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* Iron Mountain Announces Comprehensive Strategic Plan to Enhance Stockholder Value
BOSTON, MA, Apr 19, 2011 –/BackupReview.info/– Iron Mountain Incorporated (NYSE: IRM), the information management company, today announced a comprehensive strategic plan to enhance stockholder value. In addition, the Company reached an agreement with Elliott Management Corporation to support one of Elliottâ€™s nominees at the 2011 Annual Meeting of Stockholders and to add another independent director following the meeting.
Comprehensive Strategic Plan
Sets Plan for Significant Improvement in ROIC
â€œOver the years we have built a great global business with strong operating performance, record cash flows and a strong balance sheet,â€ said Richard Reese, Iron Mountainâ€™s Chairman and Chief Executive Officer. â€œDriven by our focus on operational excellence, since 2006 Iron Mountain has increased Adjusted OIBDA and Free Cash Flow1 at compounded annual growth rates of 12% and 68%, respectively, well ahead of our solid 7% revenue growth. In addition, we initiated a stockholder payout program in 2010, comprised of a $350 million share repurchase program and a quarterly dividend which was increased by 200% in December to an annual rate of $0.75 per share.
â€œConsistent with our focus on stockholder value creation, our Board and management team regularly review our business portfolio and capital allocation priorities. We are proud of what we have accomplished at Iron Mountain, and we are always working to improve our returns. By concentrating on our core strengths, optimizing our International portfolio and increasing our commitment to stockholder payouts, we believe we can further enhance stockholder value.â€
Sustaining Leadership in Highly Attractive North America Business
â€œSince 2007, Iron Mountain has driven significant improvements in North Americaâ€™s gross margin (+800 basis points) and Adjusted OIBDA margins (+800 basis points),â€ said Mr. Reese. â€œIn addition, the Company has reduced the segmentâ€™s capital expenditures2 as a percentage of revenues from 10.7% in 2007 to an estimated 4.3% in 2011. We are committed to making efficient and productive investments in the North America business to sustain our leadership position and continue generating the highly attractive cash flows that support our stockholder payouts.â€
Optimizing the International Portfolio
Mr. Reese commented, â€œWith our top North America enterprise customers doing business with Iron Mountain around the world, our International portfolio is key to our overall value proposition. Simply put, our top customers demand global service. Given that the International portfolio has the same attractive fundamentals as our North America business, we see a great opportunity to drive significant revenue growth, margin expansion and higher returns on invested capital. As market leadership drives returns, our goal remains to achieve #1 or #2 positions in all of our markets.â€
Exploring Strategic Alternatives for the Digital Business
Mr. Reese said, â€œWe first entered the digital business 10 years ago as a natural extension of our core services to address a clear customer need. Recently however, our digital business has faced a number of challenges resulting from a rapidly changing environment. In light of these factors, our Board and management undertook a strategic review of the digital business beginning last Fall and concluded that the Company could not continue investing in technology development and meet its return requirements and that exploring strategic alternatives for the digital business was in the best interest of Iron Mountainâ€™s stockholders. As we move forward, Iron Mountain will continue to deliver technology services to solve our customersâ€™ digital information management challenges through partnerships.â€
The Company noted that there can be no assurance that the exploration of strategic alternatives for the digital business will result in any transaction. Iron Mountain does not intend to further comment on the strategic alternatives process unless and until a definitive agreement is reached.
Increasing Return of Capital to Stockholders
Iron Mountain announced its initial dividend in February 2010, which was increased by 200% in December 2010. Iron Mountain currently pays an annual dividend of $0.75 per share and intends to grow the dividend as earnings and Free Cash Flow expand. In addition, the Company plans to operate around the mid-point of its target leverage ratio range of 3x â€“ 4x EBITDA (as defined in its senior credit agreement).
Mr. Reese said, â€œOur commitment to significant stockholder payouts demonstrates the Boardâ€™s confidence in our ability to grow our business profitably as we execute on our comprehensive strategic plan to enhance stockholder value.â€
Elliott has agreed to withdraw its slate of director nominees and vote all of its shares in favor of the Companyâ€™s slate at the 2011 Annual Meeting. Additionally, Elliott has agreed to abide by certain standstill provisions.
Iron Mountainâ€™s Board has also agreed to form a Special Committee, chaired by Mr. Reese, to evaluate ways to maximize value through alternative financing, capital, and tax strategies, including making its first priority to evaluate a conversion to a REIT. The Special Committeeâ€™s members will include Mr. Loren upon his election to the Board and the new independent director candidate to be appointed, as well as other directors yet to be named. The conclusion of the evaluation process to potentially convert to a REIT is expected to take place within 12 months of the 2011 Annual Meeting.
Furthermore, Iron Mountainâ€™s Board has agreed to amend the charter of the Finance Committee to increase its mandate to include the review of material capital allocation decisions and strategic opportunities for maximizing stockholder value. The Finance Committee will be renamed the Strategic Planning and Capital Allocation Committee.
The full Settlement Agreement will be filed with the Securities and Exchange Commission on a Form 8-K.
â€œOn behalf of Iron Mountainâ€™s Board, I am pleased to nominate Allan Loren for election to our Board. Allan is highly qualified and brings a significant amount of information management experience to Iron Mountain,â€ said Kent Dauten, Lead Independent Director of Iron Mountainâ€™s Board. â€œI would also like to thank Constantin Boden for his more than 20 years of service on our Board.â€
â€œWe are confident that this agreement with Elliott is in the best interest of the Company and our stockholders,â€ said Mr. Reese. â€œI am personally committed to the execution of our plan including a thorough review of value creating opportunities, which includes an expedient evaluation of a potential REIT conversion.â€
â€œElliott is pleased to have helped contribute to this beneficial outcome. After reviewing with the Board and management the actions already taken and those underway, as well as their strategic plan for the future, we support todayâ€™s announcement. The strategic proposals detailed today are aimed at increasing stockholder value and we look forward to continuing our dialogue with the Company as the plan progresses,â€ said Scott Tagliarino, Director of Global Communications at Elliott.
Allan Z. Loren Bio
Conference Call and Investor Presentation to Discuss Comprehensive Strategic Plan
Iron Mountain will also post an investor presentation on the investor relations section of its website, www.ironmountain.com, at 6:00 AM ET on Wednesday, April 20, 2011. The presentation will be furnished to the Securities and Exchange Commission (SEC) and will be available on the SECâ€™s website www.sec.gov.
About Iron Mountain
Forward Looking Statements
Judith Wilkinson / Andrea Rose / Matthew Cuneo
Alan Miller / Jennifer Shotwell / Scott Winter
1 Adjusted OIBDA, ROIC and Free Cash Flow are non-GAAP measures. Please refer to Investor Relations page of the Companyâ€™s website at www.ironmountain.com for additional information and reconciliations to the nearest GAAP measures.
2 Defined as capex incurred excluding real estate
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