Back to top

Analyst Blog

In a bid to strengthen its storage business, Iron Mountain Inc. recently acquired two companies - Datastore and Data Technology Services (“DTS”). However, financial details of the deal were not disclosed by the company.

With the current acquisitions, Iron Mountain has expanded its presence in the Wilmington, Milwaukee, Madison and the northern Chicago suburbs. Moreover, the acquisitions of Datastore and DTS gives Iron Mountain two records storage facilities in Cudahy and Sun Prairie, and 24,000 square-foot record storage hub in Northchase Parkway.

Iron Mountain has been pursuing an aggressive acquisition strategy to supplement organic revenues from the storage business. Iron Mountain has not only gained new customers from these acquisitions, but has also been able to expand its operations into new regions.

Earlier, in Dec 2012, Iron Mountain acquired three companies - IG2 Data Security Inc., DATAPROS Storage and Staffing LLC, and Data Backup Inc. All the three companies provide data storage and protection. We believe that the company will continue to pursue accretive acquisitions in this segment (both domestically and internationally) over the long term.

Storage is an integral part of Iron Mountain’s revenue structure and contributes nearly 58% of its total revenue. In the last concluded quarter, Iron Mountain recorded marginal growth of 1.7% year over year.

We expect Iron Mountain to drive significant growth through acquisitions in fast-growing countries like Brazil, Russia, China and India, which will boost its international revenue going forward. We believe that diversification and expansion of its business will help the company to counter sluggish growth from the domestic and European markets over the long term.

However, tepid internal growth coupled with volatile foreign exchange rates and a decline in recycled paper prices are expected to partially negate the company’s strong product portfolio, increasing market share and promising international business. Moreover, competition from the likes of DST Systems Inc , Guidance Software Inc and Cintas Corp are the other headwinds going forward.

Currently, Iron Mountain has a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.