Releases

posted on 29 February 2008 21:20

- 2007 revenues up 16% to $2.73 billion while OIBDA grows 14% to $704 million; capital efficiency improves to 15.2% of revenues; earnings up 18% to $0.76 per diluted share

- Quarterly revenues increase 19% supported by acquisitions, strong service revenue growth and the 76th consecutive quarter of increased storage revenues

- OIBDA is $184 million in the quarter, up 15% excluding impacts from asset dispositions

- Earnings of $0.14 per diluted share for the quarter include $0.05 of operating and tax charges related to foreign currency exchange rate fluctuations

- Company issues financial outlook for 2008; expects revenues of more than $3 billion and 10% to 14% OIBDA growth (excluding the impacts from asset dispositions)

BOSTON, Feb. 28 /PRNewswire-FirstCall/ -- Iron Mountain Incorporated (NYSE: IRM), the global leader in information protection and storage services, today announced its financial results for the quarter and full year ended December 31, 2007, reporting strong revenue growth, higher operating income before depreciation and amortization (OIBDA) and full year earnings of $0.76 per diluted share.

Iron Mountain posted strong year over year revenue growth of 19% in the fourth quarter supported by solid internal growth of 10%, with acquisitions and favorable foreign currency changes contributing the remainder. The Company had balanced revenue performance across its North American Physical, International Physical and Worldwide Digital business segments, with overall gains supported by robust service revenue growth. OIBDA of $184 million for the quarter was within the Company's forecasted range as benefits from revenue gains were offset by impacts from business mix, increased investments and certain year-end compensation and benefit accruals.

The fourth quarter capped a solid year of financial performance for the company. Full year revenues were up 16% to $2.73 billion and OIBDA grew 14% for the year to $704 million, consistent with the Company's long-term financial objectives. Net income increased 19% to $153 million due primarily to a lower effective tax rate of 31%, which added about $0.07 per diluted share to earnings. Implementation of the global treasury program reduced the Company's structural tax rate to approximately 37% while the favorable effects of certain foreign currency gains and losses and other discrete items reduced the effective tax rate further. Capital expenditures of $415 million were 15.2% of 2007 revenues, down from 15.8% of revenues for 2006.

"We are pleased with the performance of the business this year," said Richard Reese, Chairman and CEO. "We delivered solid revenue and OIBDA growth across our portfolio, consistent with our long-term financial goals, and made significant progress in executing our strategic agenda. Fundamentally, the business continues to run well and we are investing in new services and infrastructure, consistent with our strategy, to enhance our ability to provide comprehensive, end-to-end solutions to our customers' most complex information management challenges."

Separately, the Company announced that Bob Brennan, the Company's President and Chief Operating Officer, will succeed Richard Reese as Iron Mountain's Chief Executive Officer. Reese announced his plans to step down as CEO, a position he has held since December 1981, at Iron Mountain's Annual Meeting of Stockholders on June 5, 2008 and will become the Company's first Executive Chairman of the Board. Brennan will continue as President and report directly to the Board of Directors. As Executive Chairman, a full time position reporting to the board of directors, Reese, will focus on driving the Company's new services agenda and advising the CEO on strategy and other matters of the business while continuing to perform his duties as Chairman of the Company's Board of Directors.

Key Financial Highlights - Q4 2007

Iron Mountain's total consolidated revenues for the quarter grew 19% over the prior year period to $727 million driven by solid internal growth of 10% and augmented by several acquisitions, most notably ArchivesOne, Inc., RMS Services - USA, Inc. and Stratify, Inc. The Company's overall revenue growth was highlighted by continued strength in service revenue internal growth (12%) led by increased special project revenues in both North America and Europe and strong recycled paper revenues. Solid storage (8%) and core service (8%) internal revenue growth rates were also key factors in the Company's revenue performance for the quarter. See Appendix A at the end of this press release for a presentation of Selected Financial Data.

The Company posted a 17% increase in gross profits for the quarter driven primarily by strong revenue gains. The benefits from the revenue gains were partially offset by the mix of revenues, as labor and transportation intensive services such as secure shredding and Document Management Solutions (DMS) grew faster than storage, and the dilutive margin impacts of acquisitions completed during the year. OIBDA for the quarter grew 9% to $184 million, reflecting the Company's revenue performance, offset by impacts from business mix, increased investments and certain year-end compensation and benefit accruals. OIBDA growth was also impacted by a $10 million net gain on asset dispositions in 2006. Excluding the impacts of asset dispositions from both years, OIBDA grew 15% in the quarter. See Appendix B at the end of this press release for a discussion of OIBDA and the required reconciliation to the appropriate GAAP measures.

Operating income for the fourth quarter of 2007 was $115 million, which was flat compared to the same period in 2006, due to increased depreciation and amortization expense driven primarily by higher levels of capital expenditures, acquisitions and accelerated depreciation related to certain planned building moves. Further, operating income for the fourth quarter of 2006 included a $10 million net gain on asset dispositions compared to a $1 million net gain in the fourth quarter of 2007. Net income for the quarter was $28 million, or $0.14 per diluted share, including other expense, net of $6 million, or $0.02 per diluted share. The components of other expense, net, including the impact of foreign currency fluctuations are detailed in the table below.

Also impacting net income was an increase in the Company's effective tax rate for the quarter. The 44.6% tax rate reflects the net negative tax effect of certain foreign currency gains and losses recorded in different tax jurisdictions. This impact lowered earnings by approximately $0.03 per diluted share in the quarter. Absent the impact of any foreign currency rate fluctuations and other discrete items, the Company expects its structural tax rate to be approximately 36% for 2008.

The Company's year to date Free Cash Flow before Acquisitions and Discretionary Investments ("FCF") for the year ended December 31, 2007 was $148 million reflecting a 30% increase in cash flows from operating activities, approximately $33 million of insurance proceeds related to the July 2006 fire in one of our London, England facilities, controlled capital expenditures and the cash flow benefit of a $60 million year end accrual with respect to fourth quarter capital expenditures. The reversal of this accrual in the first quarter ending March 31, 2008, will impact our 2008 FCF. See Appendix B at the end of this press release for a discussion of FCF and the required reconciliation to the appropriate GAAP measures.

Acquisitions

Iron Mountain's acquisition strategy focuses on acquiring attractive businesses that provide a strong platform for future growth by expanding the Company's geographic footprint and service offerings while enhancing its existing operations. Since the end of the third quarter of 2007, the Company completed several acquisitions, most notably, the previously announced acquisition of Stratify Inc., a leading provider of eDiscovery solutions, which closed in December 2007. The Company also acquired shredding businesses in North America and Australia and a film and sound business.

Financial Performance Outlook

Iron Mountain is issuing its financial performance outlook for the first quarter ending March 31, 2008 and the full year ending December 31, 2008. This guidance is based on current expectations and does not include the potential impact of any future acquisitions. For the full year, the company is targeting 10% to 13% revenue growth and 10% to 14% OIBDA growth, performance consistent with its long-term financial goals. Please note that targeted OIBDA growth excludes current and prior year impacts from asset dispositions. ...

Iron Mountain's conference call to discuss its fourth quarter and full year 2007 financial results will be held today at 11:00 a.m. Eastern Time. In order to further enhance the overall quality of its investor communications, 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 and replays of the conference call will be available on the Web site for future reference.

About Iron Mountain

Iron Mountain Incorporated (NYSE: IRM) helps organizations around the world reduce the costs and risks associated with information protection and storage. The Company offers comprehensive records management and data protection solutions, along with the expertise and experience to address complex information challenges such as rising storage costs, litigation, regulatory compliance and disaster recovery. Founded in 1951, Iron Mountain is a trusted partner to more than 100,000 corporate clients throughout North America, Europe, Latin America and Asia Pacific. For more information, visit the Company's Web site at www.ironmountain.com.