Iron Mountain Stock: Record Earnings, Over 5% Return, 10% Growth in 2022 (NYSE: IRM)

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Iron Mountain (IRM), known as the world’s largest document storage company, is a REIT that has added more technology to its offerings in recent years, via its expansion into data centers.


Iron Mountain (IRM) was founded by Herman Knaust. In 1936 he “purchased the original site of Iron Mountain – a depleted iron ore mine with 100 acres of land – where he started a mushroom farm.

Knaust’s decision in 1945 to sponsor the resettlement of many Jewish immigrants – who lost their identities due to missing personal records during World War II – to the United States is what spurred the idea to start protecting information. vital wars or other disasters in its mine.s.” (MRI to place)

Traditionally known as a document storage REIT, IRM has expanded its data center holdings to 15 facilities on three continents since 2017.


IRM delivered strong fourth quarter 2021 results – its highest ever quarterly revenue of $1.16 billion, driving 8.5% of total organic revenue growth, with services revenue up around 20%, adjusted EBITDA increased by 15%, with a record EBITDA of $431 million. AFFO increased by 40% and NFFO by 25%. There was organic growth in storage rental revenue of 4% for the fourth quarter, 2.6% for the full year, reflecting the continued price advantage combined with positive volume trends.

Full-year 2021 net income rose 32% to $453 million, with revenue, AFFO and adjusted EBITDA all posting record amounts. The number of shares was flat in 2021, with AFFO/Share of $3.48, above management’s 2021 guidance range of $3.33 to $3.45.

2021 Adjusted EBITDA was in line with management guidance of $1,635m, up 10.75% from 2020. AFFO of $1,012m was slightly higher than management guidance of $1,005m $.

Total global volume increased by 2.4% in 2021, reaching a record 744 million cubic feet. Although no segment earnings growth figures have yet been released, IRM’s global data center team leased 49 megawatts in 2021, exceeding the annual target of 30 megawatts. They leased 27 megawatts in the fourth quarter.


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Orientation 2022:

Management released strong guidance for 2022, forecasting 10%-13% growth in EBITDA, 14-17% in revenue and 7-11% in AFFO. This forecast includes approximately $450 million in revenue from the new ITRenew acquisition.

Management also released guidance for the first quarter of 2022. It expects total revenue to exceed $1.2 billion, EBITDA to exceed $425 million and AFFOs to exceed $250 million. dollars.

orientation 2022

IRM website

New acquisition :

In January 2022, IRM completed the acquisition of ITRenew, a global leader in mission-critical data center lifecycle management solutions. With the transaction, Iron Mountain acquired 80% of the outstanding shares of ITRenew on a cash and debt-free basis for approximately $725 million in cash, with the remaining 20% ​​vesting within three years of closing for a value of minimum business of $925 million. .


At $44.20, IRM yields 5.60%, with an average five-year dividend growth rate of 4.34%. Management has maintained the current quarterly dividend of $0.6185 since the fourth quarter of 2019. IRM is expected to go ex-dividend on ~3/11/22.

dividend schedule

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IRM’s AFFO dividend payout ratio improved significantly in 2021, reaching a low of 67.23% in Q4 21 and an average of 71.09% for the full year, down 11 .8% compared to 2020.

Management has a long-term target AFFO payout ratio in the low to mid-60s, which is not that far from the fourth quarter ratio. They plan to maintain the current quarterly dividend of $0.6185 until this payout ratio is achieved.

dividend coverage

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IRM’s distributions in 2021 were characterized as ~54% Section 199A dividends, ~13% qualified, with ~20% capital gains and 11% return of capital.

2021 dividend tax

IRM website

Profitability and leverage:

IRM’s ROE jumped 52% in 2021, to 46.45%, while its ROA and EBITDA margin also increased. Net debt/EBITDA leverage improved to 5.48X, while debt/equity jumped from 7.66X to 9.45X.

Management’s long-term target leverage ratio is a range of 4.5x to 5.5x, with IRM entering the upper range in Q4 21 at 5.48X.


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It was the equity portion of this debt-to-equity ratio that changed the most in 2021, falling about 25%, to $857 million, while debt increased about 5%.

Debt Equity

IRM website

Debt and liquidity:

As of 12/31/21, IRM had approximately $2 billion in liquidity, with 90% of its debt at an average fixed rate of 4.8% and an average maturity of 7.1X years. Management expects leverage to be around 5.4X in 2022.


IRM website


At $44.20, IRM has a price/AFFO per share of 12.70, considerably below the specialty REIT average of 19.22. Its P/Sale and EV/EBITDA are also well below average, while its P/Book is well above, as is its dividend yield.

However, take these medium-sized specialty REITs with a grain of salt, since this sub-sector is a mix of disparate industries, ranging from cell towers to lumber, prisons to casinos and more.

IRM is unique as the dominant company in document storage. Its growing data center business probably only accounts for about 10% of the company’s revenue, but if you compared IRM to Digital Realty, you’d see that DLR has a P/AFFO of 21.16 and an EV/EBITDA of 23.67.


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Technology and real estate have retreated in 2022 as we enter a new era of rising rates. IRM has outperformed the real estate sector and the S&P 500 over the past year, but has lagged them so far in 2022.


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Analyst price targets:

At $44.20, IRM is around 10% below analysts’ low price target of $49, 13% below the midpoint target price of $51.00 and 18% below their target price the higher of $54.00.

price targets

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Parting Thoughts:

While it may not be among the highest yielding income vehicles we cover in our articles, IRM currently offers an attractive dividend yield of 5.6% and looks set to continue growing its earnings in 2022. In addition, management intends to maintain the current dividend, but may increase it when leverage consistently hits its 4.5X to 5.6X range.

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