Iron Mountain Acquires ITRenew
Iron Mountain had a remarkable year due to its many accomplishments within the area of IT asset disposition (ITAD). One such achievement was its acquisition of ITRenew, which led to a reported increase in revenue totaling $213 million.
This success was reflected through publicly available financial filings, and serves as further testament to Iron Mountains expertise within the ITAD sector.
$718 Million Invested
A noteworthy development occurred on January 25th, as Iron Mountain invested $718 million towards acquiring a controlling interest in ITRenew. With this deal seeing Iron Mountain hold up to 80 percent ownership in ITRenew initially, it should be mentioned that the firm has retained acquisition rights for the remaining twenty percent after January 2025.
ITRenew is a U.S. firm that specializes in providing IT infrastructure solutions for hyperscale companies and corporations.
Presently, Iron Mountain’s Asset Lifecycle Management (ALM) business model primarily depends on ITRenew’s specialized IT solutions; however it also includes some of its original ITAD operations.
Further Financial Details
Iron Mountain’s latest financial statement for 2022 offered more comprehensive insights into its notable acquisition, as well as its impact on overall operations. Since Iron Mountain’s IT asset disposition (ITAD) business is part of the company’s much larger North American Records & Information Management (RIM) branch, evaluating solely based on profit margins can “make it impossible to gauge the performance of the ITAD business, specifically.”
The “Corporate and Other” category consists of other vital facets including its ALM and fine arts management business, in addition to executive and other staff expenses. This unit saw service revenue surge by 244 percent year-over-year, reaching $352 million in 2022.
Iron Mountain’s ALM enterprise experienced a significant surge in growth, largely due to its acquisitions, specifically ITRenew.
These acquisitions contributed 215 percentage points to the overall growth, while the remaining 29 percentage points came from organic growth from its legacy ITAD operations. Additional important features of the ALM enterprise are detailed below.
A Shift in Management
Deirdre Evens, who served as general manager of the ALM business, announced her departure from the position in early February. Effective mid-September 2023, Mark Kidd, who currently manages Iron Mountain’s data center operations, will assume responsibility for both ALM and data center organizations.
The firm emphasized that unifying these two distinct businesses under one leader has been a longstanding goal.
“The acquisition of ALM assets was predicated in part on the overlapping customer bases and needs between the Company’s Data Center and ALM businesses,” the document states.
Cross-selling Gives Competitive Advantage
At a recent investor teleconference on February 23rd, the leader of Iron Mountain, CEO William Meany, discussed how the corporation can acquire and retain ITAD clients by providing an array of services.
In support of this claim, Meany cited an instance where a major nonprofit healthcare provider decided to extend its association with Iron Mountain beyond two decades, by availing their ITAD services alongside data management, non-records storage and document digitization.
As part of the new 10-year agreement, Iron Mountain will be receiving $5 million annually, which doubles what was collected under the original contract.
During the phone conversation, Meany shared some exciting news, Iron Mountain had succeeded in renewing its contract with one of the largest and most influential technology firms globally. This firm also holds the title of being Iron Mountain’s largest ALM customer.
“We continue to be excited and encouraged by the total addressable market in the asset lifecycle management category,” Meany said.
Effects From China
On the conference call, Barry Hytinen, the Chief Financial Officer at Iron Mountain, advised that revenue forecasts for ALM’s decommissioning of hyperscale data centers should be approached with caution, due to COVID-19’s ongoing impact in China. Consequently, moving forward, the organization’s conservative approach will remain in place.
“As a reminder, the decommissioning market was performing better through the first half of 2022 and slowed down sharply following more intense lockdowns in China,” Hytinen said.
As per ALM’s yearly review, the company’s business model banks strongly on reselling assets that have been decommissioned to mainland China. The current scenario could pose a problem if there are trade interruptions or a decrease in Chinese demand.
“We are, I think, being prudent with our expectations for ITRenew going forward because as you’ve probably seen in the press, China continues to – while the restrictions are off, they continue to have a lot of challenges with COVID there,” Hytinen explained.
“And so we haven’t seen the market develop meaningfully yet, but we are cautiously optimistic. So we are planning for the first quarter expectations for our ALM business to be consistent with the fourth quarter revenue levels and then ramping over the course of the year.”
Sims Lifecycle Services Comments on the Used Device Market
In 2019 Sims Lifecycle Services, one of the prominent players in the data center decommissioning market, voiced its concerns regarding China’s used device market.
Sims observed a noticeable decline in demand, and corresponding reduction in prices for previously owned electronics. As an unfortunate result of this shift, the company experienced a decrease in earnings throughout the year.
