In a bid to strengthen its storage business, Iron Mountain (IRM - Analyst Report) recently acquired three record management companies from Information Storage Consolidation Company ("ISCC") namely Safe Records Center, Archives USA and The Document Bank.
These acquisitions expand Iron Mountain’s presence in Michigan and strengthen its position in Dallas and Florida. Moreover, Iron Mountain would gain approximately 1000 customers from the current acquisitions.
Iron Mountain has been pursuing an aggressive acquisition strategy to supplement organic revenues from the storage business. Some of Iron Mountain’s recent acquisitions include Datastore and Data Technology Services in Jan 2013 and IG2 Data Security Inc., DATAPROS Storage and Staffing LLC, and Data Backup Inc in late 2012.
We believe that the company will continue to pursue accretive acquisitions in this segment. Storage is an integral part of Iron Mountain’s revenue structure and contributes nearly 57% to its total revenue. Iron Mountain recorded a 4% increase in revenues from storage in the first quarter.
We expect Iron Mountain to drive significant growth through acquisitions in the fast-growing countries like Brazil, Russia, China and India, which will boost its international revenues, 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 a promising international business.
Moreover, competition from Hertz Global Holdings (HTZ - Snapshot Report) , Pitney Bowes Inc (PBI - Analyst Report) and Guidance Software Inc (GUID - Snapshot Report) are the other headwinds.
Currently, Iron Mountain carries a Zacks Rank #3 (Hold).