Iron Mountain (IRM) Q4 FFO Miss Estimates, Revenues Improve

Iron Mountain Inc. (NYSE:IRM) reported fourth-quarter 2017 normalized funds from operations (FFO) of 53 cents per share that missed the Zacks Consensus Estimate of 57 cents. However, the figure increased 6% year over year.

Adjusted earnings increased 12% year over year to 29 cents.

Quarter Details

Revenues of $991 million beat the Zacks Consensus Estimate of $964.8 million and improved 6.1% year over year. At constant currency (cc), revenues grew 4.1% from the year-ago quarter.

Storage revenues (61.9% of total revenues) increased 6.5% at cc to $567 million. Internal growth was 4.2% year over year.

Iron Mountain generated 46.1% of storage revenues from the developed markets (North America Records and Information management, North America Data Management and Western Europe) and 12.9% from Other International markets (emerging markets, Australia and New Zealand).

In developed markets storage internal growth was 3.4%. In Other International markets storage internal growth was 6.8% year over year. Internal storage rental grew 9% in emerging markets.

Service (38.1% of total revenues) inched up 0.4% to $368 million. However, internal growth declined 0.1% year over year. In developed markets, service internal growth and Other International markets growth was 0.1% and 0.2%, respectively.

Adjusted gross margin expanded 130 basis points (bps) on a year-over-year basis to 56.2%.

Moreover, adjusted EBITDA margin improved 120 bps to 31.7%. Year-over-year growth was driven by robust performance from North Records and Information management (RIM), Western Europe and Global Data Center, which surged 240 bps, 570 bps and 240 bps, respectively.

Guidance

For 2018, Iron Mountain expects revenues between $4.160 and $4.260 billion, reflecting 7-9% growth over 2017.

Adjusted EBITDA is expected in the range of $1.435-$1.485 billion, representing growth of 12-16%. Adjusted FFO is anticipated to be in the range of $805-$865 million.

Internal storage rental growth rate expectation for 2018 is expected in the range of 3-3.5%. Total internal revenue growth is expected in the range of 2-3%.

Zacks Rank & Stocks to Consider

Currently, Iron Mountain has a Zacks Rank #4 (Sell).

Better-ranked stocks worth considering are Super Micro Computer (NASDAQ:SMCI) , Adobe Systems (NASDAQ:ADBE) and AMETEK (NYSE:AME) . While Super Micro sports a Zacks Rank #1 (Strong Buy), both Adobe and AMETEK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Super Micro Computer, Adobe Systems and AMETEK are currently pegged at 14%, 16% and 11.50%, respectively.

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