Iron Mountain truck.

Iron Mountain reported $5.48 billion in full-year revenue for 2023, up 7% year over year, but its net income dropped 67%. | Bandersnatch/Shutterstock

Data management firm Iron Mountain reported a 67% decrease in income in 2023 compared to the prior year, largely because of macroeconomic forces but also due to lower resale market prices. Company executives said they’re optimistic about the company’s growing ITAD operations, however.

Iron Mountain on Feb. 22 reported $5.48 billion in full-year revenue for 2023, up 7% year over year. The company’s earnings before interest, taxes, depreciation and amortization were also up 7% at $1.96 billion. But its net income dropped significantly, falling from $562 million in 2022 down to $187 million in 2023, a 67% drop. And its fourth-quarter income of $29 million was down 77% year over year.

In announcing the results, company executives attributed the drop in income to “higher levels of restructuring and other transformation costs, lower gains on asset recycling as compared to the full year of 2022, and the negative impact from changes in foreign exchange rates.” 

The company’s financial filings indicate higher interest rates significantly impacted income: The company’s interest expense increased 20.1% in 2023, hitting $586 million.

Iron Mountain performs a variety of services including paper document shredding and a wide range of records and information management services, but it has been particularly growing in the IT asset disposition sector. The company acquired major processor Regency last year for $200 million, a deal that closed in early January. It also acquired a majority stake in ITRenew in 2022.

Component pricing holds down ITAD revenue

In the segment of the business that includes the ITAD arm, which Iron Mountain calls asset lifecycle management, the company reported a significant decrease in 2023 service revenues, which refer to the amount the company brings in from providing ITAD services to clients. Iron Mountain reported these service revenues decreased from $352 million in 2022 to $261 million in 2023, a 26% drop.

This decrease was primarily “a result of component price declines, which we expect to improve from current levels,” the company reported. But that decline was “partially offset by increased volume” of devices handled.

In a Feb. 22 earnings call, company CFO Barry Hytinen said Iron Mountain is following industry projections that show “a continued improving environment on component pricing” this year.

“Whereas last year, we were faced with really significant challenges of component pricing continuing to decline earlier in the year and then staying at those trough levels, we have assumed a modest amount of pricing benefit on component pricing as we move through the year,” he said.

Company leaders also discussed some of the volume growth the company drove throughout 2023.

CEO William Meaney said Iron Mountain secured a “significant contract with a global financial services company” in 2023. It also won a contract with a vehicle insurance company during the fourth quarter.

“Having shifted its employees to a remote working model, our customer needed (a) partner with the capacity to retrieve over 37,000 devices from more than 240 locations nationwide, then process, refurbish and return them for distribution,” Meaney explained. “Our solution provides our customer with better visibility of its IT assets and enables them to manage this activity more efficiently.”

Meaney also highlighted the opportunities for the growing ITAD part of the business to work with another part of Iron Mountain’s business, data center management.

“We are now in a position to not only provide co-location and cloud migration services, but we can also securely and responsibly dispose of obsolete IT equipment,” he said. “An example of such an opportunity in this quarter was a major win with one of the world’s leading producers of business process management software. We managed the secure decommissioning of over 40 data centers globally, sanitized the IT assets and remarketed them to deliver a significant return in value.”

Regency discussion

Hytinen, the CFO, said the Regency acquisition “strengthens our ability to serve an expanding (asset lifecycle management) customer base and broadens our capability in the category, especially in the enterprise segment.”

Meaney added that Regency and Iron Mountain have some customers that overlap, but also have many areas of distinct clientele. As an example, he noted both companies have long provided service to government agencies at the federal and local level. But he said Regency brings expertise in the end-user device processing area. Although Iron Mountain already handled end user devices, Meaney said Regency has “even further capabilities, which I think is going to give us a lot more to do on the back end in terms of the way we serve customers and the efficiency that we could process their equipment.”

Hytinen added that the addition of Regency’s eight U.S. processing facilities “really broadens our reach and ability to serve clients quickly,” and he praised Regency for “building a business, very profitably I might add, for decades.”

“They really know what they’re doing, and I think the combination is an excellent one,” Hytinen said.

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