Storage and information management firm, Iron Mountain Inc. (IRM) recently reached a settlement with the U.S. Department of Justice (DOJ) to resolve a civil complaint.
Two civilians named Patrick McKillop and Brent Stanley levied charges against Iron Mountain under the False Claims Act in the Eastern District of California in Sacramento. They accused the company of overcharging federal agencies for record storage services. Per the settlement, Iron Mountain will be paying a sum of $44.5 million.
This is not the first time that the company has had to cough up money for the settlement of such suits. In 2013, Iron Mountain had to pay $800K for the settlement of a whistleblower suit, according to which it failed to adhere with government rules for the shredding of documents.
We believe that the settlement will enable Iron Mountain to maintain its customer relationships with federal agencies, which in turn, will prevent the loss of customers and thereby, revenues.
Meanwhile, Recall Holdings has rejected Iron Mountain’s $2.2 billion bid citing it to be too low. However, Recall Holdings declared that it was open for further discussions going forward, provided Iron Mountain came up with a better offer.
Since the beginning of 2014, the company has invested approximately $150 million to acquire international records and information management related businesses. Additionally, it has invested $12 million in 2014 to acquire the records inventory of 11 document storage companies, including 10 organizations in North America and one in Belgium. The company’s aggressive acquisition policy should therefore help it to extend its foothold across emerging markets, which, in turn will drive top line growth going forward.
We believe that Iron Mountain’s strong product portfolio, increasing market share and promising international business are its primary growth catalysts. Moreover, the company’s entry into the data center market could act as a positive.
However, costs related to conversion and fluctuations in recycled paper prices are the near-term headwinds for the company. Moreover, volatile foreign exchange rates and competition from Guidance Software Inc. (GUID), Pitney Bowes Inc. (PBI) and Cintas Corp. (CTAS) are the other headwinds.
Currently, Iron Mountain has a Zacks Rank # 3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment