protection services in Australia. “These transactions are
consistent with our plan to extend our market leadership, support long-term
growth and solid returns, and capture a significant amount of un-vended
records storage,” Meaney said.

Operations Review

Operating performance for the quarter was in line with expectations, with
consistent C$ storage rental revenue growth of 5.3% and service revenue growth
of 3.8%. Internal storage rental growth for the quarter was 1.4%, driven by
5.2% gains in the International business and 2.3% internal growth in the North
American DM segment, partially offset by flat internal growth in the North
American RIM segment. Foreign currency rate changes reduced reported storage
rental revenue growth rates by approximately 1.4% for the quarter.

Global records management volume grew by 6.7% on a year-over-year basis,
supported by solid 15.2% volume increases in the International business,
driven by strong growth from both emerging and developed markets as well as
recent acquisitions. Net pricing in North America increased by 0.8% compared
with the year-ago period.

As the company has previously noted, service revenues reflect a trend toward
reduced retrieval/re-file activity and related transportation revenues;
however, this rate of decline has begun to moderate in recent periods. First
quarter internal service revenue declined 0.7% compared with the prior-year
period. C$ service revenue growth was 3.8%, driven by recent acquisitions with
related new incoming volume and transportation fees, growth in imaging
projects and an increase in shredding volume with related growth in revenue
from paper recycling, offset somewhat by lower recycled paper pricing when
compared with prior year averages.

Financial Review

Adjusted OIBDA margins for the first quarter of 2014 decreased by 80 basis
points to 29.7%, compared with the first quarter of 2013, primarily due to the
recognition of $2.4 million of charges related to the 2013 organizational
realignment and $3.5 million for the insurance deductible charge related to
the recent fire in Argentina. First quarter Adjusted OIBDA margins in the
North American RIM segment remained strong at 37.5%. North American DM
Adjusted OIBDA margins were 56.1%, down from the same period in 2013 due to
declines in service activity levels as the business becomes more archival in
nature. The International business continued to deliver profitability on a
portfolio basis in line with the company’s mid-20% target, with Adjusted OIBDA
margins of 26.2% for the first quarter.

Free Cash Flow (FCF) for the first quarter before acquisitions, real estate
capital expenditures, operating costs and cash taxes related to the proposed
conversion to a REIT was $(20) million, compared with $50 million for the same
period in 2013. This change was primarily due to higher cash interest expense
and the timing of payables. Capital expenditures in the first quarter
(excluding $15 million of real estate and $2 million of REIT-related capital
expenditures), totaled $47 million, or 6.1% of revenues. The company’s
liquidity position remains strong with availability of $556 million and a net
total lease adjusted leverage ratio of 5.1x at quarter end, as compared to a
maximum allowable ratio of 6.5x. The calculation for this ratio is net debt
including the capitalized value of lease obligations divided by EBITDAR as
defined in the company’s credit agreement.

Dividends

On March 14, 2014, Iron Mountain’s board of directors declared a quarterly
cash dividend of $0.27 per share for stockholders of record as of March 25,
2014, which was paid on April 15, 2014.

Iron Mountain’s conference call to discuss its first quarter 2014 financial
results will be held today at 8:30 a.m. Eastern Time. The company will
simulcast the conference call on its Web site at www.ironmountain.com, the
content of which is not part of this earnings release. A slide presentation
providing summary financial and statistical information that will be discussed
on the conference call will also be posted to the Web site and available for
real-time viewing. The slide presentation, replays of the conference call and
related transcript will be available on the Web site for future reference.

About Iron Mountain

Iron Mountain Incorporated (NYSE: IRM) is a leading provider of storage and
information management services. The company’s real estate network of more
than 67 million square feet across more than 1,000 facilities in 36 countries
allows it to serve customers around the world. And its solutions for records
management, data management, document management, and secure shredding help
organizations to lower storage costs, comply with regulations, recover from
disaster, and better use their information. Founded in 1951, Iron Mountain
stores and protects billions of information assets, including business
documents, backup tapes, electronic files and medical data.
Visitwww.ironmountain.com for more information.

Forward Looking Statements

This press release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and other
securities laws and is subject to the safe-harbor created by such Act.
Forward-looking statements include our statements regarding our operations,
economic performance, financial condition, goals, beliefs, future growth
strategies, investment objectives, plans and current expectations, such as
projected revenues from our emerging market acquisition pipeline. These
forward-looking statements are subject to various known and unknown risks,
uncertainties and other factors. When we use words such as "believes,"
"expects," "anticipates," "estimates" or similar expressions, we are making
forward-looking statements. You should not rely upon forward-looking
statements except as statements of our present intentions and of our present
expectations, which may or may not occur. Although we believe that our
forward-looking statements are based on reasonable assumptions, our expected
results may not be achieved, and actual results may differ materially from our
expectations. Important factors that could cause actual results to differ from
our other expectations include, among others: (i) the cost to comply with
current and future laws, regulations and customer demands relating to privacy
issues; (ii) the impact of litigation or disputes that may arise in connection
with incidents in which we fail to protect our customers' information; (iii)
changes in the price for our storage and information management services
relative to the cost of providing such storage and information management
services; (iv) changes in customer preferences and demand for our storage and
information management services; (v) the adoption of alternative technologies
and shifts by our customers to storage of data through non-paper based
technologies; (vi) the cost or potential liabilities associated with real
estate necessary for our business; (vii) the performance of business partners
upon whom we depend for technical assistance or management expertise outside
the U.S.; (viii) changes in the political and economic environments in the
countries in which our international subsidiaries operate; (ix) claims that
our technology violates the intellectual property rights of a third party; (x)
changes in the cost of our debt; (xi) the impact of alternative, more
attractive investments on dividends; (xii) our ability or inability to
complete acquisitions on satisfactory terms and to integrate acquired
companies efficiently; (xiii) other trends in competitive or economic
conditions affecting our financial condition or results of operations not
presently contemplated; and (xiv) other risks described more fully in our
Annual Report on Form 10-K filed with the Securities and Exchange Commission
on February 28, 2014 under “Item 1A. Risk Factors” and other documents that we
file with the SEC from time to time. Except as required by law, we undertake
no obligation to release publicly the result of any revision to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

APPENDIX A

We have presented in this earnings release financial data (Adjusted OIBDA,
Adjusted OIBDA Margin %, Adjusted EPS and FCF that exclude certain costs
associated with the company’s 2011 proxy contest, the previous work of the
former Strategic Review Special Committee of the board of directors and the
company’s proposed REIT conversion (collectively, REIT Costs). We believe the
adjusted data provides meaningful supplemental information regarding the
company’s operating results primarily because they exclude amounts we do not
consider part of ongoing operating results when planning, forecasting and
assessing the performance of the organization or our individual operating
segments. We believe that the adjusted data also facilitates the comparison by
management and investors of results for current periods and guidance for
future periods with results for past periods.

                                                            
Selected Financial Data:
(dollars in millions, except per           Q1/2013    Q1/2014    Inc (Dec)
share data)
Revenues                                   $ 747        $ 770        3.1    %
                                                                     
Gross Profit (excluding D&A)               $ 426        $ 435        2.1    %
Gross Margin %                               57.0 %       56.5 %
                                                                     
Adjusted OIBDA                             $ 227        $ 229        0.5    %
Adjusted OIBDA Margin %                      30.5 %       29.7 %
                                                                     
Operating Income                           $ 123        $ 142        15.7   %
Interest Expense, net                      $ 63         $ 62         (1.4   )%
                                                                     
Income from Continuing Operations          $ 18         $ 43         132.8  %
Adj. EPS from Continuing                   $ 0.27       $ 0.26       (3.7   )%
Operations – FD
                                                                            

Non-GAAP Measures

We have presented supplemental non-GAAP financial measures as part of this
earnings release. Reconciliations of each supplemental non-GAAP measure to its
most comparable GAAP measure is presented below and available at the Investor
Relations page at www.ironmountain.com under “Supplemental Data.” This
presentation of non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, the most directly comparable GAAP
measures. We believe that these non-GAAP financial measures provide meaningful
supplemental information regarding the company’s operating results primarily
because they exclude amounts we do not consider part of ongoing operating
results when planning and forecasting and assessing the performance of the
organization or our individual operating segments. We believe that our
non-GAAP financial measures also facilitate the comparison by management and
investors of results for current periods and guidance for future periods with
results for past periods.

Adjusted Operating Income Before Depreciation, Amortization, Intangible
Impairments, (Gain) Loss on Disposal/Write-down of Property, Plant and
Equipment, Net and REIT Costs, or Adjusted OIBDA

Adjusted OIBDA is defined as operating income before depreciation,
amortization, intangible impairments, (gain) loss on disposal/write-down of
property, plant and equipment, net, and REIT Costs. Adjusted OIBDA Margin is
calculated by dividing Adjusted OIBDA by total revenues. These measures are an
integral part of the internal reporting system we use to assess and evaluate
the operating performance of our business. We use multiples of current or
projected Adjusted OIBDA in conjunction with our discounted cash flow models
to determine our overall enterprise valuation and to evaluate acquisition
targets. We believe Adjusted OIBDA and Adjusted OIBDA Margin provide our
current and potential investors with relevant and useful information regarding
our ability to generate cash flow to support business investment.

Adjusted Earnings Per Share from Continuing Operations, or Adjusted EPS

Adjusted EPS is defined as reported earnings per share from continuing
operations excluding: (1) (gain) loss on the disposal/write-down of property,
plant and equipment, net; (2) intangible impairments; (3) other (income)
expense, net; (4) REIT Costs; and (5) the tax impact of reconciling items and
discrete tax items. We do not believe these excluded items to be indicative of
our ongoing operating results, and they are not considered when we are
forecasting our future results. We believe Adjusted EPS is of value to our
current and potential investors when comparing our results from past, present
and future periods.

Free Cash Flows before Acquisitions and Discretionary Investments, or FCF

FCF is defined as Cash Flows from Operating Activities from continuing
operations less capital expenditures (excluding real estate and capital
expenditures associated with the REIT conversion), net of proceeds from the
sales of property and equipment and other, net, and additions to customer
relationship and acquisition costs. REIT Costs are also excluded from FCF. Our
management uses this measure when evaluating the operating performance of our
consolidated business. We believe this measure provides relevant and useful
information to our current and potential investors. FCF is a useful measure in
determining our ability to generate excess cash that may be used for
reinvestment in the business, discretionary deployment in investments such as
real estate or acquisition opportunities, returning of capital to our
stockholders and voluntary prepayments of indebtedness.

Following are reconciliations of the above-described measures to the most
directly comparable GAAP measures. Columns may not foot due to rounding.

Operating Income reconciled to Adjusted OIBDA (in millions):

                                           
                                                Three Months Ended March 31,
                                                2013            2014
Operating Income                                $   123           $  142
Add: Depreciation & Amortization                    80               86
Gain on disposal/write-down of PP&E,                (1   )           (8   )
net
REIT Costs                                         25             8    
Adjusted OIBDA                                  $   227          $  229  
                                                                             

Reported EPS from Continuing Operations – Fully Diluted reconciled to Adjusted
EPS from Continuing Operations – Fully Diluted:

                                             
                                                  Three Months Ended March 31,
                                                  2013            2014
Reported EPS from Continuing Operations –         $   0.10        $ 0.22
FD
Add: Loss (gain) on disposal/write-down               --             (0.04   )
of PP&E, net
Other Expense, net                                    0.01           0.03
REIT Costs                                            0.13           0.05
Tax impact of reconciling items and                  0.03          --      
discrete tax items
Adjusted EPS from Continuing Operations –         $   0.27         $ 0.26    
FD
                                                                   
Weighted average common shares                       192,110       193,069 
outstanding – FD (000s)
                                                                   

FCF reconciled to Cash Flows from Operating Activities from Continuing
Operations (in millions):

                                                       
                                                            Three Months Ended

                                                            March 31,
                                                            2013     2014
Cash Flows from Operating Activities from                   $ 106      $ 56
Continuing Operations
Less: Capital Expenditures (excluding real estate),           75         75
net
Additions to Customer Acquisition Costs                       5          8
Add: REIT Conversion Costs, net of tax                        18         5
REIT Conversion Capital Expenditures                         6         2   
FCF Before Acquisitions and Discretionary Items             $ 50       $ (20 )
                                                                       

                                              
IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in Thousands except Per Share Data)

(Unaudited)
                                                   Three Months Ended

                                                   March 31,
                                                   2013          2014
REVENUES:
Storage Rental                                     $ 442,469       $ 458,889
Service                                             304,562       311,237 
                                                                   
Total Revenues                                       747,031         770,126
                                                                   
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation and            321,076         335,145
Amortization)
Selling, General and Administrative                  223,451         214,780
Depreciation and Amortization                        80,201          86,433
Gain on Disposal/Write-down of Property,
Plant and                                           (539    )      (8,307  )

Equipment, Net
                                                                   
Total Operating Expenses                            624,189       628,051 
                                                                   
OPERATING INCOME                                     122,842         142,075
                                                                   
INTEREST EXPENSE, NET                                63,182          62,312
OTHER EXPENSE, NET                                  2,739         5,317   
                                                                   
Income from Continuing Operations before
Provision
for Income Taxes                                     56,921          74,446
                                                                   
PROVISION FOR INCOME TAXES                          38,571        31,725  
INCOME FROM CONTINUING OPERATIONS                    18,350          42,721
INCOME (LOSS) FROM DISCONTINUED                     2,184         (612    )
OPERATIONS, NET OF TAX
NET INCOME                                           20,534          42,109
                                                                   
Less: Net Income Attributable to
Noncontrolling                                      1,148         442     

Interests
                                                                   
Net Income Attributable to Iron Mountain           $ 19,386       $ 41,667  
Incorporated
                                                                   
EARNINGS (LOSSES) PER SHARE – BASIC:
INCOME FROM CONTINUING OPERATIONS                  $ 0.10         $ 0.22    
TOTAL INCOME (LOSS) FROM DISCONTINUED              $ 0.01         $ -       
OPERATIONS
Net Income Attributable to Iron Mountain           $ 0.10         $ 0.22    
Incorporated
EARNINGS (LOSSES) PER SHARE – DILUTED:
INCOME FROM CONTINUING OPERATIONS                  $ 0.10         $ 0.22    
TOTAL INCOME (LOSS) FROM DISCONTINUED              $ 0.01         $ -       
OPERATIONS
Net Income Attributable to Iron Mountain           $ 0.10         $ 0.22    
Incorporated
                                                                   
DIVIDENDS DECLARED PER COMMON SHARE                $ 0.2700       $ 0.2700  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING          190,213       191,879 
– BASIC
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING          192,110       193,069 
– DILUTED
                                                                   
Adjusted Operating Income before                   $ 227,476      $ 228,524 
Depreciation and Amortization
                                                                             

                                                         
IRON MOUNTAIN INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands)

(Unaudited)
                                                                
                                             December 31,       March 31,

                                             2013               2014
ASSETS
                                                                
CURRENT ASSETS:
Cash and Cash Equivalents                    $ 120,526          $ 169,906
Restricted Cash                                33,860             33,860
Accounts Receivable (less allowances
of $34,645                                     616,797            626,116

and $35,544, respectively)
Other Current Assets                          162,424          157,747    
Total Current Assets                          933,607          987,629    
                                                                
PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment at               4,631,067          4,642,183
Cost
Less: Accumulated Depreciation                (2,052,807 )      (2,080,397 )
Property, Plant and Equipment, net            2,578,260        2,561,786  
                                                                
OTHER ASSETS:
Goodwill, net                                  2,463,352          2,466,001
Other Non-current Assets, net                _ _ 677,786        _ _ 691,201
Total Other Assets                            3,141,138        3,157,202  
                                                                
Total Assets                                 $ 6,653,005       $ 6,706,617  
                                                                
LIABILITIES AND EQUITY
                                                                
CURRENT LIABILITIES:
Current Portion of Long-term Debt            $ 52,583           $ 55,084
Other Current Liabilities                     906,518          812,766    
Total Current Liabilities                      959,101            867,850
                                                                
LONG-TERM DEBT, NET OF CURRENT                 4,119,139          4,288,605
PORTION
OTHER LONG-TERM LIABILITIES                    516,931            498,991
COMMITMENTS AND CONTINGENCIES
TOTAL IRON MOUNTAIN INCORPORATED               1,047,338          1,042,818
STOCKHOLDERS’ EQUITY
NONCONTROLLING INTERESTS                      10,496           8,353      
                                                                
TOTAL EQUITY                                  1,057,834        1,051,171  
                                                                
Total Liabilities and Equity                 $ 6,653,005       $ 6,706,617  
                                                                             

Contact:

Iron Mountain Incorporated
Investor Relations Contacts:
Melissa Marsden, 617-535-8595
Senior Vice President, Investor Relations
melissa.marsden@ironmountain.com
or
Faten Freiha, 617-535-8404
Director, Investor Relations
faten.freiha@ironmountain.com
 
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