Steel Guru : Iron Mountain Inc announces Q3 2009 financial results

Iron Mountain Incorporated has reported its financial results for the third quarter ended September 30th 2009. The company announced reported operating income and operating income before depreciation and amortization growth of 5% and 6%, respectively as compared to the third quarter of 2008. OIBDA growth was 10% on a constant currency basis.

These results were driven by continued focus on sustainable operating improvements and supported by storage revenue internal growth of 7%, which more than offset forecasted weakness in service internal revenue growth. Incorporating its solid operating performance, the company raised its full year OIBDA and cash flow outlook and refined its revenue outlook to reflect year to date results. Backed by increased cash flows from operations, controlled capital expenditures, and recent financing activities, Iron Mountain ended the quarter with greater liquidity comprised of cash and availability under its revolving credit facility of more than USD 1 billion.

Mr Bob Brennan president & CEO of Iron Mountain Incorporated said that "Iron Mountain is a resilient, diversified business that continues to post solid results. We have a strong foundation upon which we are building long-term growth platforms. Our disciplined management approach continues to drive solid profit performance through improved execution and is serving us particularly well in this challenging economy. We are on track to deliver solid full year results in 2009."

Iron Mountain reported total internal revenue growth of 2% in the third quarter compared to the prior year period supported by storage revenue internal growth of 7%. Solid storage revenue internal growth in the North American Physical and International Physical business segments offset economic pressures on digital revenues and activity based service revenues related to the handling and transportation of items in storage and secure shredding. As expected, complementary service revenues decreased year over year, due primarily to lower recycled paper prices and softness in the more discretionary revenues, such as project revenues and fulfillment services. OIBDA of USD 224 million for the quarter was supported by higher gross profit margins. Included in OIBDA for the third quarter is a benefit of USD 5 million resulting from certain vehicle leases being classified as capital leases in 2009. These leases previously met the requirements to be considered operating leases. The year over year weakening of major foreign currencies against the US dollar reduced reported growth rates by approximately 4% compared to the third quarter of 2008.

Internal revenue growth for the third quarter was 2% as storage revenue internal growth of 7% more than offset the expected weakness in service revenue growth. Severe economic conditions continued to impact core activity levels, complementary services and technology sales. The year over year weakening of major foreign currencies including the British pound and the Canadian dollar against the US dollar reduced the revenue growth rate by 4% compared to the third quarter of 2008. As a result, Iron Mountain reported total consolidated revenues of USD 765 million for the quarter compared to USD 784 million for the prior year period.

The company reported gross profits of USD 443 million with its gross profit margin improving from 55.1% in the third quarter of 2008 to 58.0% in the third quarter of 2009. Gross margins were supported by improved storage gross margin and productivity gains in North America, as continued progress on transportation and record center optimization initiatives drove higher service gross margins. Gross margins also benefited from improved performance in the International Physical segment and from the recharacterization of certain vehicle leases as described above.

OIBDA for the quarter was USD 224 million, up 6% on a reported basis compared to the third quarter of 2008. Excluding the impacts of the foreign currency exchange rate changes, third quarter OIBDA grew 10% compared to the prior year period. 2% of this growth is attributable to the recharacterization of certain vehicle leases. Selling, general and administrative costs were flat to the prior year period on a reported basis. Excluding the impacts of the foreign currency exchange rate changes, these overhead costs increased 4%, as the company continued to make investments in growth and productivity initiatives.

Operating income for the third quarter of 2009 was USD 143 million, up 5% compared to the same period in 2008. Excluding the impact of asset gains and losses, third quarter operating income increased 4% compared to the prior year period reflecting the flow through of OIBDA gains.