Operator:

Good morning and welcome to the Iron Mountain Second Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

William Meaney :

Thank you, Gillian, and thank you all for taking the time to join us today for our discussion of our second quarter results. As you saw in this morning's announcement, this quarter delivered another record financial performance and exceeded our expectations. Reflecting on these results, I am incredibly proud of how our team consistently executes at a high level, putting our customers at the center of everything we do. With our proven growth strategy, we are entering the back half of the year with strong momentum. We continue to see firsthand the power of Project Matterhorn from our commercial teams, who are successfully leveraging our full suite of products and solutions to help position Iron Mountain as an ideal partner to our customers. This customer centricity continues to power our results forward for both customers and our shareholders. Building on our track record of value creation for our shareholders and our strong positive outlook, our Board of Directors has authorized an increase of our quarterly dividend by 10% to $0.715 in-line with our AFFO per share growth. I'll now turn to key developments during the quarter and how we executed on our growth strategy, which is aligned to our business segments. As a reminder, our strategic priorities are the following. Driving continued revenue growth in our physical storage records management business, providing digitally enabled solutions for our 240,000 customers, which allows them to get true competitive advantage out of their physical and digital information, delivering differentiated data center offerings and offering top-tier growth through our global scale and customer trust, and advancing our asset lifecycle management services which provide security, maximum efficiency, and an environmentally sound lifecycle management approach for our customers' IT assets. To give you some examples of how we have recently applied our services on behalf of our customers, let's begin with our records management business. The first win I wish to highlight shows how our scalable solutions can solve for complex regulatory requirements and address changing customer needs. A European-based pharmaceutical company came to us in need of a global record retention schedule, as the company was struggling to manage costs and meet regulatory requirements. As part of our expanding partnership, we are providing a fully managed suite of solutions, including policy center [upkeep] (ph), advisory services, and a dedicated help desk for queries in a scalable and flexible way that can seamlessly adapt over time as their needs evolve. Continuing with wins in our records management business, I am particularly excited to discuss a couple of digital wins. The first example to highlight is a major contract signed with a large financial institution. The foundation of this win was based upon multiple decades of a trusted relationship with the bank's understanding of our truly differentiated approach to digitally managing and automating workflow. As a result, they selected Iron Mountain to serve as its partner for a long-term transformation of its management of digital and physical documents. On the bank's behalf, Iron Mountain is transforming how it captures both digital and physical documents and their associated metadata across all lines of business, including non-banking internal documents like finance and HR. Our unique offering revolutionizes document processing services for both physical and digital documents. We have achieved this by employing our proprietary leading edge, AI powered intelligent document processing built into our InSight platform. Continuing with our digital business in Australia we have secured a large deal with one of the country's biggest banks to provide our Digital Mailroom solution, which brings together our operational scale and digital capabilities. Iron Mountain has been a trusted records management partner for over 20 years, and we built on that relationship to develop a comprehensive service offering that will see us manage their physical Mailroom sites across Australia and scan around 32 million images a year, as we process mortgage documents, checks, vouchers, and other banking documents. Our proven implementation methodology reassured the customer that we could execute a seamless transition of services and the innovative technology we are deploying will help them to realize significant efficiencies in the years ahead. Moving to our data center business, through the first half of the year, we leased 97 megawatts, which includes 66 megawatts this quarter. Due to our strong pipeline, we feel confident we will exceed our original projection and now expect to lease 130 megawatts for the year. The speed of leasing in the first half of the year is thanks to the momentum that our team has built in our leasing pipeline. We are an attractive partner to customers looking for infrastructure, which can support their very dense IT workloads and associated with their AI enabled services. Here are some examples of wins during the quarter from our US and UK markets. At our Western Pennsylvania location, we welcomed a new hyperscale customer with a seven-year contract. Since signing the contract, the customer is already in discussions about potential expansion to some of our other campuses. A good example of our continued and growing partnerships with some of the largest hyperscalers, our recent wins this quarter with a single customer in both the US and UK markets. This customer has placed a 10-year contract for us with us for almost 25 megawatts of capacity at our London data center campus and a 15-year contract for 36 megawatts at our data center campus in Phoenix, Arizona. Also at our Phoenix campus, we have won a 10-year co-location contract with one of Japan's largest banks. We will be providing 800 kilowatts of capacity to support the complete transformation of this customer's North American IT platform. Turning to our asset lifecycle management business, we continue to see established Iron Mountain customers seek new solutions from our ever-expanding portfolio. A perfect example of this is how we expanded a relationship with an insurance company that has been an Iron Mountain customer since the late 1950s. Having secured a small ALM project with them last year, our customers confidence in our capabilities and our delivery record has led them to make us their sole ALM provider. Finally, I'd like to share a last example of a customer that has added our ALM services to the Iron Mountain Solutions from which they already benefit. This global cloud-based software company has asked us to manage an ALM program to securely destroy, remarket or recycle data center assets at more than 30 locations in North America, EMEA, Latin America, and the Asian Pacific regions. Demonstrating we can provide a full service global ALM offering is no small task, but our skilled and dedicated teams successfully met the challenge. We are now a proud ALM partner for this customer, alongside the records management and digital solutions that we already provide. To conclude, we have thoughtfully and strategically curated a mountain range of best-in-class solutions and an effective operating model under Project Matterhorn. This quarter's successes are a brief testament to the value our strategy is already delivering and a window into the future we are building at Iron Mountain. As we continue to expand our footprint of storage and services and deliver tailored, innovative solutions for each of our customers, I could not be more grateful for the hard work of our Mountaineers. Our strategy and execution is showing the way in delivering consistently strong revenue growth in the resulting financial model that delivers top tier growth in both our AFFO and our dividend. We have an energized team of experienced, proven operators who are committed to excellence, and that gives us great confidence in our future. With that, I'll turn the call over to Barry.

Operator:

Absolutely. We will now begin the question-and-answer session. [Operator Instructions] And today's first question comes from George Tong with Goldman Sachs. Please go ahead.

William Meaney:

Thanks, George, and good morning. Let me handle the first part, and then I'll let Barry talk a little bit more about the pricing trends that we're seeing. So first, we're really pleased with the growth, in the organic growth that you highlighted in our ALM business this quarter. And you think about that, about two-thirds of that is driven by just pure volume. And the other third is the price improvement that we've seen from the record lows that were 12 months, 18 months ago. So we're really pleased with the progress. But I'd say most of the growth is from volume.

Operator:

Thank you. And our next question today comes from Kevin McVeigh, UBS. Please go ahead.

Barry Hytinen:

Yes. Kevin. Good morning. We continue to feel very good, as we just noted about our guidance, and as you know, we beat in the first quarter, and we beat again here in the second quarter, actually a wider beat than the first. And our thought process is that things continue to trend very much in the right direction. That's why we pointed to the higher end of our guidance range for the year. I will note FX continues to be a headwind, so you will see the stronger dollar be an impact to our reported results in the third quarter probably of the order of the same magnitude as the second quarter, if not a little bit more. But what you are seeing is, improving trends as compared to our initial outlook this year across the business. Global RIM continues to perform really well in the organic storage rental revenue growth accelerated in the quarter, as we expected it to and as we forecasted last quarter, and we continue to expect that to be in the 7% to 8% range in the back half. And then in terms of data center, as we talked about before, that's a business that has a tremendous amount of visibility in the near-term. And as we talked about the outlook for the long term, there is very robust in light of the leasing activity we've had. And I just mentioned ALM with George. So I appreciate the question.

Nate Crossett:

Hi, good morning. Just wondering what you are expecting in terms of overall RIM volumes for 3Q in the balance of the year? And then can you -- I guess, you already talked about your expectations for pricing growth. So should we assume that the organic revenue growth is 7% to 8% in the back half?

Operator:

And our next question comes from Andrew Steinerman with JPMorgan. Please go ahead.

William Meaney:

Good morning. I'll start with your second question and then Barry will follow up on the CapEx relative to our Investor Day. So I think what you see for us, hyperscalers are always kind of not just the largest cloud providers, but the largest SaaS providers as well. So people who need very, very large deployments in terms of megawatts of data center capacity. And usually, these are global firms. So I'm not saying that we won't see some of those firms -- some of the more newer firms that you are highlighting come into that fold, but I’d say, that the barriers to entry for these really very large hyperscalers just given the cost of leasing and building data centers. It is a fairly consolidated in tight group. I'm not saying that there couldn't be people that break into it, but I think for the moment, it's a pretty stable group, slightly increasing as some of the SaaS players get bigger in their own right.

Operator:

Thank you. And our next question from comes from Eric Luebchow with Wells Fargo. Please go ahead.

William Meaney:

Thanks, Eric. Let me start and then Barry may want to chime in as well. So first, we feel really good about, as you are highlighting, the growth and momentum that we are building in the data center business. And just in the colo, but more and more in the hyperscale and the majority is coming from hyperscale. But as Barry said, it is -- well over 90% like around 96% is all pre-leased and it is a fully funded plan as we highlighted in Investor Day. So we don't see any -- we feel really good in terms of the way that we are able to fund the growth. And so we are happy in terms of the trajectory that we have without going out and raising equity. I think we have a plan that works.

Operator:

Thank you. And our next question today comes from Shlomo Rosenbaum with Stifel. Please go ahead.

William Meaney:

Good morning. Shlomo. So I will take the question on the ALM and then Barry can talk to you a little bit about the takes in terms of storage costs. So on the ALM side, is the hyperscale is the reticence that you might have seen last year that I think we commented from the hyperscalers was less to do with the pricing on the components. It was more the availability of new kit that they had to actually refresh their data centers. And I think you've seen all the reporting from some of the largest hyperscalers in the last couple of weeks that you are all ramping up their refresh of their data centers to bring in the most capable GPUs, so that they are AI ready, and they can build up some of their AI Services. So we do see an uptick, to your point in the volume that we're getting from the hyperscalers, but it's driven more because they are refreshing their data centers to be more AI enabled and they're able to get the latest GPUs from the supplier, so they are able to accelerate some of that. So we do see a building volume from the hyperscalers right now in terms of decommissioning, which leads to more ALM volume in our business.

Operator:

Thank you. And our next question today comes from Brendan Lynch with Barclays. Please go ahead.

Barry Hytinen:

Brendan, we were very pleased with the 7.7%. And I think at that level, you can see the amount of EBITDA the business generates since it is a highly productive portion of our company. And as it relates to trending, we have indicated we feel like mid-to-upper single is the right kind of level over the longer term. And so I’d say, it trending in this vicinity is -- would be very positive to the business model going forward.

Barry Hytinen:

Brendan, the only other thing I'll add is that at the start of the year, we had suggested Global RIM might be in the vicinity of 6%, total growth for the year. And so year-to-date, we are running 7.5% on that business. So we continue to see outperformance in Global RIM. Some of that is driven off of revenue management, also incremental service uptake of the sort that Bill just mentioned.

Jon Atkin:

Thanks. A couple of questions. Can you talk a little bit about ALM and to what extent Regency is sort of fully occupied? Or do you have the opportunity within that set of assets to see more productivity. And then secondly, on data centers, if there is anything to call out in terms of lead times around construction and delivery and the conversion of book-to-bill. Thank you.

Barry Hytinen:

Jon, this is Barry. As it relates to Regency and the opportunity to continue to utilize and optimize further, it’s definitely there. There is a lot of opportunity. We have considerable capacity to expand the business, both in terms of what is already in place, as well as the opportunity to expand the footprint at relatively low CapEx, I might add. So it's a very positive situation to be having Regency get further utilized which I expected to over time. And I’ll say, we have a very highly capable team at Regency that there is no doubt, can manage a much larger business and drive a tremendous amount of value for our shareholders.

Shlomo Rosenbaum:

Hi. Thanks for squeeze me in for one more. This is a little bit more of a technical one also. It looks like the real estate depreciation went up sequentially by like $14 million. Was there a major site that team on Board during the quarter?

Operator:

Thank you. And ladies and gentlemen, this concludes our question-and-answer session and the Iron Mountain second quarter 2024 earnings conference call. We thank you for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Operator:

Good morning, and welcome to the Iron Mountain First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note today's event is being recorded.

Gillian Tiltman:

Thanks, Rocco. Good morning, and welcome to our first quarter 2024 earnings conference call. On today's call, we will refer to materials available on our Investor Relations website. We are joined here today by Bill Meaney, President and Chief Executive Officer; and Barry Hytinen, our Executive Vice President and Chief Financial Officer. After prepared remarks, we'll open up the lines for Q&A.

Barry Hytinen:

Thanks, Bill, and thank you all for joining us to discuss our results. In the first quarter, our team continued our track record of strong performance, exceeding the expectations we've provided on our last call.

Operator:

[Operator Instructions] And today's first question comes from George Tong with Goldman Sachs.

William Meaney:

Thanks, George. It's Bill, and I appreciate you joining the call. The -- so let me start with kind of the macro view. So we're really very pleased with our storage, both in terms of the records management as well as in the data center side because you can see we're continuing to grow. We've never stored on the traditional side or the records management side, we've never stored more documents than we do today.

Barry Hytinen:

George, thanks for that question. Bill's got it right there on the revenue management within Global Rim. The timing of revenue management actions year-on-year is such that there was a bit of a shift in the first quarter. Last year, we had more of the revenue management actions in place right at the beginning of the year. And this year, we're back to our more normal cadence of kind of the Mark's time frame, generally speaking, in terms of getting them all into the market and realized.

Nathan Daniel Crossett:

Maybe just a follow-up to that. What is your expectation for RIM volumes for 2Q and the balance of the year? And then data center leasing guidance, is it still 100-megawatt? And maybe you could just talk about the pipeline for data center.

Barry Hytinen:

And Nate, the only -- this is Barry. The only thing I would add is -- building on to Bill's point there at the beginning on volume. We are forecasting for volume to be up second quarter versus the first quarter. And consistent to slightly up for the full year as we've been saying for some time we're well on track with that forecast. And just as a reminder, we have never stored more physical volume than we are storing today.

Brendan Lynch:

Maybe we could start just by disaggregating the ALM components between increased volume and improvement pricing?

Operator:

And our next question today comes from Jon Atkin with RBC.

William Meaney:

Okay. So maybe I'll start, John, and then Barry can give you some more color on ALM. On the data center side, I think we covered pretty much what we said in the last quarter, we see those trends continuing. So think of it as a couple of hundred basis points above the historical cash-on-cash return.

Alexander EM Hess:

This is Alex Hess on for Andrew Steinerman. Maybe 2 quick questions if you allow. On the ALM side, it appears that sort of -- if my math is right, that quarter-on-quarter, so 4Q '23 to 1Q '24 sort of the organic growth was about flat.

Barry Hytinen:

Go ahead with the longer term, and so we'll have them both.

William Meaney:

Okay. Well, I'll deal with the longer term, and then I'll let Barry talk to you about the sequential quarter-over-quarter -- quarter-to-quarter on the ALM side. So on the -- I mean, the data center business, I think you can see that we're continuing to drive strong deployments across all of our campuses.

Eric Luebchow:

Just to follow back on the data center business. Obviously, you have a high-class problem with most of your footprint pretty leased up. So how should we think about future data center CapEx given the strong leasing in the quarter? And how are you thinking about either additional markets or areas where you might need to add land capacity so that you have a further runway to grow the business beyond this year?

Jonathan Atkin:

Just a follow-up on, I guess, 2 follow-ups for your time. So you mentioned a lot of sovereign requirements, and I'm just interested in how competitive you find that space in terms of the RFP activity. And again, similar to my other question with earlier, is there particular region where you see more of those sorts of things, perhaps presenting opportunities? And then beyond the question would be the...

Jonathan Atkin:

Yes. How competitive are you finding the sovereign requirements? I don't know if these are formal RFPs in each case, but if you can talk a little bit about the competitive environment and then future opportunities, are there particular regions where you see more growth ahead in kind of the public sector?

William Meaney:

Okay. Thanks, Jon. I'll take the question in terms of government contracting. And Barry, as you know, runs our M&A shopping. So I'll let him talk about both the integration with Regency as well as the pipeline in terms of further roll-ups.

Operator:

Good morning, and welcome to the Iron Mountain Fourth Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

William Meaney:

Thank you, Gillian. And thank you all for joining us today. We are pleased to report another outstanding year for Iron Mountain. We achieved record revenue and adjusted EBITDA in both the fourth quarter and the full year. Our record results are a testament to the devotion and hard work of our team and our resilient and growing business model. In the fourth quarter we achieved revenue of 1.4 -- $1.42 billion, yielding 8.7% total organic revenue growth and record adjusted EBITDA of $525 million up 11%. For the full year we delivered record results across the board, revenue of $5.5 billion, adjusted EBITDA of $2 billion, and AFFO of $1.2 billion. I'll now discuss some ways in which we have been working with our customers, which has led to this growth. Let's begin with our records management business. A win of note was with one of the largest health systems in the US awarding Iron Mountain a contract to significantly enhance its management of records across 140 hospitals and 2,600 care sites. Building on a strong long-term relationship with the customer, we are now implementing a rigorous compliance program that will reduce the cost and meet records retention requirements leading to a more efficient service. This win is particularly representative of our focus on cross-selling through Matterhorn as this customer is utilizing a variety of our products and services across our business lines, including digital services along with traditional records management and shredding. Another win showing Iron Mountain's cross-selling power occurred with a Hungarian industrial gas supplier. We are helping this customer to create space at its facilities by storing and then digitizing its records. We are also exploring opportunities to deploy our digital mailroom solution as our partnerships develop, thereby expanding this relationship across our product suite. The last win to highlight in our records management business is a new contract with the Swiss Division of a British multinational asset management company to relocate its physical records to one site and digitize them over time. In addition to freeing up physical space, our solution will ensure our customers' records are stored safely and compliantly, and enables more efficient access to the digitized information. Moving now to some wins in our digital solutions business, we won a contract from a large aerospace customer to deploy our InSight platform to manage and translate invoices from 22 languages into English. The customer chose our solution ahead of competing proposals, thanks to InSight's embedded AI engine, which gives it the ability to not only store, but to automatically classify a range of documents in a highly secure manner. Another win this quarter was with a Canadian government agency. This agency, which manages workplace compensation claims has been a customer of our records management services for more than 15 years. Our successful delivery of digital mailroom and imaging on demand solutions during the COVID pandemic has led to a new Master Services Agreement for digitizing services worth more than $10 million over the contract length. We will preserve, scan around 47,000 rolls of microfilm to produce 240 million images on our InSight platform, helping the agency to process compensation claims faster than ever and delivering a solid recurring revenue stream to drive our growth. In Brazil, a major television network that has been a records management customer for almost 25 years has asked us to manage the indexing and digitization of 50,000 boxes of records stored at its locations in Iron Mountain's facilities in the country. Our InSight platform is at the heart of our solution, enabling the customer to manage requests to digitize from all parts of the business in one place effectively and efficiently. Finally, the Hong Kong division of a major multinational bank has chosen Iron Mountain to be its partner in a major transformation of its finance operations. This customer manages a large volume of finance documents and has outsourced this work to Iron Mountain with a goal of streamlining the process of checking and scanning these files. We see the potential to scale the solution for the bank in other locations including Singapore, India, the US, United Kingdom, and the United Arab Emirates. Now let's turn to our data center business. We continue to be pleased with the growth trajectory of our data center business, which has only accelerated with the rapid adoption of AI-enabled services. We are pleased to have signed 124 megawatts well ahead of our initial plan for the year. We continue to see tremendous opportunity in serving both hyperscale and co-location customers and significant growth potential for our footprint. An example in the quarter, we signed a seven-year agreement to provide capacity at our New Jersey data center for an automated trading technology company that is expanding in the US. Our reputation for compliance and sustainability were key to winning this business and it was important for our customer to receive 100% traceable and verifiable energy and carbon records in support of its sustainability goals. Also in the U.S., we were pleased to win a data center deal with a secure cloud storage company that is growing rapidly across North America. Our reliability and close relationships since first doing business with this customer a year ago helped to seal this new deal as did the strategic location of our facility in Northern Virginia. Moving to India, we continue to see strong demand for capacity. We closed a data center contract with a major bank in the country in the fourth quarter. This customer chose our Mumbai facility specifically and Iron Mountain more broadly for our ability to provide a secure data center for its large domestic branch platform close to its headquarters. Turning to our Asset Lifecycle Management business, or ALM, we secured a significant contract with a global financial services company. Our ability to integrate our secure ALM services with the customer’s existing business management platform was critical and has enabled them to streamline how they order, complete and report on their IT asset disposition activities. Our solution was an excellent demonstration of how deeply we understand the needs of our customers, especially in the highly regulated world of financial services. Staying with ALM business, in the quarter we won a contract with a U.S. vehicle insurance company that has been an existing customer of ours for many years. Having shifted its employees to a remote working model, our customer needed to partner with the capacity to retrieve over 37,000 devices from more than 240 locations nationwide, then process, refurbish, and return them for distribution. Our solution provides our customer with better visibility of its IT assets and enables them to manage this activity more efficiently. I should also highlight the synergy between our ALM and data center business when it comes to data center renewal and decommissioning. 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. 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. Also in the quarter, we were awarded a contract by one of the oldest financial institutions in the US for a similar data center decommissioning project. Both wins demonstrate that Iron Mountain is uniquely positioned to minimize risk and maximize savings as a single source partner for these activities. Finally, let me take a moment to highlight our acquisition of Regency Technologies. Regency's team makes a great addition to the leadership of our rapidly growing ALM business and gives us additional capabilities to serve this fast growing sector at the heart of the circular economy. Furthermore, this acquisition together with the momentum we have been building in ALM through the strengthening of component pricing and cross selling sets us up well for continued success. To conclude, I would like to thank our team for their resilience, hard work and dedication as we continue our Matterhorn clime and continue to serve over 225,000 customers. We are thrilled to progress ahead of expectations and it is due to the commitment of our Mountaineers. As we look to 2024 and beyond, the momentum we have built will continue to drive the opportunities ahead with another year of double digit top line growth expected. Barry will speak in detail about our financial guidance for the year ahead. With that, I'll turn the call over to Barry.

Operator:

Absolutely. We will now begin the question-and-answer session. [Operator Instructions] And today's first question comes from George Tong with Goldman Sachs. Please go ahead.

William Meaney:

Good morning, George. Thanks for the question. So let me kind of answer the kind of the higher level on the strategic where we see the trends going and then Barry can go to the next level and give you a little bit more specifics in terms of the numbers. But on the -- to your macro point in terms of the trends on the component prices, it's very much in line what you see in terms of the analyst reports right now and you can see that coming through in the Q4 and building into Q1. So we expect the component prices to continue to strengthen during the course of the year. And you can see that broadly in the semiconductor and memory business for the original manufacturers as well. So we're very much benefiting from the same trends you're seeing in the industry for the OEMs, as well as for the reused or the recycled market. In terms of volume, actually throughout the year as we've been reporting on the last few quarters is we continue to see increase in volume, although when that turned into revenue, it was muted because of the low component prices that we started off the year and kind of worked through the rest of the year. But the trends that we saw in Q4 -- that showed up in Q4 continue -- we continue to see building in Q1 and we're very much tracking what you're seeing in the broader OEM market for memory, disks and CPUs, GPUs. Barry?

Operator:

Thank you. And our next question comes from Shlomo Rosenbaum with Stifel. Please go ahead.

Barry Hytinen:

Hi, Shlomo, this is Barry. Thank you for that question. So what you would see in our results and as you're pointing to and thank you for that is that, our global RIM storage rental revenue was up 8% -- over 8% in the quarter on an organic basis and for the full year it was about 8.5%. So we have very strong storage rental revenue growth in 2023 and that's with positive volume trends and good mix and revenue management. And the way we think about revenue management of course as we talked about before is about value. Our ability to provide our customers with value added services, such as our ability to provide digitization on demand rapidly whenever they need it, Smart Sort and a host of other value added services. So -- and then incidentally, our service revenue also stepped up nicely in the Q4 on Global RIM as well. And so, our expectation for the new year embedded in the guidance, Shlomo, is about -- round numbers, call it 6-ish percent growth for Global RIM at the midpoint, which in light of the revenue management actions we have as a anniversary from last year as well as additional revenue management actions this year, very good trajectory we think on services, inclusive of digital services continue to ramp through the year. We feel very good about that projection and I think it does imply an opportunity for us to certainly achieve the midpoint on the Global RIM number at 6%. Thanks very much.

Nate Crossett:

Hey, good morning. Maybe one related to that previous question is, I know you don't give a formal guide, but what are you expecting in terms of overall RIM volumes for Q1 and the remainder of this year? And then if I could just ask one on data center pricing and leasing. How much of that 100 megawatt guide is kind of already in the pipeline? And I think cash mark to market was 5% for 2023. How do you see that playing out this year? Thank you.

Barry Hytinen:

Nate, thanks for the question. It's Barry. A couple of responses on the physical volume, much as we have forecasted the last few years, we're planning this year the same way, which is for our physical volume to be slightly up for the year and also for the Q1 [indiscernible] about that. And so, the vast majority of the growth that I mentioned for Global RIM will be driven off of services as well as revenue management of course. As it relates to your question about mark to market on data center, clearly trends have been good with respect to mark to market over the last really five, six quarters. And from what we're seeing, we continue to expect that to be trending upward, and we have high visibility on that. And frankly, in the co-lo space, it's trending up even higher. Thank you.

Brendan Lynch:

Hey, good morning, guys. Thanks for taking the question. Maybe on Matterhorn, you highlighted some recent wins there, but I'd imagine it's a very long sales cycle for a lot of the engagements that you have. Maybe you could talk a little bit about where you see yourselves in the overall process with individual customers and, how much additional benefit you expect to see stemming from the Matterhorn initiatives over the next four to five years?

Barry Hytinen:

The only thing I'd add, Brendan, it's Barry, is that, our cross selling opportunity is very large at this business, right? We have well over 200,000 clients, most of them are measured in decades of duration and we are seeing our cross selling efforts continue to expand. We increased significantly year-on-year, but there's a lot more opportunity. And when I think about the services that Bill just mentioned as well as things like Asset Lifecycle Management, really those are services that we can be offering and nearly all of our customers need. And so we think it -- Matterhorn, we are -- as you heard me say, we reiterated our targets today and we're in fact running ahead. So we feel very good about where we're at.

Kevin McVeigh:

Great. Thanks so much. Hey, it looks like the total volumes increased in time to the storage, but the retention slipped a little bit. What drove that kind of acceleration there, because it looks like a nice outcome?

Operator:

Thank you. And our next question comes from Eric Luebchow with Wells Fargo. Please go ahead.

William Meaney:

Thanks Eric for the question. So in terms of the returns that we're getting and Barry touched upon in his script is, you should think about interest rates or the cost of capital have moved up, but our pricing has moved up about 100 basis points, 150 basis points ahead of that. So we're actually getting higher returns, even in a higher interest rate environment than we were before. So the pricing has moved up quite nicely, even more if you look at the non-hyperscale portion, but I'm talking more about the hyperscale customers in and of themselves. And that's partly driven by the traction we're getting in the market. And then the other part of it is the scarcity. I mean, especially with the growth in AI, as you know, AI actually absorbs a lot of power and that's what we're selling effectively is capacity or access to power. So I think we're really happy with the way that the pricing is evolving in the business. In terms of your other question, in other words, yes, and it kind of goes to the pipeline. Yes, we feel very comfortable about the target for this year, which is more than 20% ahead, close to 25% ahead than what we targeted last year. So the continued momentum and growth in the business and the -- could we do more than that? Yes. We have a fully funded plan, so we don't see any shortage of capital. And remember, the one of the advantages that we have, not just because of the cross selling of Matterhorn that having the full information services suite. But the other part of it is that, our records management business is a 70% plus gross margin business that generates a lot of cash and that gives us deeper pockets than some of the pure play data center places -- players in terms of being able to both deliver our dividend and -- growth and dividend to our shareholders as well as putting capital to work in data center as I said. And it just so happens that 225,000 plus customer base is a cross selling opportunity for us.

Operator:

Thank you. And our next question comes from Jon Atkin with RBC Capital Markets. Please go ahead.

William Meaney:

Thanks Jon for the question. As I said in my script and also Barry is that, we're really excited about the Regency acquisition, not just because of the footprint that it gives us, it gives us stronger even scale within the United States, but also the leadership team. So very strong leaders that we're really happy to kind of continue to build out the organizational structure under Mark Kidd. So we're -- so first of all, the leaders that we got with that business, we're very excited about. The second thing is they have a lot of customers that both overlap, but they also have a lot of customers that don't. So for instance, they have a very good both federal and local government portfolio businesses and that's a business that we're already in deep collaboration in terms of how we can expand that using Iron Mountain's muscle with our 26,000 Mountaineers around the globe on how they can actually tap into that. And then they also have some expertise, especially around the end user devices, which already we're doing a lot in end user devices that highlighted some of the wins on my -- in my opening remarks. But the -- they have 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.

Operator:

Thank you. And our next question is a follow-up from Shlomo Rosenbaum with Stifel. Please go ahead.

Barry Hytinen:

Yes, sure thing, Shlomo. I'll take the services point first. As I alluded to in the prepared remarks, we had very good mix within our services. And as you know, when we're doing services especially as we're continuing to see larger and larger deals, the mix of those can move around and the timing of them. And so we had anticipated a little lower margin mix in the services portfolio. Some of those deals pushed into the first quarter here in terms of when we win them and into the New Year. But we then won some deals and we're able to provide service on some higher margins. So that's part of it. And together with the fact that candidly our team here does a great job driving productivity across our services organization. As it relates to the storage gross margin, I'm glad you asked that question, because there's an item that I want to make sure we all understand. That storage gross margin, of course, is the combination of all of our storage businesses. So when you think about the Records Management Physical Storage Business, that's a very high gross margin business and continued to perform very well. We're very pleased with the margins in that business in light of revenue management, et cetera and the volume trends over the last several years. It's been trending really well. The factor that can affect the actual rate though and also affects your all other storage costs, which I'll come to, is data center. As you know, as you'd see from our peer companies that are public as well as some of the other companies in the data center space, the gross margins on data center generally as an industry are lower than our records management business. And so while our data center gross margin actually expanded both sequentially and year-on-year, the mix in fact because data center grew, I think the storage revenue was up 35% or so year-on-year in the quarter that has a mix element. And so, you can have a situation where our gross margins are improving on both businesses, yet the contribution creates the rate going down slightly. As it relates to all other storage costs, that's -- one of the big drivers there, of course, is and it goes to data center is the power. And so, as we're having more and more client commencements, they start drawing more power in there that also has an effect on gross margin, but doesn't change our EBITDA dollars. So good questions and I hope that clears that up. We feel very, very good about the gross margins in the company.

George Tong:

Hi. Thanks. A quick follow-up. It looks like your dividend payout ratio has dipped below the 65% LTM target, which is where you raised the dividend earlier. Can you talk about your thoughts on raising the dividend again now that the payout ratio is below the threshold?

Operator:

Thank you. This concludes our question-and-answer session and the Iron Mountain fourth quarter 2023 earnings conference call. Thank you for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

Operator:

Good morning, and welcome to the Iron Mountain Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

William Meaney:

Thank you, Gillian, and thank you all for taking the time to join us today to discuss another record quarterly results. Once again, our Mountaineers have gone above and beyond in their efforts to serve our customers with innovative solutions that support their businesses, putting our customers first runs deep in all we do and sits at the core of Iron Mountain. This legacy, combined with our dedication to not only protect but to elevate the power of our customers' assets and work continues to drive our execution and growth. Turning to our results. We delivered record third quarter performance once again achieving our highest ever quarterly revenue of $1.4 billion which to put that in context, is an increase of over $100 million year-over-year and record EBITDA of $500 million. The strength in these results is a direct result of the positive momentum we are building from Project Matterhorn. We are more than a year into our growth journey and are pleased with our enhanced operating model, which is empowering our commercial organization to cross-sell our products and services. In the third quarter, we delivered organic storage rental revenue growth of 10% as a result of continued revenue management success and improved volume trends and drove over 20% organic growth in our data center business. Let's begin by turning to some of our customer wins, which played a significant role in our ability to achieve these record results. In our records management business, we had a public sector win this quarter in the U.K. with a new contract worth nearly $2 million. This new project is with an important government agency and has been an Iron Mountain customer for 18 years. In that time, our relationship has expanded from an off-site records management provider to an integral partner at our customers highly secure site, which indicates the trust and confidence our customers have in us. By relocating and digitizing important records securely, our customer can make faster and more informed decisions that are critical due to the sensitive nature of its work, whilst also freeing up on-site space. As a public sector organization, the value for each dollar they spend is a key concern for this customer, and we continue to demonstrate that Iron Mountain is the partner of choice for their digital transformation journey. In Digital Solutions, this business continues to gain momentum, especially with our ability to provide higher value, technology-enabled solutions to new and existing Iron Mountain customers. Customer wins for our digital solutions are underpinned by three key differentiators. First, our unique ability to provide a unified end-to-end solution for our customers across their physical and digital assets. Second, our proven capabilities to operate at scale in complex regulated environments and industries. Last, but importantly, our ability to drive business outcomes for our customers, leveraging our artificial intelligence platform, which translates unstructured data into actionable insights. For example, we have been awarded a contract by the TV and film production distribution division of a major technology company, with a story history dating back almost 100 years, we are leveraging our InSight platform to digitize, archive and preserve over 200,000 legal records containing the media rights for distribution and licensing of thousands of film in titles and TV episodes. With all this data available through one cloud-based digital platform, we can help our customers identify and develop new business opportunities by leveraging its rich intellectual property. This latest deal builds on a growing portfolio of solutions we are providing for this global customers' different business units, including records management and IT asset disposition. The multifaceted long-standing relationship we have with this customer truly highlights the success of Project Matterhorn and our cross-selling efforts. Now let's turn to our continued success in winning government business around the world. We are supporting government agencies in Europe to digitize public services as part of an initiative to make their economies and societies more sustainable and resilient following the COVID-19 pandemic. This quarter, we won a two-year deal to digitize around 10 million files to accelerate a backlog of pension payments for one national government Social Security Administration agency. In awarding Iron Mountain this contract, the customer recognized the specialist nature of our solution, including our AI and human in the loop capabilities and our ability to quickly scale operationally to deliver this project within the required time frame. Also in the public sector, we are pleased to be working with the U.S. citizen and Immigration Services to help drive efficiency and reduce the backlog of applicants awaiting adjudication decisions to become U.S. citizens. Over the last 10 years, we have been a proud partner with this important government agency. Having been entrusted with over 500,000 cubic feet of files in high-density tapes, our digitization solutions will enable remote adjudicators to have faster access to vital data, helping them make overall immigration decisions. Turning to our asset life cycle management business. Consistent with the projections we shared last quarter, pricing has been stable, having hit a low level last February. Whilst industry projections are for significant price improvements in late 2023 and throughout 2024, we have continued to take a prudent perspective and are only assuming marginal incremental pricing improvement for the remainder of the year. Our pipeline is robust, and we have delivered solid results this quarter that were in line with our expectations. Also, we are excited to share that we have signed an agreement to acquire Regency Technologies subject to customary closing conditions as we continue our roll-up of the ALM market. Regency is a little over $100 million annual revenue business in the ALM space based in Ohio. The long-term customer relationships that Regency brings to Iron Mountain are an excellent strategic fit to our ALM business. Regency will add operational scale as we continue our growth journey in this fast-growing sector. As the world's need for both secure and more circular solutions for end-of-life IT assets becomes more vital, we are pleased to add to our capability in this category. With that, let us turn our discussion to some individual wins within the ALM space this quarter. I am pleased to share a particularly exciting win for our ALM business with a large global technology company. The deep relationship and trust we have built with this customer over many years was instrumental in Iron Mountain securing the significant deal serving multiple business lines and geographies for the customer. These geographies include India, where our presence and ability to service the customer was a decisive differentiator alongside our global footprint, the expertise and responsiveness of our ALM team and our reputation for data security and chain of custody. Also in ALM, we have signed a long-term contract with a private U.S. insurance company that has been a long-time customer of our U.S. Secure Shredding and Destruction services. Last year, we began supporting this customer with one-off IT asset destruction projects, which demonstrated the value of remarketing thousands of these assets. The agreement we have now reached positions us as our customers strategic partner for its future end-to-end IT asset management needs. By supporting the requirements of an organization with over 37,000 leased IT assets that need returning from remote employees, we are extending the value of the solutions we bring and have changed our customers' perception of what Iron Mountain can offer. Finally, we have a particularly exciting win to share. We have secured a significant five-year ALM contract to support a leading pharmaceutical retailer in the U.S. to advance its commitment to zero waste by 2030. Iron Mountain will provide a circular economy solution by removing and recycling thousands of tons of pharmaceutical stock bottles and pill bottles from thousands of its retail outlets across the U.S. We are providing this leading retailer with an advanced recycling solution turning plastic into raw materials. This will enable the creation of new virgin plastic, helping this retailer meet their environmental goals. This is made possible by the scale of our physical presence, our highly experienced ALM team and a reporting platform for all of the confidential weights that we have managed for this customer since 2014. We are pleased to be able to extend the value of our partnership with this new contract. Moving on to our data center business. Our pipeline continues to expand with positive pricing trends. The continuing strong demand for data center capacity, continues to be driven by digital transformation and most recently, the explosive demand for AI. Supporting the growth and expansion needs of our customers is paramount to our collaborative partnerships, and we are pleased to provide this required capacity to our customers in the markets in which they are keen to operate. From a leasing perspective, in the third quarter, we signed 65 megawatts. This means that through the end of the third quarter, we have already signed 120 megawatts far beyond our original projection, for the year of 80 megawatts. In the quarter, 60 megawatts were signed across two leases to a single Fortune 500 technology company at our campus in Northern Virginia. The deal provides this hyperscale customer with capacity across two buildings on our 142-acre, 276-megawatt campus and represents, the largest revenue deal in Iron Mountain data center's history. We have also won a deal to provide nearly three megawatts of capacity at our Frankfurt data center for an existing North American cloud services customer looking to expand their European footprint. Our sales teams work closely with the customers' technical team to agree on a strategic solution that meets the customers' unique infrastructure needs. Given the strong customer demand in our data center business, we are continuing to expand the reach of our platform. To that end, I am pleased to announce a couple of capacity additions. First, we are repurposing a previous records management facility in Miami to data center use. Miami is a key market, where a number of our customers, are looking for edge deployments and this newly repurposed facility will add 16 megawatts to our data center portfolio. Furthermore, we have acquired additional land and power this quarter, growing our total data center capacity to 860 megawatts, up 80 megawatts from last quarter. In summary, the hard work dedication and execution of our Mountaineers continues to deliver strong results for our loyal customers and ultimately, our company shareholders. Through our Matterhorn initiative fueled by our enhanced operating model, our team continues to achieve record sales growth by selling our entire mountain range of products and services to our long-standing 225,000 customers. Even in a tumultuous geopolitical climate, the resilience and strength of our business model, combined with the dedication and customer-first passion of our mountaineers continues to drive us ever higher. I would also like to express my deepest gratitude to our team for their hard work and continued focus as we continue our growth journey. With that, I'll turn the call over to Barry.

Operator:

[Operator Instructions] And our first question comes from George Tong of Goldman Sachs. Please go ahead.

William Meaney:

Yes. Thanks, George and good morning. So, I think that you can expect and you can see that through the course of the year, even as inflation has come off, is that we're continuing to be able to use revenue management across the board in our - especially in our records management business, and that's really based on how our customers value the services. So, we don't see any change in that trend. And in fact, in terms of customer retention, you've seen even a slight improvement in that during that period of time. So, just as the customers really understand the value that we're applying, and we're actually using revenue management to tap into that. So, we don't see any change in that trend.

Operator:

The next question comes from Nate Crossett of BNP Paribas. Please go ahead.

William Meaney:

Thanks, Nate. Let me answer the question on Regency and then Barry will take your other two points. So on Regency, you can imagine they went through probably a similar growth profile that we saw in ALM. And they also have kind of, I would say, hit the low point probably about four months ago. And since then, they're actually growing kind of mid-single digits over the last, say, two, three, four months. And that's - they probably recovered a little bit faster than our business, but that's where the complementary mix of the two businesses is there, both in terms of the customers that they serve, and they do a lot more on the downstream processing, than the business that we have at Iron Mountain that we've acquired through IT renews. So, it's a good complementary fit. But we also see that they've actually, over the last few months, been growing single digits. Obviously, the business will continue to ramp, hence the pricing across the board starts improving.

Operator:

The next question comes from Jon Atkin of RBC Capital Markets. Please go ahead.

William Meaney:

No. Thanks, Jon. So I'll - let me take the ALM and then I'll let Barry talk a little bit more about pricing and volume trends. So on the ALM side, yes, we haven't backed off from our multiyear target that we shared at Investor Day, a little over a year ago. We still see the $900 million as a reasonable target in terms of the business trends, because one thing that we have continued to see is incoming volume. So if you look both year-over-year and year-to-date and sequentially is we do see volume continuing to grow and to ramp. And as Barry said, that we've seen now pricing starting to come back, whilst it's early green shoots, but 15% improvement in memory pricing, which you probably recall from our call last time is the bulk of the components that we sell on is - it shows that we're moving in the right direction to get back towards the type of pricing that we saw couple of years ago. So, if you put that all together and now with the additional capabilities that we're getting from the Regency acquisition is that both - they do a lot more on the downstream processing, which quite frankly, will not only allow us to harvest more value from the products that we're recycling from our customers, but it will also allow us to kind of expand, improve or accelerate our expansion into the OEM channels that we mentioned before. So I think you put that all together is that we feel very good about the targets that we laid out at our Investor Day.

Operator:

The next question comes from Shlomo Rosenbaum of Stifel. Please go ahead.

William Meaney:

Okay. So, Shlomo, let me talk a little bit about the - what we see on the volume trends, and then I'll let Barry put it together in terms of how you should think about modeling that going forward in terms of the business. I'll also come and pick up your point about what exactly Regency ads. So in terms of the volume trends, if you look at the enterprise side of our business, is there, the synergies, and as Barry said in his remarks, almost 100% cross-selling in terms of our ALM business. Is there you see almost triple-digit year-on-year increases in terms of volume that we're getting from our enterprise customers. So in the enterprise segment, we're seeing a really, really good volume. If you look at the hyperscale, which is the part of the business, that we acquired through IT renewal is the one that's most been impacted by what we see on the pricing of the components, which, as we said, is now just starting to move back north in the right direction. Is there, we actually see year-on - if you put year-to-date volume trends of incoming equipment, is we actually see double-digit - strong double-digit growth year-on-year, year-to-date incoming volume. And so the thing that's been muting that incoming volume, quite frankly, has been the pricing, but the good news is the pricing has started to improve. And Barry can help you think through how do you think about putting those two together as we project going forward. The last thing coming to Regency. So I'm glad you picked up on that because I probably should be more explicit on that. So Regency, first of all, they are adding a couple of customers into the portfolio that, quite frankly, we didn't have both in government sector and retail, which I think is really interesting in terms - because a lot of the equipment gets recycled by people dropping off at their retailers. So I think that's a really good capability there. But more importantly, is they actually are able to recycle a lot of what I would call the things that can't be reused directly into IT equipment. So things like we mentioned the plastics for pharmaceutical retailer. They do a lot more of that than we have historically. And the other thing, the other aspect is over the last couple of calls, we mentioned how we had signed up OEM relationships where these are laptop tablet manufacturers that are looking for people when their equipment comes off lease and needs to be recycled is they come to us and other people to actually resell - to refurbish and resell those products. And Regency has much more capability than we do in that area. They built up not only more expertise in refurbishing tablets and laptops than we have, but they also have a very nice e-commerce platform and where they can actually resell those. So they will really accelerate those - accelerate the sales for those channels that we mentioned on the last couple of calls, signing up the OEM manufacturers. So I think their capability will be a nice complementary fit to the contracts that we had already signed.

Operator:

The next question comes from Eric Luebchow of Wells Fargo. Please go ahead.

William Meaney:

So Eric, I'll take the - I'll talk about the yields that we're getting it. And then Barry can talk about the balance sheet impact and how we're thinking about financing it going forward. So I think on the yields, as you probably - were kind of foreshadowing in the nature of your question. We have seen yields moved up and in Barry's prepared remarks and I think also in mind. I talked about the price improvement or the strength of pricing around data center as demand continues to ramp. So historically, if you think about the journey that you've watched us on, Eric, is a few years ago, we would have said, hyperscale or kind of 7 to 8. I think on the most recent calls, we said hyperscale. These are cash-on-cash returns have been 8 to 9. And now you can expect that they are 9 plus. So we're - and these are all pre-leverage, cash-on-cash returns. So the returns are even with the ramp in the cost to build - well, the cost of build is obviously built in, but in terms of the cost of financing is well ahead after you put the data center together and lease it up is well ahead of our cost of capital. So we feel really good about the returns we're getting even in the higher interest rate environment.

Operator:

[Operator Instructions] And our next question comes from Brendan Lynch of Barclays. Please go ahead.

William Meaney:

Good morning, Brendan. Thanks for the question. So the - yes, so in Miami, you probably can imagine, yes, we are actually scrapping the building. So we're reusing the land in that particular case because it's the way that we could get the most data center capacity into that facility, otherwise we would have been leaving much opportunity on the table. So it's a better use or a better way of actually tapping into that market. But it still gives us kind of - if you look at an all-in basis, probably a 15% reduction in cost to build. And obviously, the speed at which we can enter the market is much faster because trying to find the right location of land in Miami and secure the power can be challenging. So we think both in terms of speed and then 15% cost improvement, which is significant, is really important. And if you look more broadly of the 90 million square feet of industrial real estate that we have around the globe that's associated with our records management business is - think about that's probably in the order of 15% to 20% of the properties are under evaluation on any given day as we look at it. So we're constantly screening about 15% to 20% of our locations and looking at what customers' requirements are and in some cases, having discussions with customers and thinking about which of those sites might be next. And these are generally fit in very nicely for what I call these kind of edge deployments or secondary cities like Miami, right? So this won't be the last one that we - the first and the last. This will be the first of many, we feel as we continue to go forward.

Operator:

Good morning, and welcome to the Iron Mountain Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I'd now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

William Meaney:

Thank you, Gillian, and thank you all for taking time to join us today for our discussion of our record second quarter results. Our team has once again exceeded expectations with performance reflective of our strong legacy of customer service, our laser focus on execution, and our dedication to finding innovative solutions to serve our customers as they evolve their businesses. I'm excited to share that in the second quarter we achieved our highest ever quarterly revenue of $1.36 billion and record EBITDA of $476 million. This performance is ahead of the expectations we provided last quarter. The enhanced operation model we created through Project Matterhorn has continued to prove successful as our commercial team is empowered to sell the entire Mountain range of products and solutions across our portfolio. We are pleased with the high quality and wide range of our offerings today which positions us to be a nimble partner to serve our customers' needs. To highlight some of our results in the second quarter, we delivered organic storage rental revenue growth of 11% and drove high-teens organic growth in both our data center and digital services businesses. We are also pleased to announce that our Board of Directors has increased our quarterly dividend per share to $0.65 or $2.60 per share annualized, commencing with our third quarter dividend to be paid in October. As we have said before, when our AFFO payout ratio reached the mid to low 60s as a percentage, we would increase the dividend. Our payout ratio at the end of the second quarter was just under 64%. I would like to begin our broader discussion of some of the customer wins, which led to our record second quarter results. Let me start with records management, where our success was derived from both new and existing customers. One significant win we would like to highlight this quarter was with a large not-for-profit hospital system, faced with rising lease costs, despite a shrinking storage footprint, the customer turned to us for an alternative to storing in their own space. Our Smart Sort solution will address their needs over the next three years. It will deliver cost efficiency and optimize storage space for the customer before they transfer their records to an Iron Mountain facility for secure future management. This win exemplifies our commitment to solving our customers' problems and providing them with tailored solutions. The COVID-19 pandemic has led organizations around the world to reassess their current real estate portfolios in order to accommodate remote and hybrid work. Our customers are optimizing their real estate to accommodate changing working practices, we are able to offer solutions that demonstrate the breadth of our portfolio and the value of partnering with Iron Mountain across our products and services. One example is a customer who chose our Clean Start solution to remove and relocate records, office equipment, and IT assets from more than 60 offices across North America that are being closed or decommissioned over the next two years. Thanks to our Asset Lifecycle Management solutions, we are also helping this customer to decommission IT assets from these offices securely and sustainably. We continue to see growing momentum for our digital business with customers turning to us for solutions in areas such as public sector, industry focused solutions, and end-to-end business process management. For example, we are proud to be supporting the digitization of real estate mortgage records held by the Helinick Land Registry in Greece under a two year contract worth $35 million. We demonstrated our understanding of the public sector in Greece and of the European Commission's recovery and resilience facility, which is funding this project through the Greek government to support European economies as they transform the way they support their citizens. This is a breakthrough deal that will provide further opportunities to support similar digitization projects elsewhere in Europe. Another example of how our digital business is enabling us to develop and deliver transformational solutions for our largest customers is with one of the biggest financial service companies in the United States. This customer is outsourcing its noncore services and has selected Iron Mountain to manage all of its records. Our end-to-end solution ensures a secure chain of custody regardless of media format for this customer, leveraging our image on demand service and InSight platform to integrate seamlessly with their customer success management system. This game changing deal demonstrates the power of partnering with Iron Mountain to accelerate our customer's digital transformation. Staying with our Digital Solutions business, our 25 year relationship with a Fortune 500 gas and electric utility company continues to be a powerful example of how our customers turn to Iron Mountain because of the range of solutions we can provide. To ensure our customer is compliant with all legal and regulatory requirements we are digitizing around 20 million images from 8,000 boxes stored with Iron Mountain over the next three years. Having provided records management and data management services since 1998, our customer was confident in our Digital Solutions secure chain of custody, information governance expertise, and ability to scale up quickly to deliver this project. To conclude with records management, on 29th June we acquired the controlling interest in Clutter, a tech enabled on demand consumer storage company. We were previously a minority investor in Clutter and provided storage and operational services through a commercial partnership. This acquisition makes us the industry leader in valet self-storage services in North America. Turning to asset lifecycle management, we continue to see muted pricing for the largest part of this business, which relies on reselling used memory, hard drives and CPUs we receive from hyperscalers. That being said, pricing is stabilized, and we do expect to see an improvement as we head into next year. Moreover, you will recall that our ALM business has three components

Operator:

We’ll now begin the question-and-answer session [Operator Instructions] And our first question will come from George Tong of Goldman Sachs. Please go ahead.

Barry Hytinen:

Okay. Hi, George. This is Barry. Thank you for the question. Yes, let me help you with that. From a standpoint of the way the decommissioning and component price business has been unfolding this year. As you know, early this year, late last year and into early this year, component pricing was dropping quite appreciably. And by about the February time frame, it had reached over essentially all time record lows. And that's really across the gambit of component pricing from memory to CPUs, all the various components that we're selling. And, that has obviously been a significant impact for both Iron Mountain, but also for many other players in the technology industry. I think importantly what you've seen, and I'm sure you would have been following this, many of the OEMs have significantly reduced their production of new components, which is now limiting supply in the marketplace. And of course, used component pricing tends to directly correlate and follow with new. And so, what we've seen here since the component pricing hit the lows in the kind of February timeframe is, importantly, pricing has been very consistent. In fact, some components have been ticking up. We've seen that in certain elements of memory among other component pricing. So, what we've worked into our outlook though, George, is that, we are keeping component pricing in our outlook for this year at this record level low levels. And our thought process is, that's a prudent way to plan. When you look at industry analysts, then there's -- this is publicly available data, there are many estimates that project for component pricing to begin to lift as we move through the remainder of 2023 and in fact have very, very sharp increases in most component pricing next year in light of supply and demand expectations. As I said, we're not baking that into our 2023 outlook for prudent reasons. We are anticipating that our total ALM business will be up just a few million dollars on a sequential basis in the third quarter. And then will be up again in the fourth quarter, but that speaks to the points that Bill made in his prepared remarks that, for example, in our enterprise ITAD business, bookings are up a tremendous amount in the second quarter year-on-year. We are winning more decommissioning business across that decommissioning vertical. And of course, our OEM teams have been winning very important wins for us, which I think set us up very well for the intermediate and longer term in the broader asset lifecycle management space. Volume on a sequential basis was essentially equivalent, George, which we felt good about. And I would say the forward pipeline as it relates to volume in light of what I've just mentioned is favorable for us. So we feel that we are now getting through the hardest comps of the year. As you know, last year, we were $72 million, -- $71 million, $72 million of revenue in the first quarter with ALM, we were $83 million in the second quarter. That dropped quite appreciably to $60 million in the third and $55 million or so in the fourth. So that goes to my point about the comps get easier with pricing being flat to up, we feel well positioned. Thanks, George.

Nate Crossett:

Thank you. So is it fair to say, I guess, that the service revenue growth year-over-year, like, this is the low quarter in 2Q? And that we should expect maybe it to trend out from here? And then maybe just comment on storage rental growth that still remains very strong. Can you maybe just speak to recent customer conversations and your ability to push price?

William Meaney:

Yes. And just one thing I would add for Nate on the storage trend sort of volume, you probably picked up from some of the wins we highlighted is that, as companies are shifting their use of space as the workforce is more remote or hybrid. That's yielding both increased volume for our storage facilities as they clean out or decide that they want to have it depoed rather than in an office that people don't visit as much or at all anymore. As well as, as Barry pointed out, [indiscernible] behind this 175% year-over-year increase in ITAD bookings, both because as companies are kind of cleaning out, it's a tailwind both on the storage in the ITAD business.

Alex Hess:

Yes. Hi. This is Alex Hess on for Andrew Steinerman. Maybe just to dig in on Global RIM for a second. Can you remind us what percent of storage revenues are in some manner CPI linked with -- maybe what the price floor and lease terms look like nowadays? And then just quickly on Clutter, how does that factor into your outlook and maybe some thoughts around that business, which we understand had some cash flow issues as a standalone company on its own. Thanks guys.

Operator:

The next question comes from Shlomo Rosenbaum of Stifel. Please go ahead.

William Meaney:

Okay. Let me start with the labor costs and the trends in terms of the volume. So I think, first, starting off on the volume trends is, as I was saying to Nate -- to Nate's question is that, overall, the volume, as you can see, is flat, slightly up. So it's trending in the right direction. And I wouldn't say this is a -- it's going to be a massive change. But what we see, if you think about 730 million cubic feet, so it's a very large base that we're operating on, is the trends that we see both in some of the new storage areas, but as well as what we see in people going into a hybrid or remote working aspect. It really is getting a lot more traction for our Smart Sort and Clean Start type solutions, which uncover more storage, also the services that we can provide being depoed. In other words, we can serve their employees anywhere they are. They don't have to come to the office to actually get information back, whether we give it back to them physically or image on demand. And then it's also uncovering, as we say, is driving a lot of the increased bookings that we see in the enterprise ALM side of the business and fueling that 175% growth that we see. So overall, we feel really good about where the trends are, but you can imagine, on 730 million cubic feet around the world, is that -- even what I call quite macro trends that I described are --don't change the overall trajectory like massively, but it is definitely a tailwind for that business. And on labor costs, before I hand it back to Barry is, you're right, labor costs is up. Some of it is as we go into new areas in terms -- as we ramp, or some of the projects that we ramp on, then obviously we're bringing labor in ahead of time. And the other part is making sure that our mountaineers around the world are well looked after, because we really do see the -- it's the core to us. We're a business services company. And the first impression that our customers have is our mountaineers, and we want to make sure that they and their families are well looked after. And the inflation environment globally has been challenging for a number of our colleagues.

Operator:

The next question comes from Jon Atkin of RBC. Please go ahead.

William Meaney:

Okay. Thanks, Jon. I'll start with the -- what we see on the data center horizon and the I’ll turn it over to Barry. I think first of all, we're really pleased with how our data center business continues to grow. And also, as you know, I know you cover the industry extremely closely is that, pricing is up markedly, like as we look in markets like Northern Virginia on a triple net basis as we see around the hyperscale segment, pricing up some 40% so the returns continue to grow and keep pace. I think in terms of -- looking at the size of our pipeline, Barry mentioned [Technical Difficulty] million on top of the $1 billion that we already had for investment capital in 2023. Based on the strength of that pipeline and the success that we're having, pretty much across the globe is that -- I mean, you're right that we're always kind of conscious of in terms of how we fund our projects. That being said, we're actually fortunate that we have the records management business and our other services business, which is like a financial beast. I mean, it just generates a tremendous amount of cash that not only fuels the dividend, but it also fuels a lot of the development capital into our data centers. So I wouldn't say that we're in a situation where kind of a company that is solely in the date center space that has only to itself to look for in terms of how it funds itself going forward to drive a lot of the development. We actually have a growing, but some people will consider a mature business in terms of the amount of capital we have to put into that because it’s a very scaled high operating leverage business and we are able to use funds and profitability from that to fund a big part of our development. That being said, as you know, that we've done -- we have taken third-party capital a couple of times already, and we typically do that on stabilized or near stabilized assets and tap into funds that where people are looking for relatively low yielding, but long maturity or duration type assets. And we'll continue to do that as some of our portfolio stabilizes. I can imagine that we would recycle capital when the opportunity presents itself. But overall, if you look at the plan that we laid out last September in terms of our Investor Day, we're probably a little bit ahead of that in data center just because of the growth that we've been seeing in the first half of this year and what we see in the pipeline. But we feel pretty good about that we have a fully funded plan in terms of the way we're doing it now. But if there's opportunities, as I say, to take third-party capital, especially around stabilized assets, generally that boost our returns long term and we will do that.

Operator:

The next question comes from Kevin McVeigh of Credit Suisse. Please go ahead.

Barry Hytinen:

Okay. Thanks Kevin. Appreciate that. You're right that our revenue management program is doing very, very well. And obviously, our storage rental revenue growth has been growing. And as I mentioned, some of our growth rates are actually accelerating that being one of those. And that's thanks to both our Global RIM teams, as well as our data center teams, because commencements has been very strong. You referenced that CapEx is up, as I mentioned, that's going to build out our data center portfolio that's already preleased. So we are endeavoring to meet all customer demand, which continues to ramp. In terms of -- you are right, Clutter adds a relatively small amount of revenue. We probably are a touch more conservative with ALM in the back half, Kevin, than where we were at the beginning of the year because, of course, at the beginning of the year component pricing was still -- was still coming down. And now it's stabilized we've recognized that those stable levels of pricing. As I said, that may prove to be conservative as we move through the year, but we are only halfway through. So we tend to try to not get ahead of ourselves, Kevin. In terms of cash generation and the compilation of the incremental CapEx. Here’s what I'd underscore. We have reiterated our leverage expectations that we will be at 5.1 times at year end, which is consistent with where we are today, and at a multiyear level low. So we feel really good about the cash generation of the business. We're generating incrementally higher returns in data center on that CapEx investment. Returns on hyperscale have moved from kind of the seven, eight level to more like eight, nine, and retail cash on levered returns are also quite firm. And so, we're blending into that low double digit vicinity on a combined basis. We feel really good about where things are trending, Kevin, so appreciate your questions.

Eric Luebchow:

Hi. Thanks for the questions. Two, if I could. So, just wanted to touch again on the data center pipeline. Any requirements you see that you think are tied to this wave of generative AI demand we're hearing about in the industry? And does that change at all how you design your data center for some of the higher densities that are required for these types of deployments? And then secondly, on the hyperscale ALM business. I know you talked about China COVID shutdowns impacting that business. Has there been any move to kind of diversify your end markets to resale beyond China to help reduce the concentration there? Thank you.

Barry Hytinen:

And Eric, it's, Barry. As it relates to diversifying away from China, as we've talked about before, that certainly is a focus of the team. We have added to our organization in ALM and specifically around diversifying the downstream channels, we are making steady progress, but it is slow because, of course, as we've said before, China is the main market for us in that regard. But we are looking at and branching into throughout Southeast Asia there are opportunities we think over the intermediate term in India. We certainly have been selling more components into the U.S. and Europe as well, and that's a key focus, as well as the Mid-East. So there is -- there are opportunities there, and we are building that -- those channels The other thing I'll just build on and link the two questions is, when you think about hyperscale decommissioning, we generally are decommissioning data centers that were put into service, let's say, five years prior. And so -- on average. And the thing about AI in this very significant ramp in terms of hyperscale data center development right now is, it will provide even another leg to our hyperscale decommissioning growth five years on. Historically I've had some questions about like, well, how does the decommissioning business continue to ramp over time? And of course, the things that we'll be decommissioning this year are components that were put in place about five years ago. And next year, we'll be decommissioning things that were put in place four years ago. And as those data center platforms have grown, it provides that much larger of a platform for us to decommission in the future. And I think it shouldn't be lost on us that of this AI growth is going to drive another substantial leg up in the opportunity for hyperscale decommissioning in the future. And as the leader in that space, we feel quite good about the future.

Brendan Lynch:

Hi. Good morning. Thanks for taking my questions. I wanted to ask on the storage -- excuse me, the retention rate in the Global RIM business, it looks like you contracted about 100 basis points year-over-year and it's at, probably the lowest level in the past few years. I understand that the storage business has generated really strong growth, driven by price, but maybe you could kind of square some of those dynamics there as well.

Operator:

This concludes our question-and-answer session and the Iron Mountain Second Quarter 2023 Earnings Conference Call. Thank you for attending today's presentation and you may now disconnect.

Operator:

Good morning, and welcome to the Iron Mountain First Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

William Meaney:

Thank you, Gillian, and thank you all for taking the time to join us today. Our team delivered another quarter of record results for the first quarter of 2023, exceeding our expectations. This performance reflects the resonance of our expanded product portfolio, our unmatched customer relationships and the strength of our dedicated team. On a reported basis, in the first quarter, we achieved our highest ever quarterly revenue of $1.31 billion, yielding 7.5% total organic revenue growth and EBITDA of $461 million. We continue to be encouraged by the increased demand for our services across key markets fueling these results as well as the success of Project Matterhorn, enabling our commercial teams to offer our customers access to the widest range of solutions in our company's history. We delivered organic storage rental revenue growth of 11% in the first quarter, and we drove high-teens organic growth in both our data center and digital services businesses. As we introduced last year with Project Matterhorn, our steady build-out of new products and services as well as growth in these underlying markets continues to accelerate us on our growth trajectory path. I would like to take this opportunity to highlight how we have been serving our customers with our solutions-based approach and our offerings across the Mountain range. Beginning with records management, we won significant new business in the United Kingdom with a major global industrial and aerospace company signing a contract valued at GBP 40 million. Following more than a year of conversations, the team entered into a bespoke 10-year agreement, providing the customer with several hundred thousand cubic feet of secure physical data storage, document digitization and management across multiple secure locations, radio frequency identification tagging for additional security and a dedicated on-site team of experts working to Iron Mountain's industry-leading standards. I am pleased we could offer such a comprehensive solution that allows the customer to both digitize their data and protect their business. We are now discussing additional opportunities with the same customer in other European countries, North America and Asia. In total, the potential contract value over 10 years is approximated to be GBP 90 million. Another win that highlights our ability to sell the entire Mountain range involves a state historical society, which turned to both Iron Mountain and our Fine Art Storage Business Crozier for help in preserving the history of its cultural heritage center, which is home to its underground archives in museum. With budget as a key consideration for this customer, our unique solution was focused on reducing costs, whilst leveraging our expertise and innovation to challenge the customer to think differently. Our combined art, library, archives and logistics expertise enabled our team to deliver a solution that met the state's needs. Also in the quarter, a financial services company based in Australia, a long-standing customer of Iron Mountain turned to us for help with their compliance issues after being impressed by the information we presented at a Policy Center webinar back in 2021. Our suite of digital enablement solutions and software, including the InSight platform will provide the customer with increased visibility into its archives, digital copy as selected records, auto generation of metadata and auto reduction of personal identifiable information. Success stories such as this highlight the value we provide customers and not only moving data from physical to digital storage, but also improving the methods and capability to utilize the data. Another digital win was with the U.S. Department of Veterans Affairs. The U.S. Congress has requested that the VA advanced the production of complete and accurate veteran records in a timely fashion, driving the need for digitization of historical veteran documents, which are often dispersed across multiple storage locations. The customer required an experienced digital partner to increase their scanning capacity and also provide facility oversight, chain of custody logistics and secure storage. The unique aspects provided by our high security Boyers, Pennsylvania facility, combined with the skill of our staff were key contributing factors to winning the deal. This is just the beginning of our work to aid in the delivery of medical records to enhance patient care of veterans. Also in Digital Solutions, we had a key win with an existing customer His Majesty's Courts and tribunal service on a digital mailroom solution to automate the indexing and classification elements of the mail room function. The service, which will reduce the cost and time of processing court applications will be delivered from our location where we have a well-established digitization and BPO facility. Turning to asset lifecycle management, or ALM, we divide this business into 3 verticals. The first of these is the hyperscale decommissioning business that we acquired from ITRenew. Our volumes grew in excess of 30% in this vertical year-over-year, reflecting our market-leading platform, the strength of our existing customer relationships and our ability to win more new logos. Revenue is down, however, reflecting the record-low pricing the market has seen since the end of 2022 on both new and used components. In our enterprise ITAD vertical, we've been gratified to see more synergies with our existing customers. Since we have relationships with over 225,000 customers across our wider business, the opportunity to cross-sell our enterprise ITAD services has never been greater. The last of these verticals is the technology manufacturers. Here, we are winning business, both in terms of servers as well as end-user devices. We have invested in our sales force and obtained specific expertise in the OEM space setting us up for success. This indirect relationship to decommission end-user product is a huge market opportunity. Examples of recent wins in the ALM business include a contract with an existing global asset management company to perform on-site hard disk and solid state disk ratio and destruction whilst maximizing value from data center and corporate end-user assets. Continuing with ALM, a large global risk management company sought services to decommission to complete in 2 partial data centers. A combination of our strong existing relationship and performance, including guidance from a dedicated program manager, our remarketing solutions and capabilities and the ease of the use of our ALM portal contributed to the win. Finally, let's turn to our Data Center business. We are pleased to have finished the first quarter of 2023 with 52 megawatts of new leases signed with a single hyperscale customer signing 2 deals for a total of 44 megawatts. You will recall that our guidance for the year is 80-plus megawatts. So to have least over half of our target in the first quarter alone is a triumph of our team. In terms of the co-location wins this past quarter, one win I would like to highlight is with an existing U.S. federal home loan customer who sought to expand into a new data center market for disaster recovery options and selected our VA2 data center in Manassas, Virginia. The customer was impressed with the tour of our Virginia campus and the custom solution we developed to meet their needs. With their positive past experience with our data center services, we've bundled this expanded solution with a renewal at another of our data center sites. Also in the quarter, our team announced the win with a fleet management company, which for years has explored moving their internal on-site data center infrastructure to co-location. Our ability to provide a custom solution in our VA2 data center, including direct internet access, smart hands and cross connects resulted in a powerful solution for them and the continuation of an important relationship that has the potential to expand to a disaster recovery solution at our New Jersey data center. Also noteworthy is a substantial win with an existing major semiconductor chip manufacturer who's taking advantage of all the Mountain range has to offer. The customer was seeking a data center partner to host their internal development cloud environment, and our data center and commercial sales teams work closely to deliver a solution at our Arizona site, leveraging the customer's existing relationship. All 3 of these wins that I have noted are with long-standing customers, demonstrating our ability to source premium co-location deals with customers with whom we have had trusted relationships for decades. To conclude, we are more enthusiastic than ever about the growth in our business and our ability to offer our customers expanded and innovative solutions to meet their ever-evolving needs. Project Matterhorn is bearing fruit, and we continue to make great strides as our team climbs towards the highest peaks of our journey. With that, I'll turn the call over to Barry.

Operator:

[Operator Instructions]. Our first question comes from George Tong with Goldman Sachs.

William Meaney:

George, thanks for the question. So yes, I think overall, if you think about it in the traditional areas, our service revenue growth was quite strong. If you look at just in the RIM business is our Global Organic RIM services grew at 14%, again on an organic and constant currency basis. So very, very strong growth. If you look it on the ALM side, which is where you see the downdraft is, as I've said in my comments, is volume in this quarter was up some 30% year-over-year. So we're actually seeing the synergies -- the commercial synergies that we have as a company and as Barry mentioned, we just signed a new OEM customer as well. So we see really good traction on the volume side. But on the pricing side, if you probably have seen in the electronics industry, some of the components are down 70%. So whilst we still have positive gross margins on that business, is the revenue is heavily impacted by what we've been seeing across the semiconductor industry in terms of record-low pricing. So I think that it's really a two world. So as I say, from a -- even ALM business on a volume basis has shown traction, but it is a downdraft in terms of the overall service revenue. But the traditional areas, I would say, in terms of RIM, also, if we look at our digital services, we're also up year-over-year in the high teens, really good progression.

Operator:

Our next question comes from Kevin McVeigh with Credit Suisse.

Barry Hytinen:

Yes. Thanks, Kevin. Appreciate the question. We feel very good about where we're trending. In fact, the first quarter came in right in line, if not a little bit better than what we were expecting in our guidance for the second quarter is similarly and that is despite the fact that we've adjusted our expectations for ALM down some in the second quarter. And the reason we're able to achieve the numbers that we're putting up in the second -- that we're projecting for the second quarter and our confidence in the back half is because of a couple of things you just pointed out. We are seeing even better revenue management projections in the business. We have, as you've seen in our Global RIM business, we have very strong storage rental growth on an organic basis, almost 9.5%, which marked an acceleration sequentially and year-on-year. Our total organic storage rental growth was over 11%, which was also very strong. And I will tell you that in light of the fact that we are going to see more revenue management activities we've recently passed some here even in the second quarter, and we'll be passing more as we move through the year, together with the fact that data center pricing continues to improve, and that's an industry phenomenon. You will see, together with that, our commencements are very strong in the back half. So data center will be accelerating as we get into the back half. And as you know, there's very strong visibility on that business. So it's a high confidence point that I'm making there. So we feel very good about where we are. In terms of -- you mentioned the specifics around second versus the -- quarter versus second half. I'll just note that in light of the timing of the U.S. dollar strength, we still have an FX headwind in the second quarter. In the first quarter, that was almost $30 million of topline. But as we said on the last call, and I'll reiterate, that becomes much more muted, in fact, may even be a slight tailwind in the back half. We also get through a few items that are in the first half from an EBITDA standpoint. As you know, we did some sale leasebacks last year and we comp over those as we move into the back half and with our productivity initiatives and additional commercial investments we've made, we get to a more favorable comp in the back half from those as well. So I'll tell you, Kevin, we feel very well positioned about accelerating business even with more muted expectations around ALM.

Jonathan Atkin:

Towards the beginning, you pointed out a number of wins with government agencies and large enterprises and so forth. And I was curious to maybe get a little bit more color on what's kind of the tone of discussion around sales cycle compared to what you're accustomed to? And then the competitive set that you faced with those deals to the extent that you faced with these bake-offs or just kind of the decision to go with you is really more of a bilateral discussion, but maybe a little bit about the competitive dynamics and sales cycle would be helpful for both government and enterprise?

Operator:

Next question comes from Shlomo Rosenbaum with Stifel.

Barry Hytinen:

Okay. So thanks for that question. I think our team is doing a phenomenal job with revenue management. It's been a real standout. When you look at Global RIM in terms of its storage rental organic growth that was almost 9.5%. And as you know, we saw good solid volume trends. It was up about $2.5 million on a cube on a trailing 12-month basis. So as you can gather from that, the vast majority of the growth was driven by revenue management. And importantly, we feel very well positioned in terms of the whole year. And I'll tell you that in terms of the total storage rental growth rate that we put up 11%, which is, of course, benefited by data center commencements with what we see on data center commencements through the remainder of the year. Together with the revenue management activities we've already put in place and additional that we have going into market over the next few months, I feel very confident that we are going to continue to see total company organic storage rental growth of this order, I think, 9%, 10%, 11%. And that the environment for revenue management continues to be strong. We will have relatively more revenue management this year, Shlomo, than we did last year. And that is a factor of both what we're wrapping from last year as well as the activities we've had in this year. Importantly, we continue to see excellent customer retention, and I think that just demonstrates that we are bringing forward very significant value for our clients in these areas. In terms of mix, I would say we continue, as we talked about before, to expand the revenue management program beyond just storage. So you are seeing improving revenue management trends in our services, and that's generally across all line service in our core offerings and so we feel like it's on the right trajectory, Shlomo.

Unidentified Analyst:

This is . Maybe you can just remind us on the funding plan for development this year? What does the pricing look like for any debt needed? Would you do asset or company level financing? And then I also wanted your updated thoughts on the dividend here with the payout, the lowest it's been in a while.

Barry Hytinen:

Thanks for the question. When you work through our guidance, as Bill mentioned, as we discussed at the Investor Day, we have a fully funded plan for this year and going forward. And as you know, we will be a routine debt issuer, and while the market has clearly been moved up in terms of rate over the last couple of years with the Fed moves, I would say it's become much more -- it's an improved market as compared to where it was over the last couple of quarters, and we see generally a favorable outlook from a standpoint of issuance. And I think from a standpoint of where we could issue today, that's improved some versus the last couple of quarters. And to your point, there's a lot of interest in asset-level financing, whether it be for construction or otherwise. And so we're looking at all those options and making sure that we have the best plan for our shareholders. But it's not something that we have to do, as you see, we have plenty of liquidity, but you should expect us to be an issuer on a routine basis. I want to just kind of continue to see what's out there from a market perspective. Clearly, rates are a little bit higher than where they were a couple of years ago, but we still see them being very attractive and partly because pricing in data center has continued to lift and we see continued improvements. In fact, year-on-year, net new retail-type data center deals we're seeing up like 20%, pretty much consistently across our entire portfolio, and that's trending more toward, I think, by the end of the year, early next year going to be about like 30%. And so that is a pretty significant move. And then importantly, on hyperscale side, I think the whole industry is generally seeing cash-on-cash unlevered returns moving up, I think something like where a lot of folks were writing in the high 7s or mid-7s, I'm seeing a lot of stuff that's in the 8s, if not even higher. And so I think that's a good trajectory for the industry. It's healthy and it supports the point that I was making earlier. So we feel really good.

Alex Hess:

This is Alex Hess on for Andrew Steinerman. I wanted to ask briefly about the ITRenew callout. You highlighted that services revenue growth would have been 11% organic, excluding ITRenew, which implies a pretty sharp deterioration quarter-on-quarter and year-on-year in that business, if my math is right. Could you maybe break that out into what degree that was driven by pricing versus ability to sell through into end markets? And any other dynamics that sort of give you confidence that, that will eventually recover?

Barry Hytinen:

Alex, I appreciate the question. I'll give you a little bit more of the detail, which you could find in our filings. So in the fourth quarter of last year, our total ALM business was about $56 million. And in the first quarter, it was $41 million. And so -- and that compares against $70 million last year. Now as I talked about previously, the second quarter of last year was in light of the timing of lockdowns and the pricing trends by the end of the year, second quarter was the peak for our ALM business at $83 million of revenue. We've assumed in our guidance for the second quarter that revenue is consistent with the first quarter this year. So that is a drag on, of course, the services growth rate in the first quarter, and it will be again in the second quarter. At the -- if you wanted to sort of sensitize our guidance, I would tell you at the low end of our range, which I did not anticipate this is what's going to happen, but just at the low end, we would assume that it just is flat at this level of revenue for the whole year. I really don't see that happening in light of the very strong pipeline opportunities we have in the trends we're seeing in the business. But that's conservative posture for the low end. What we think is probably going to happen is we will be slight to -- slightly up sequentially. We're running a little bit ahead here already in the second quarter of the projection I'm giving you. And then in the second half, the way we're planning is for the third quarter to be essentially flat year-on-year. So that implies a little bit of a lift and another lift in the fourth quarter. But I will tell you that we have pretty strong confidence in our ability to do that. And I called out 1 deal on -- in the prepared remarks around OEM, and maybe I'll give you a little bit more color. This is a situation where we're dealing with one of the largest manufacturers of devices in the world. There are several of those, as you know, and we're approaching all of them because what we're finding with large multinationals is very similar to our core enterprise clients. These companies are looking for a partner who can work with them everywhere they do business all around the world. They're currently using a lot of point players in very specific markets on a local basis, and they'd like to have more uniform standards and consistency, and we can provide them with the sorts of services they're looking for things like data [indiscernible], recycling, remarketing. Ultimately, we'll be working with them on things like asset tracking and storage, IT asset management, things of that nature. So it's -- another example of how our team is continuing to diversify and grow our ALM business and it bolsters our confidence. And just to reiterate, this is a huge market ALM. We really like the space. It's very fragmented, and we think we're in a very good position to take a tremendous amount of share over time. We're working through what everyone in the industry is working through right now, which is pretty low component pricing. We feel good about the opportunity.

Eric Luebchow:

So I wanted to touch on the data center demand. So you're more than 60% towards your leasing goal for the full year, so a really strong start to the year. And if you look -- it looks like your in-place and development portfolios are pretty highly leased up. So maybe you could talk about your ability to accommodate additional demand, whether through future development of your land holdings, additional expansions? And then if leasing continues to trend at a high level, could you accelerate some of your data center CapEx this year beyond what you initially guided to?

Barry Hytinen:

Thanks, Eric. It's good to talk to you this morning. I appreciate those kind words. We -- obviously, the team is doing really well and continuing strength and strength in terms of new signings and also margin performance in our data center business. So hats off to our team there. In terms of data center capital, as you know, this year, we had penciled to deploy about $850 million of growth CapEx and with the vast majority of that going to data center. Year-on-year, we put a considerable incremental amount of CapEx into data center in the first quarter. I think we do have the benefit of so much being pre-leased and the team continue to sell that, yes, it is conceivable to me that we will be, over time, ramping our CapEx for data center and it's sort of a bit of a high-class problem, so to speak, as the team continues to sell through our pipeline plans. So we have ample capacity to do so in terms of deploying additional capital. We were always planning to spend from a timing standpoint, more CapEx, relatively speaking, in the first half this year than we did last year. As you recall, last year, it was a little bit more shaped towards the back half in terms of data center deployment where deploying a considerable amount here in the first half, we'll continue that trend in the second quarter. And after we get through midyear and see how the additional pipeline looks, which is quite strong, I'll note, at this time. As we see how that is at midyear, we may talk to you about a little bit more, but that would be a very positive development in terms of continuing to see really high levels of organic growth rates driven by commencements. As you know, we're very pre-leased in terms of our underdevelopment. I think we're now pressing over 90% in terms of pre-leased in terms of what's under construction. So it's a good place to be. The only other thing I guess I'll call out is that churn has been relatively low, and we continue to expect it to be relatively low for the full year. So thank you, Eric, for your questions.

Brendan Lynch:

I wanted to discuss a little bit about Project Matterhorn. I understand it's still very early days, but you called out some large multiple vertical wins. I'm wondering how you expect that type of contract to trend in your revenue mix over the long term as Project Matterhorn gains more momentum. Do you expect to see a lot more of these large multi-vertical wins relative to kind of the legacy revenue mix, which might have been more of a fragmented customer base?

Barry Hytinen:

Brendan, I'll just add, as we talked about before, one of our key initiatives within Matterhorn is cross-selling. And if you go back to what I mentioned in the prepared remarks and our data center team signed 22 new logos within data center in the quarter and when we segment that on a megawatt basis, 75% of that was cross-sell from our existing client base, those 225,000 clients. So I think that's a good indicator of what we are trying to drive with our Matterhorn initiatives around cross-selling.

Shlomo Rosenbaum:

Bill, I thought you had missed it if I don't ask you about the underlying volumes in RIM. So I'm going to ask you now if you can provide a little bit of more color on the breakout like RIM adjacent businesses, consumer and other, just how are the underlying factors playing out and maybe talk a little bit about developed markets versus emerging markets as well?

Operator:

This concludes our question-and-answer session in the Iron Mountain First Quarter 2023 Earnings Conference Call. Thank you for attending today's presentation. You may now disconnect.

Operator:

Good morning and welcome to the Iron Mountain Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

William Meany:

Thank you, Julian. And thank you all for taking the time to join us today. We are pleased to have delivered record performance for both the fourth quarter and the full year. These exceptional results are reflective of our broad product portfolio, synergistic business model, deep customer relationships, and committed team. Before I dive into the drivers of our strong performance, I would like to take a few moments to relay how deeply saddened we are all feeling by the devastating and recent earthquakes in Turkey and Syria. Our thoughts and prayers are with our fellow mountaineers, customers and all of their families living and working in the region. The safety and security of our employees is our number one priority. And we are committed to supporting our colleagues in the region as they navigate this challenging time. Now let me begin our discussion of our recent performance. I am proud to report that Iron Mountain has had another outstanding year. In the fourth quarter we achieved quarterly revenue of $1.28 billion yielding 11.3% total organic revenue growth and record adjusted EBITDA $472 million up 10%. For the full year, we delivered record results across the board. Revenue of $5.1 billion adjusted EBITDA of $1.8 billion, and AFFO of $1.1 billion, representing growth of 14% 12% and 10%, respectively. This performance is a direct result of our close relationships with our customers and our commitment to innovation so we can provide them with expanded products and services to meet their needs. For the full year, we delivered organic storage rental revenue growth of 9%, reflecting continued benefit of pricing combined with positive volume trends. We drove double digit organic growth in our data center business, as well as our digital services and asset lifecycle management business areas capping off another excellent year. Our continued drive to build an ever-expanding suite of synergistic and customer centric solutions, together with global reach and scale fuels our accelerated growth consistent with the Matterhorn Excellence model we unveiled last autumn. Let me share a few examples of how we've been enabling our customer’s success and growth through the diverse solutions and unmatched customer service we offer. Beginning with our records management business report, we reported a substantial cross sell win with a large non-profit healthcare provider, which has been an Iron Mountain customer for more than 20 years. The win resulted in a new 10-year contract covering records management, ALM, data management, secure storage of non-records and document digitization services taking this customer from $2.5 million per year to $5 million annually. Just a few years ago, we would have been able unable to provide such a broad range of services and solutions to this long tenured customer. Today, with our broad offerings we not only cross sold the new services and solutions, but we increased our share of wallet for our records management services and solidified our position as a trusted and strategic partner. We also provided a solution for a large U.S. Bank to develop a simple and cost effective process to manage its vast inventory of over 24 million mortgage files. This partnership involves meeting stringent compliance obligations, mitigating risk and reducing cost. Also in the quarter we want new business serving the Australian Government. Through this work, we will drive considerable cost savings to one of Australia's largest government agencies. Iron Mountain will have a dedicated team to pack, enter data and transport 375,000 cartons to our new facility in Melbourne. In Digital Solutions, a key win I would like to highlight is with a branch of the U.S. federal government. As a result of the enormous success of our original project with the customer to digitize 177,000 reels of microfilm in less than the prescribed year, we have executed a sole source follow on contract to digitize another 133,000 reels of microfilm. This win is the result of the strategic development of a best-in-breed AI machine learning solution to auto classify and automate data capture. In addition, we worked with a large global medical equipment and electronics manufacturer to navigate an extensive global medical product recall. The customer needed an efficient partner to assist with the recall in order to meet regulatory requirements and avoid further legal ramifications. The customer also required rapid response and tight turnaround times and was seeking a single partner. The win includes several service offerings delivered by a single point of contact and illustrates the early success of our new commercial operating model that we introduced with Project Matterhorn. Turning to ALM, another noteworthy win this quarter was with a health insurance provider, which selected Iron Mountain as its dedicated asset lifecycle management partner. Due to the unique nature of their business, the customer has constant attrition throughout the course of the year, and consequently, they were seeking a dedicated ALM partner to provide collection, wiping, imaging, secure storage and redeployment of technology assets. The customers previous positive experience with Iron Mountain and our team, combined with our strong solutions led to mutual success. Our services resolve the challenges around collection, ease of use, and reporting and tracking. This illustrates our commercial team strength and ability to cross sell our set of solutions across the mountain range. And is another example of our increased focus and success in driving commercial engagement is part of our Matterhorn Klein. Moreover, we are especially proud to say that we renewed our largest ALM contract this quarter. This is the fourth contract renewal with this client, one of the largest technology companies in the world. We have worked with them for the past 12 years and are proud of this relationship, the continuation of which demonstrates the potential for longevity in this area of our business. We continue to be excited and encouraged by the total addressable market in the asset lifecycle management category. Despite the headwinds we have faced this year as a result of enduring COVID-19 lockdowns in China. In spite of this, our legacy ITAD business continues to perform well and as we gain momentum on our Matterhorn Klein, we continue to focus on moves to accelerate this growth. Finally, turning to our data center business, we are pleased to have finished the year with 139 megawatts of new leases signed exceeding our original booking guidance of 50 megawatts and our most recent target expressed in the third quarter of 130 megawatts. In the fourth quarter, we successfully completed 14 megawatts of leasing. This area of our business has gone from strength to strength over the past several years, and we continue to see tremendous opportunity in serving both hyperscale and colocation customers, and significant growth potential for our data center footprint. With 37% year-on-year bookings growth, excluding our large lease in Virginia 4, 5 we will continue to prioritize data centers with our capital program, more details of which Barry will provide in his remarks. One customer win in our data center business that I would like to share is a six megawatt expansion lease at our Phoenix campus with an existing Global Fortune 100 customer. The customer which has a long-term strategic relationship with Iron Mountain across service lines, and has existing capacity in several of our other locations needed space to expand in Arizona. Our customer was able to leverage our Phoenix data center for their expansion, and we look forward to supporting them in their future growth. Also in the quarter, our team announced a win for our joint venture at the Mumbai-2 data center, which is connected to our Mumbai-1 data center one of the most robust carrier hotels in the country, providing superb connectivity and flexibility for our customers. We partnered with a global content delivery network company to expand their presence in Mumbai. They required a robust network ecosystem backed by reliable power infrastructure, which we were able to provide. Another win to highlight our ability to cross sell across business segments involves our existing relationship with one of the largest German banks. This resulted in a new partnership with our data center team who leveraged their excellent network within the German Financial Network market and demonstrated proficiency and its high regulatory standards, customer buying team structures and the data center competition in Frankfurt. The customers felt confident in our team's expertise in our ability to support a highly regulated environment to meet their needs. This is yet another excellent example of our ability to listen to our customers and find ways to meet their needs. To conclude, I am incredibly proud of our dedicated team, our unmatched customer dedication and relationships and our solutions, which continue to drive our transformation and excellence. The reorganization we completed in 2022 through the initiation of Matterhorn has established a strong foundation, which is already delivering double-digit growth. It is this foundation built by Matterhorn, which will continue to fuel our growth trajectory and to realize our greatest ambitions. Turning toward 2023, this momentum will continue to drive the opportunities ahead with another year double-digit top line growth expected. Barry will speak in detail about our guidance for the year ahead. Our goals are well within sight as we climb on with Project Matterhorn and beyond. With that, I'll turn the call over to Barry.

Operator:

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from George Tong with Goldman Sachs. Please go ahead.

William Meaney:

Yes. No, thanks, George. So first of all, we're very pleased with the continued growth, especially where we just started Matterhorn last year. So if you look at overall in terms of the organic growth through the year and an increase in terms of total revenue growth, as we progress. So we're very pleased. To your specific question on service is one of the biggest factors in terms of when you're looking at the year-over-year comparison, if you recall, a year ago, we had the big fit-out for data center in Frankfurt. So that's the biggest factor in terms of that slight drop or that noticeable drop when you look at the year-over-year, still double-digit growth but that was the biggest factor. I don't know, Barry, if you want to add anything.

Operator:

The next question comes from Kevin McVeigh with Credit Suisse. Please go ahead.

Barry Hytinen:

Thanks for the question, Kevin. I would say ITRenew actually performed consistent with our expectations, and I'll just provide a little more color there. As we've said before, with the lockdowns that we were experiencing or everyone is experiencing in China, we had been seeing ITRenew declining through last year. And in fact, in the fourth quarter, it stabilized was actually slightly up on a sequential basis, which we view as a positive. Now 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. 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. As it relates to the rest of the business that you were pointing out, we had very strong contribution from revenue management, as you would have seen in the supplemental report. In fact, that ramped nicely on a sequential basis. And we feel very well positioned as it relates to revenue management as we move here through 2023 because as I mentioned in the remarks, all of our revenue management actions are essentially already in market. So we feel very, very good about how things are trending. The other thing I'd call out, which was a really nice performance was in our data center business. You saw the growth rate continue to be very strong on the storage side, high 20s and from a standpoint of bookings also ahead of our expectation. So that gives us very strong visibility into 2023 in terms of revenue generation. And I'll tell you the pipeline continues to build. So appreciate the question. Thanks, Kevin.

Andrew Steinerman:

Hey Barry. Just for the sake of precision, could you just indicate what the organic constant currency revenue growth is at the midpoint of your first quarter and 2023 guide. And it definitely seems like you're expecting faster growth for the full year kind of after first quarter or maybe compared to first quarter and just maybe go over that dynamic more unless you feel like you've already addressed that.

Operator:

[Operator Instructions] Our next question comes from Shlomo Rosenbaum with Stifel. Please go ahead.

Barry Hytinen:

Thank you for the question. It was very strong, as you probably noticed. Organic revenue growth on storage was 11%. And overall, it was 11.3%. And so with volume being as we planned just slightly down on a sequential basis, by the way, up better than our projection for the full year. It was a very nice contribution, and we had 8.9% on that metric for the full year. So it shows you the ramp that we've been seeing through the year. In terms of -- for 2023, we continue to expect revenue management to be a very nice contributor and be thinking probably in at least the mid-single digit range for the whole year, if not a little bit higher in light of what we've got in market. And we feel quite good about where things are. And I guess I'll also add that from a volume perspective, since it goes a little bit to the question you were asking, from a volume perspective, we are continuing to see good trends there, and we would expect for the full year 2023 very similar projection to what we did last year. So something like consistent to slightly up. Thank you for the question.

Operator:

Good morning and welcome to the Iron Mountain third quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. We will limit analysts to one question, and you can re-join the queue. Please note this event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

Bill Meany:

Thank you Gillian, and we appreciate everyone taking the time to join us for our third quarter results. We are pleased to share with you another outstanding quarter, representing the durability and growth of our business model as we continue to navigate successfully through significant headwinds, including the strength of the U.S. dollar, COVID shutdowns in China, and ongoing global tensions. Our team of 25,000 dedicated Mountaineers continues to empower our customers with solutions to enable them to transform their businesses. In the third quarter on a reported basis, we delivered revenue of $1.29 billion, representing 14% total organic revenue growth. We are pleased to have achieved all time record adjusted EBITDA of $469 million. Since last year, the U.S. dollar has strengthened significantly, and excluding its impact on a like-for-like basis, this quarter our revenue was approximately $1.33 billion and EBITDA was $484 million, representing growth of 18% and 16% respectively. These results demonstrate the inherent growth and strength of our business and are further proof of why we continue to be so encouraged by the increased demand for our services across the markets in which we operate. Positive volume and revenue management trends continued to benefit us this quarter, as reflected in our organic storage rental revenue growth of 9.7%. As we shared with you in September at our investor event, we are executing well on our new Project Matterhorn operating model, the next transformational phase of Iron Mountain’s growth journey. Building off an already solid foundation, we believe Matterhorn is a cornerstone initiative that will allow us to maintain and capitalize on the positive momentum we have seen over the last several quarters. Through our fully funded plan’s ability to invest 16% of revenue over the next four years, we believe we will further strengthen Iron Mountain as a market leader across our expanded total addressable market, our diversified global footprint, and our enhanced suite of innovative solutions. Our strong double-digit organic growth is evidence of the early progress we are making on our initiatives, which gives us the momentum and confidence in our ability to deliver higher levels of profitable growth over the next several years. Now I’d like to share a few highlights of some recent customer wins while lie beneath the top and bottom line growth. Turning to our digital solutions business, we helped a global European bank evolve to a paperless branch experience to drive enhanced customer service with 360-degree customer data, traceable and audible digital records, and reduced manual efforts for their tellers. The customer has a footprint of more than 400 branches in the U.S. with each branch storing decades’ worth of customer records on premises. We are partnering with the bank to digitize all customer records across their U.S. branches in under a year. The files will be securing transferred and imaged at Iron Mountain digital supercenters indexing and tagged with critical metadata using machine learning and then placed into Insight, Iron Mountain’s digital repository. Insight will be provided to over 3,500 tellers across the bank to access these digitized customer records quickly and securely. This win is just one example of how we are helping our customers evolve their businesses through digitization, resulting in quicker, easier and more secure access to their most important information for years to come. Also in digital solutions, we won a contract with a state court in Brazil from an incumbent provider. To comply with the Brazilian National Council of Justice’s 100% Digital initiative, all state courts are required to convert active lawsuit documents from physical to digital by 2023. As such, they turned to Iron Mountain for help to implement and complete the conversion process within the mandated time frame whilst adhering to specific quality requirements. Whilst this is in and of itself a terrific win, we are currently exploring further opportunities with this customer. Moving to our asset life cycle management segment, I’d like to share an innovative win this quarter. Our strong existing relationships and coordinated efforts led to a large asset life cycle management win to serve 700 locations in the United States and Canada for a large healthcare company. Prior to the deal, the customer had primarily engaged with us through our records business. The first phase of the partnership included retrieval of IT equipment and plans for a forthcoming data center refresh. We expect to process more than 13,000 assets in the first year. Moving onto the impact of COVID shutdowns in China on the ITRenew business, we see continued constraints in the downstream demand for recycled IT components. As a result, we expect to see similar levels of ITRenew sell-through in Q4 as in Q3. With the continued increase of the backlog of components, we remain bullish on the prospects for the business once the situation normalizes. In our fine arts business, we are pleased to highlight a win with an internationally renowned art museum. The customer turned to our team to assist them with multiple onsite projects related to renovations the museum will undergo throughout a three-year period. Lacking the internal resources to staff these projects, they were seeking a trusted partner to support them providing additional art handling services. By leveraging our experience and successful track record of prior engagements with the customer, we were able to offer a compelling proposal that secured this very exciting initiative. In the quarter, this business grew by 17% year-over-year, which is a reflection of the strong underlying business. Shifting to the data center business, we are pleased to have booked 7 megawatts of leasing in this quarter, bringing total bookings year-to-date to 125 megawatts. As a result, we expect to exceed our previous projection of 130 megawatts for new leases for the year. One of the wins this quarter included a cross-sell deal with a large non-profit community health provider that needed to close down their internal data center and establish a disaster recovery site. As a long-term taped backup and records management customer of Iron Mountain, they reached out to their account team, who engaged with our data center team. As a result, the customer signed a co-location contract which included internet services and multiple cross-connects within 45 days. The convenience of having a single provider for all their physical and digital storage needs was a critical selling point in addition to Iron Mountain’s rigorous data center compliance program, which is essential for the customer given the highly regulated market in which they operate. Our team’s flexibility and willingness to collaborate across divisions to customize solutions for our customer provides a superior experience and ultimately is what made us stand out as their partner of choice. From a development perspective, as discussed in September at our investor event, we have continued to build our land bank in key strategic markets to support future growth with several notable expansion deals. As previously announced, we have added buildable capacity in the Phoenix, Arizona market with the purchase of adjacent land to our existing campus. Based on current design plans, the parcel can support 36 megawatts and includes a 56 MVA substation on site. This is an important expansion in this dynamic market as our current campus at 89 megawatts is nearly fully leased and/or committed. We also expanded our footprint in India with the securing of land and power for 20 megawatts of additional capacity in Mumbai. We remain excited about the growth potential in this strategic emerging market both for our data center business, as well for the enterprise as a whole. In total, we currently have 52 megawatts of buildable capacity across five markets in India. Subsequent to the end of the third quarter, we acquired a data center campus in Madrid, Spain, marking our entry into the Iberian market. The asset is a uniquely scaled data center campus with an existing 3 megawatt building and fully permitted expansion potential of 79 megawatts. We view Madrid as a very important European market as it is poised to capture significant growth from supply-constrained markets. With these additions to our portfolio, our total capacity is now nearly 670 megawatts. The wins I’ve shared with you today demonstrate the breadth and depth of our business, our focus on customer centricity and providing innovative, transformation solutions, and the strength of our global commercial platform driven by our Matterhorn initiative. I am very proud of our outstanding team who are the bedrock of our company and the way in which we come together to drive and deliver our growth journey. Our business model is highly profitable, our pipeline is strong, our vision is clear, and we continue to climb on. With that, I’ll turn the call over to Barry.

Operator:

[Operator instructions] Our first question comes from Shlomo Rosenbaum with Stifel. Please go ahead.

Barry Hytinen:

Okay, thanks Shlomo - this is Barry. Appreciate the question. We did put in place those revenue management actions we talked about on the last call, so those went into effect in September and you see that beginning in the quarter to take hold in the results. As you would have noted, the implied growth from revenue management, it accelerated in the quarter and that’s been ramping through the year, so think on our global RIM business, it was probably in the 6.5 range - that’s up from about 5 earlier in the year and making steady progress. I would expect in light of the macro environment and the reception that we’ve been seeing with respect to revenue management activities, that that would--we would continue naturally to be at this level as we move into 2023, so we are preparing similar revenue management actions going forward and the reception has been consistent with what we’ve seen over many years. I think it demonstrates the value that we’re driving for our customers. Thanks for the question.

Kevin McVeigh:

Great, thanks so much. Barry, can you just--I just want to make sure I have the numbers on ITRenew. How much is in the full year guidance versus where you initially guided, and was the offset the data center deal or--because obviously you’re maintaining despite, it sounds like, a little bit of run-off in IT and FX. Where’s the offset on the guidance?

Operator:

Our next question comes from George Tong with Goldman Sachs. Please go ahead.

Bill Meany:

Thanks George for the question. We feel really good, as you would have noted, that over the last number of quarters, we’ve been consistently showing north of 20% growth both on our IT disposal business - you know, the traditional part or the organic portion of our asset life cycle management business has consistently been 20% or better, and our digital service business continues to go from strength to strength again, north of 20%. Those are really two of the key drivers driving that overall level of service growth. If anything, we see in both of those areas, the interest in customers, whether it’s helping them at the end-of-life in some of their assets, make sure that it is destroyed in a way that’s secure, or in the digital service business, we see more and more customer interest and actually customer contracting on us helping them with their digital transformation. I think the current environment, we see more rather than less of both of those things, so we feel really good about being able to maintain that kind of level of growth, which is all part of the Matterhorn project that we outlined at our investor event a few weeks ago, that when you put it all together, it drives what we see over the next coming years - you know, consistent growth rates that turn into a CAGR of 10% or better.

Eric Luebchow:

Hi, thanks for taking the questions. Two, if I could, and probably both for Barry. Just wanted to return to your investor day from September. Maybe you could give us a little color - the $450 million of cash costs you expect to incur over three years as part of Matterhorn, a little more insight into what those costs are, where they’ll be spent to help drive some of the growth rates you laid out longer term. Then secondly, just as you think about capital allocation, if you could talk about you funding plans to achieve the longer term capex guide. I know your long-term debt yields are above 7% today, and obviously the forward curve on short term rates continues to march higher, so just wondering how you’re thinking about managing fixed to floating mix as you fund your elevated data center capex pipeline. Thank you.

Operator:

Our next question comes from Wendy Ma with Evercore. Please go ahead.

Bill Meany:

Good morning Wendy, thanks for the question. We remain really excited and very bullish about our data center businesses. As we said, if you look at--you know, we’ll exceed the 130 megawatts that we had laid out or forecasted on our last call, so we continue to build past that and we see similar momentum as we go into next year, so we don’t see any change in terms of our pipeline that turns into leasing activity as we start approaching 2023. We continue--there’s always a little bit of lumpiness because these are fairly large contracts when you look at quarter to quarter, but we see continued strength and momentum as we go into next year. I think we are also in key markets - that’s why we’ve expanded in Phoenix, where I mentioned that we’re pretty much fully leased or committed on our current campus in Phoenix, and we’ve expanded there. As Barry mentioned, whilst there is 3 megawatts that comes with the north of 70 megawatts of capacity that we’ve purchased in the Iberian Peninsula, specifically in Madrid, is that comes with a pipeline of activity because we’ve been clearly speaking to our customers and anticipating that move. We continue to see that we’re going from strength to strength in that business and building really strong momentum as we go into 2023.

Andrew Steinerman :

Hi. Barry, when talking about the fourth quarter revenue guide of $1.3 billion, could you tell us how that shakes out in terms of organic constant currency revenue growth, and if you could make a comment between storage and service?

Operator:

Again, if you’d like to ask a question, please press star then one. Our next question comes from Brendan Lynch with Barclays. Please go ahead.

Barry Hytinen:

Okay, maybe I’ll take the first part of that, and if Bill wants to add, he can. Thank you Brendan for the question, and appreciate those points that you’re asking about. I think our team has done quite an effective job with respect to hedging and getting us into a place where we’re in a very good position as we work into 2023 as it relates to power. To give you a sense, Brendan, obviously this is a little bit based on forecast of next year, but we estimate that we were in excess of 95% locked in terms of pricing at this point for power; in fact, it’s probably closer to 99%. I would say the other important point is when you look at our customer base, we have the ability to directly pass power pricing onto roughly 90% of the customers, and that’s either through pass-through or surcharge, for example to retail customers, and in many cases that’s month to month as we’ve highlighted before. For those that we don’t have that direct ability, of course we have the ability to adjust pricing on renewals, and that’s principally in the retail portion of our business. As you know, those are relatively shorter contracts, so we have the ability to price quite frequently or consistently with power, so it’s not a huge headwind. I think the fact that the team has continued to drive gross margins to being consistent, in fact in the most recent quarter up several hundred basis points in our data center business, is a very good testament to the fact that we’re managing the impact of power, which as you know is a margin drag as its increasing, so we feel very good about where we are going into next year as it relates to power. As it relates to pricing more broadly, the thing I would point you to is if you look at our mark-to-market, it has continued to improve throughout the year, and as you know, that’s a lagging indicator in light of when the contracts for renewals were signed, so we continue to see a very healthy environment for pricing within data center, at least within the markets that we operate in there, generally speaking. I would say there’s more demand than supply. We feel very well positioned as it relates to the assets we have and our ability to continue to price. I’ll also note, of course, that construction costs are up and so when you look across the platform of our data center business, we feel very good about how the team is performing.

Operator:

This concludes our question and answer session and our Iron Mountain third quarter 2022 earnings conference call. Thank you for attending today’s presentation. You may now disconnect.

Operator:

Good morning, and welcome to the Iron Mountain Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

Bill Meaney:

Thank you, Gillian, and thank you all for joining us today to discuss our second quarter results. Our team delivered another quarter of record results, further demonstrating our resilience in pricing power as the world navigates difficult market conditions and global instability. Our dedicated team continues to develop new and innovative solutions for the ever-evolving needs of our customers. Our durable business model and strong customer relationships consistently drive value for our customers and ultimately, our shareholders. Our record second quarter results delivered our highest ever quarterly revenue of $1.29 billion, representing 13% total organic revenue growth and an all-time record for EBITDA of $455 million, in spite of significant FX headwinds. These results are further proof of why we continue to be so encouraged by the increased demand for our services across key markets. Pricing and positive volume trends continue to benefit us in this quarter as we reflected in our organic storage rental revenue growth of 8.2%. As we have been sharing with you over the past few quarters, we have been growing quickly, even faster than our own expectations. A major driver for this growth is a direct benefit from our continued innovation, which has increased the size of the total addressable market for our products and services by 12 times to $120 billion, most of which is in faster-growing sectors. Accordingly, we are forecasting revenue growth to continue to accelerate in the back half of the year, driven by strong revenue management in our Global RIM business unit, growth in our data center business, digital information management solutions and improving trends in downstream demand for our hyperscale asset life cycle management or ALM business, which we acquired through the acquisition of ITRenew in January of this year. I now would like to take this opportunity to share a few highlights of our customer wins. To begin with, our records management business, we have had a long-standing relationship with a major global accounting organization for more than 20 years. They were in the midst of reviewing their records management program when they learned of our Smart Sort solution. We calculated that Smart Sort could help them classify and destroy co-mingled records that have various retention schedules and a much faster and more cost-efficient way than if they were to do so in-house. This led to a proof-of-concept to demonstrate the power of our tools and techniques, which resulted in a deal that closed month sooner and expanded the records management program we performed for them across not only the outsourced records but their in-house records as well. Moreover, this win has already led to other exciting conversations with the customer about digital transformation opportunities. The deal has also opened more opportunities with the customer in Europe and the Asia Pacific region. On the digital solutions side, we recently won a contract with a large insurance and financial services company in the United States. They had previously only used us for shredding services, aligned with the acceleration of the digitization initiatives, they needed solutions to help them create greater business efficiencies whilst maintaining data security for the sensitive information their company handles every day. We provided a cloud-based solution to further support their work from anywhere initiatives by delivering information to their associates wherever they are in a secure and easy-to-access manner. Our team listened to the customers’ needs and tailored a near-site Digital Mailroom solution to effectively meet their needs by leveraging an Iron Mountain owned and operated record center located near the customers’ headquarters. As a result, we will digitize and distribute 10 million pieces of mail annually. As part of the special handling process, we will also leverage our InSight solution for checks and other items deemed to be sensitive. Over time, we expect to leverage the full suite of InSight solutions to process all of their mail, leveraging workflow automation through the use of our embedded artificial intelligence and machine learning capabilities. This innovative solution will dramatically improve mail processing times through automated routing as well as classification and governance. These wins demonstrate the merits of strong customer loyalty, coupled with our solution-oriented approach in serving our customers. We are sharply focused on understanding their job to be done in delivering solutions, which are both innovative and impactful. Now to switch gears, I’d like to share a recent data restoration and migration win that led to an ALM win, thanks to a deep and trusted relationship with one of our customers, a large Australian bank. They have been growing through acquisition and as part of their integration plans have been decommissioning their data centers to move to a large cloud provider. To help enable this transition, we recognize that they would benefit from better access to their data on tapes, leading to one of our biggest data restoration and migration services contracts. This is in and of itself a great win, but it led us to an even larger opportunity to assist this long-standing customer. Based on our strong partnership, we were able to help the customer manage their decommissioned data center assets by offering an introduction to our ALM services. This win is an important entry point and shows our ability to help our customers solve multiple business challenges. It also reinforces the cross-sell opportunity in ALM. In our ALM segment, in addition to the Australian bank, this quarter, we closed a deal with another large global bank, whereby Iron Mountain will provide on-site media destruction and data center equipment recycling to 42 data centers, campus locations and branch offices. The program will also expand to corporate and user assets in multiple global locations. This customer contacted Iron Mountain in January of 2022 to inquire about our secure IT asset disposition services due to poor performance from their incumbent vendor. Our team engaged with the bank’s key stakeholders to discuss their service requirements, data security policy and pain points in order to best position our solution. Our best-in-class logistics, asset processing capabilities, data security practices, transparent reporting, and strong client relationships were critical to securing the win. Moreover, our acquisition earlier this year of ITRenew and the resulting ability to in-source all asset processing capabilities in the U.S. convince this customer that we have the strongest capability set to service them. We are also pleased to report another ALM win with a large cloud customer wherein we were awarded part of a $60 million global RFP. The customer currently uses a multi-vendor approach with a vendor assigned per region. ITRenew was the largest provider to them in North America for value recovery and on-site drive destruction. Now that Iron Mountain has completed the acquisition, the customer has additionally awarded us their Irish business, along with expansion of the North American business to include shredding and recycling hard disk drives. We won this business in part due to our track record of achieving the highest value for the resale of decommissioned components, our global footprint and our excellence in asset tracking. We are very encouraged by the continued growth of IT assets contracted to us for disposal as well as the wins with new and existing clients. However, like all global businesses exposed to computing equipment, the latest COVID-19 shutdowns in China have had a negative short-term impact. This impact has been most particularly pronounced in May and June. There is a higher-than-normal backlog of material, which we hold on consignment that cannot be sold until we can deliver it to the manufacturers in China who are using the recycled components in their goods. Whilst China’s zero-COVID policy makes it hard to predict when manufacturing rhythms will return to normal, we do expect to see an acceleration of our sell-through once the situation does indeed normalize. In summary, the continued growth we have seen in the upstream supply of IT equipment needing to be securely and safely recycled further increases our excitement about this sector once downstream demand for recycled IT components reverts back to its usual levels. Finally, our data center business has been extremely active this quarter, and we successfully completed 83 megawatts of leasing. This included a 72-megawatt lease for two buildings on our Northern Virginia campus. Both of these facilities are effectively stabilized as we have pre-leased 100% of the capacity to a Fortune 100 company. Today, we are happy to announce a joint venture for these assets with a subsidiary of Hana Financial, a global real estate firm. Full build-out of these two sites is expected in the third quarter of 2025, and Iron Mountain will be responsible for managing the design and development of the data center shell as well as administrating the leases. Also in this quarter, we signed a hyperscale tenant on our Phoenix, Arizona campus. With this new lease, the customer has existing capacity in three of our locations. This win increases their geographic presence with us as well as introducing the client to the Phoenix market for the first time. We’ve also been active on colocation this quarter in our data center business. We had a new customer win with one of the largest managed service providers, which has existing data centers in North America and Europe, and we’re looking to gain entry into strategic emerging markets such as India. To that end, we were able to accommodate this customer through our Web Werks, JV, in Mumbai for data center capacity. When we originally entered India through this JV, we operated in three markets. We have spent much of the last year focused on securing land to expand our footprint in our existing markets as well as two additional new markets now. We believe as we work through planning and permissioning on these parcels, we will have over 100 megawatts of sellable capacity in the Indian market over the next couple of years. Having personally visited India already twice this year. I and we remain very excited about – about the opportunities we are seeing in this exciting market, both for data center as well as our business more broadly. These wins show how our focus towards building an extraordinary set of synergistic and customer-centric solutions, combined with our global reach and footprint both differentiates and propels our growth forward. As we have discussed before, we are focused on driving commercial activity, including cross-selling our solutions to our customers, and this quarter, nearly all of our data center bookings were signed with existing customers of Iron Mountain. To conclude, I am incredibly proud our team has continued to build on our growth momentum, expand our portfolio and not only meet but exceed our customers’ evolving needs. This is evidenced by our outstanding and record results this morning, including our highest ever revenue and all-time record EBITDA as well as the highest rate of organic revenue growth in the last 25 years. We expect to continue to build on these results as we further the growth of our business based upon a strong global footprint, a powerful portfolio of products and services and our deep customer relationships. We have a very exciting future, and I can’t wait to see all we continue to accomplish together. With that, I’ll turn the call over to Barry.

Operator:

Thank you. [Operator instructions]. And the first question will be from George Tong from Goldman Sachs. Please go ahead.

Barry Hytinen:

Hi, George, it’s Barry. Thanks for the question. The team is doing very, very well with respect to revenue management. You would have seen that our organic storage rental revenue growth on an organic basis was up over 8% in the quarter. That marked a nice acceleration even from the higher levels in the first quarter. And in our Global RIM business that was over 6% on that metric. So volume, as you would have seen on an organic basis – in total is up about 2%, but on an organic basis is very consistent with our expectations of being just slightly up, so about 50 basis points. So what you’re seeing is a very strong contribution from revenue management coming through. And I’ll just add on to the second part of your question and note that we are continuing to see incremental opportunities for pricing. And in fact, we will be seeing us move forward with additional pricing actions later in the third quarter that will fully benefit us as we move through the year and then give us a little bit of an incremental lift next year. So those are just in light of what’s going on in the economic activity and the fact that our existing revenue management program has been so well received, we see the opportunity to continue to move higher. So you will see that going forward. Thanks for the question.

Shlomo Rosenbaum:

Hi. Good morning. Thank you for taking my question. Barry, can you talk a little bit more just about the ITRenew revenue contribution to the quarter you noted it was light. Can you give us the exact amount? It seems – at least my calculation is somewhere around $65 million. And then maybe Bill, you can talk a little bit as you talk about ITRenew in terms of what were you expecting in the quarter initially in when you had earnings in the first quarter? And how is that different? And how do you expect that to play out over the course of this year? In other words, what’s your target for ITRenew, given what we’re seeing from China, are you expecting to catch up? Or are you expecting some of this to kind of flow into 2023?

Barry Hytinen:

Yes, sure. Thanks, Shlomo, for the question. You – a couple of things you asked. On the actual contribution, you’ve calculated it correct; it was about $65 million. So that was just a touch up from the first quarter. And as we – as Bill referenced, as we said in early June in light of what we were seeing in the second half of May as well as the continued to see in June in light of the COVID shutdowns that Bill referenced. We certainly, that was below our expectations. That said, in terms of going forward, two things. One is we are planning and in the guidance that I gave you for the third quarter and the target for the full year. We have just assumed that our ITRenew contribution would be consistent going forward at that level or even maybe even a touch below that. And I think that’s a conservative way to position it because as Bill mentioned, we and so many other technology-oriented companies don’t know when China will reopen. But I think once it does, to his point, we have a very strong committed backlog and we have a good amount of consigned inventory that can sell through. I just didn’t want to plan for it to get better. So I view that as – that’s why I described that as I think, conservative because as it opens up, we will be selling through. So we feel very good about the committed backlog and the level of activity we’re seeing from our upstream clients. And as that market reopens, I think we will see a very good sell-through. Thank you.

Sheila McGrath:

Yes. Good morning. Service revenue growth was up meaningfully. I was wondering if you could help us drill down on that. What were the major drivers of the growth? Is it new businesses or a rebound of some business that had slowed down with COVID?

Barry Hytinen:

Sheila, its Barry. The only thing I would add on to that is specifically to build on Bill’s point around digital solutions; we grew high teens in the quarter, which was the best comp we’ve had on that specific line in several quarters. And in fact, it’s against our hardest comp last year. So it really speaks to the fact that our digital business is taking hold and going from strength-to-strength. I’ll note that we had a very strong contribution from our legacy ITAD business as well. That’s in the asset life cycle management business, as you know and that business is growing at the very rates and we see considerable incremental opportunity for that to grow, in fact, just to be clear, it’s accelerating in terms of its level of growth, so we feel great about that business. And then it’s notable to say that our pricing continues to be up across the business that includes services. So thanks for the question, Sheila.

Brendan Lynch:

Hi. Good morning. Thanks for taking the question. I wanted to just touch on Hana Financial and the JV for some of your assets. Obviously, you’ve been trying to grow data center revenue for past couple of years. So it was a little bit surprising to see a joint venture structure. Maybe you could just comment on what your considerations were there?

Barry Hytinen:

Yes. Hi, Brendan, thanks for joining the call. In terms of the JV, just to be clear, we’ll operate it will, of course, be respond for the construction, the management et cetera. We saw it as an opportunity to leverage third party capital, which allows us to essentially use someone else’s balance sheet and then use ours to go further our development pipeline. As you know, we’ve got a lot of capacity to continue to build out. And as Bill mentioned, this is effectively a fully stabilized asset before we even break ground. And in light of the still very significant investor interest in data center assets, we saw it as a compelling incremental opportunity to even further improve the return that much more as the pre-lease is very attractive to the capital markets. So we’ll maintain a 55% interest in it. We have traditional benefits from the joint venture structure that you’d appreciate as a data center analyst, and I’ll just note that we were able to sell that at a sub four and a half cap. And again, it’s fully stabilized. So we view it as a compelling capital allocation opportunity. Thanks for the question.

Eric Luebchow:

Hi. Great. Thank you. I’ll stick with the data center topic. So kind of interested in how your sales funnel looks after such a strong start to the year, particularly with hyperscale but also on enterprise? And then – on the pricing side, it seems like data center pricing has been lifting even for the larger hyperscale deals. So I’m wondering where you’re seeing pricing today, particularly as supply appears to be getting tighter and tighter in a lot of markets. And then Bill, interested on – in terms of like where – which markets you might need additional land capacity or are there opportunities to do some select tuck-in M&A for no select assets to maybe get some capacity in new markets? Thank you.

Barry Hytinen:

Eric, just to add on, this is Barry. I would say as it relates to pricing, it’s been quite good, and we see that continuing to lift across our data center portfolio. You would see that in our mark-to-market has been improving. And continuing to run a little bit ahead of our expectations, and that’s a little bit of a lagging indicator. So you’ll see more lift there. You’ve seen our new and expansion leases signing at higher levels on a per kilowatt basis, both in the quarter and versus last year, and our renewed leases are coming in better. So that, together with the fact that, churn is running kind of at or below expectations, we feel very good about what the team is doing in our data center business. Thanks.

Sheila McGrath:

Yes. It looks like you may have done some sale leaseback in the quarter, I thought let fewer buildings. Just wondering how much proceeds did you raise and if pricing has changed dramatically in the light of interest rates?

Operator:

Thank you. And ladies and gentlemen, this concludes our question-and-answer session and the Iron Mountain second quarter 2022 earnings conference call. We thank you for attending today’s presentation and you may now disconnect. Take care.

Operator:

Good morning, and welcome to the Iron Mountain First Quarter 2022 Earnings. Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Sir, Tilman, please go ahead.

William Meaney:

Thank you, Gillian, and thank you all for taking time to join us today. Our team delivered exceptional results for the first quarter of 2022, exceeding the expectations we provided on our last call. This record performance is reflective of our broad offerings, deep customer relationships, resilient business model, and dedicated team. Whilst we are thrilled to report these results, its important to take a moment to acknowledge the events happening in Ukraine and impacting the world at large. As we navigate this devastating conflict, we continue to prioritize our Mountaineers and their families. To that end, I am comforted to share that all 65 of our colleagues from Ukraine continue to check in with our global risk, safety and security team on a daily basis and all are safe. Some families have made the difficult decision to migrate to other countries. And I am proud of how our fellow Mountaineers in the region have offered assistance in providing comfort and resettlement. I continue to be both inspired by and grateful to all the teams in Ukraine and the surrounding countries who have united to support each other in this crisis. I visited the region twice recently and I remain humbled by the strength of our colleagues. And we remain committed to supporting our effective Mountaineers and continue to hope and pray for a rapid resolution of this war. Now if I may, let me begin our discussion of our first quarter results, a record for the company. We achieved our highest ever quarterly revenue of $1.25 billion, exceeding our expectations of $1.2 billion, yielding 10% or total organic revenue growth and an all-time record EBITDA of $431 million. We continue to be encouraged by the increased demand of our services across key markets fueling these results. As pricing and positive volume trends continue to benefit us, we delivered organic storage rental revenue growth of 6.8% in the first quarter. We drove double-digit growth in digital offerings, including data center, GDS, digital transformation services, and ALM or asset lifecycle management. As you know, we've been growing quickly and over the past two years, we have been growing faster than even our expectations. I have shared with you previously, how our continued build out of new products and services, as well as growth in these underlying markets has now taken our total addressable market to over $120 billion, accelerating us on our growth trajectory path. Turning to our ALM business, we achieved several solid wins that spanned industries, many of which were made possible through the strong combination of Iron Mountain, and the recently acquired ITRenew, which has been performing even better than we had anticipated. An example of the power of this combination can be seen in our expansion on a customer win with a large financial institution that we were originally awarded in early 2021. With the additional expertise we acquired with ITRenew, we expanded our offerings to include market leading recycling expertise, as the whole world is focused on how to better embrace the concept around a more circular economy and reduce our impact on the environment. Along with this added expertise, we now have a full set of capabilities which are truly differentiating in the eyes of not only this customer, but also most of our global customers. Another ALM win this quarter was for a task order for Iron Mountain to provide on-site media destruction and ALM services to 18 US locations, including data centers and office locations, in which all IT asset types will be included has in scope. Several key factors in awarding us the RFP included secure logistics, global footprint, partner network and existing trusted relationships. For this customer, we expect to expand services to multiple regions, including the United Kingdom, Brazil, India, and Canada. These are just some of the wins this quarter, which demonstrate the strength of our expanded ALM platform, which will directly benefit from IRMs 225,000 loyal customer base, which includes 95% of the Fortune 1000. Our continued drive in building an extraordinary set of synergistic and customer centric solutions, combined with our global reach and footprint propels our growth forward. Now let me share a few examples of how we've been empowering our customer’s success and growth through our diverse digital transformation solutions or GDS offerings, coupled with our customer focus. In the first quarter, we received fully executed service orders for two large deals in the energy vertical for one of the world's largest oil and gas companies. Both projects will allow our customer to identify and access dark data to provide quicker decisions and to better manage their assets. The total value of these two deals represents more than $12 million. We are looking forward to replicating this success with other energy customers. Turning to the Asia Pacific region, I would like to highlight a large win with an Asian full service universal bank that I had the honor to visit in March. Iron Mountain will provide digitization service - services to assist our customer’s local compliance requirements of digital [ph] which are anti-money laundering related requirements for a total contract value of $4 million. We are also thrilled to report a customer win that has resulted in a five year $8 million Digital Mailroom deal leveraging our content services platform or InSight. This Fortune 500 Mutual Insurance customer after handling their own mail in house for more than 100 years came to us with this opportunity which was both complex and emotional for the customer. Our success here is a direct result of our long standing strategic partnership. We also continue to grow our business with Immigration, Refugees and Citizenship Canada or IRCC, which facilitates the arrival of immigrants, provides protection to refugees and offers programming to help newcomers settle in Canada. In 2020, Iron Mountain began supporting IRCC with imaging a variety of application forms. There was an immediate need to process a backlog of applications with your staff working from home as a result of the pandemic. Today, we have processed approximately 115,000 applications, representing over 14.7 million images. Building from this initial work in Toronto, we grew the project by securing an additional contract worth $2.9 million. In addition, we recently awarded a 1.3 million RFP to expand this image initiative to Atlantic and Western Canada. This would not have been possible without our work in supporting this customer from day one, positioning Iron Mountain as a critical business partner. In our Crozier business, we are pleased to highlight our installation of a piece of art entitled just what is your position by a distinguished LA artist at the new terminal at LAX. This installation highlights our team's expertise and precision with regard to complicated installation that will now be on display for millions of travelers. Last, but surely not least, turning to our data center business. You will recall that we initially expected to lease 50 megawatts this year. By the end of Q1 however, we had already signed a total of 35 megawatts, including a single tenant of 27 megawatts for our London-2 location. We are excited about the continued demand we see across Europe, as we bring on added capacity to the market in the coming months. Since March, we have sold an additional 72 megawatt lease on our Northern Virginia campus. This is a near build-to-suit type of agreement where we are responsible for leasing on a long term basis the land, the shell and a large portion of the installed MEP or mechanical electrical plant. Iron Mountain's data center solution met the security, scalability and interconnection requirements of the customer in this critical global data center market. The lease is expected to commence and begin ramping mid-year 2024 and it – and has a term of 15 years. Finally, I would like to share with you a joint ESG and data center win. As we have said before, ESG continues to be an important focus for us, shone through many years of producing annual corporate sustainability reports outlining our commitments and progress for nearly a decade. We recently announced a design certification of our Phoenix Arizona AZP-2 data center, the first data center in North America to receive BREEAM certification. We are taking the lead on demonstrating the steps facility owners can take to ensure that their data centers are both efficient and resilient. Design for the facility has been certified under BREEAMs new construction standard, a global recognized green building certification for new developments and achieved the BREEAM excellent rating. This continued focus on building standards, together with already having long term renewable power purchasing agreements which offset at more than 100% of our data center energy requirements places us firmly on the path to reach our 2040 commitments to use 100% renewable energy, 100% of the time. To conclude, we continue to build on our growth momentum and expand our portfolio to exceed our customers evolving needs, as evidenced by our outstanding results this morning, including our highest ever revenue and all-time record EBITDA. With our strong footprint, powerful portfolio and deep customer relationships, we are confident that we will continue this momentum. The future is bright, and I can't wait to see how we can accomplish. With that. I'll turn the call over to Barry.

Operator:

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question we have on the phone lines comes from Sheila McGrath of Evercore ISI. So please go ahead. I have opened your line.

William Meaney:

Good morning, Sheila. Thank you for the question. So, I think the first is that we feel really good about the platform, not only the $120 billion total addressable market that we have, but the platform that we have in each of the poor - parts of the portfolio that attack that, if you will, or address that. So we don't see a need to do any, you know, large M&A type deals, like the ITRenew, because I think we now have market leading platforms pretty much in each of those - those areas that we're addressing. So we don't really see that. And we still think that we have a long ways to run in our share price.

Operator:

Thank you. The next question comes from Kevin McVeigh from Credit Suisse. Your line is open.

Barry Hytinen:

Thanks, Kevin.

Barry Hytinen:

We appreciate the comments. And we feel really - we feel really good about how things have been trending. If you look at our Global RIM storage rental revenue growth of 4.6% organic, the vast majority of that is prices, as you can see our organic volume is right in line with what we've been expecting. And so you know, it's been very good performance on pricing. And importantly, we continue to see more opportunity for pricing and, and that's the - on that expectation, I would advise you to think about pricing continue to be at this level or better for the remainder of the year. The other thing that really helped the total company's storage growth is our data center. You would note that our data center storage revenue was up considerably in the quarter. And they are two in light of both the team's phenomenal performance in terms of historic leasing, as well as recent deals and commencement. We expect to see considerable growth on that data center storage line, the entire year, as we were talking about last quarter. So we feel very well positioned, Kevin and appreciate the question.

Barry Hytinen:

Yeah, Kevin, I will tell you that - thanks for the question on the CapEx. I'll draw people's attention to the fact that we did increase the CapEx guidance by about $100 million versus our prior expectation. That reflects the fact that our data center development CapEx is up about $100 million. So I'm currently planning for $625 million or so of data center development CapEx for the full year. And that's reflecting the fact that the new leases that we've signed, together with continuing to be opportunistic about building the platform, you know, as you've seen, we've had phenomenal new leasing. And so it's sort of a great situation to be able to continue to invest in that business where we're seeing very nice returns. When you think about the model, I would say that you should be seeing a very considerable amount of free cash flow before discretionary in - when you work through our CAD, and we feel very good about how the - how the business is performing.

Barry Hytinen:

That's correct, Kevin.

Operator:

Thank you. We now have the next question from Shlomo Rosenbaum from Stifel. Please go ahead when you're ready.

William Meaney:

No, thanks. Thanks, Shlomo. Good morning. So at least I know that you're on. No. And well, first of all, the - in terms of physical volume, we said it's flat to slightly up to the year. But that's looking at our - across our portfolio of everything that we put in our warehouses around the globe, right. So in terms of managing the organic utilization of our facilities based on organic visible volume growth, we still expect that to be flat to slightly up and you know, in this quarter it was up as you see. So looking within records management, we always kind of consider that to be more flat to slightly down. And if you look at the trend, even between Q4 and Q1, and as you watch the business for a long time, you know that both Q4 and Q1, usually have a little bit of noise. And then because people tend to do their destruction programs, either at the end of the year, and some of that goes into the beginning of the year. So you'll always see a little bit noise. But I think if you look at the last say, you know, four quarters, you'll see a very consistent trend on what's happening to our physical volume around the records management. So, we feel really good where it's at. You know, it's kind of staying in that kind of flat to slightly down records management. Our other areas, in terms of physical volume storage is growing quite nicely. So overall, you know, we'd still remain kind of flat to up for the year in physical volume. And then of course, pricing takes that up.

Operator:

Thank you. We now have a question from Andrew Steinerman of JPMorgan. Please go ahead when you're ready.

Barry Hytinen:

Thanks, Andrew. You are thinking about that correctly. A couple things to think about. As we move through the year, we have improved mix coming through the business. We do naturally have, as you traditionally have seen in our business, since you followed us for so long, a level of upfront, first kind of quarter costs which ease, we have a level of improved mix going forward. We get more price as we move through the year. We also see very good flow through coming on the data center business. As I mentioned earlier, last quarter, we expect the data center margin to be slightly up year-on-year, and we see good flow through coming through in the back half there as well. And then, generally speaking, we will continue to comp with positive benefit from Project Summit and other ongoing productivity initiatives. So, you know, I would say first off, I should remind folks that in the first quarter, we did better on a margin basis than we anticipated. That's because the core Iron Mountain business performed very well in terms of productivity and pricing. And we see that trajectory continuing through the year. So sitting here, after one quarter, I feel quite good about where we are in the margin trajectory, Andrew.

William Meaney:

Operator, maybe put up the next question.

Eric Luebchow:

Hi. Good morning, everyone. So I was interested in the 72 megawatt data center, shell and land and MEP lease you mentioned. I imagine that's a pretty capital efficient lease structure, given its size. But maybe you could kind of give us some color on the returns you'd underwrite, to under that type of structure, the capital intensity? And then whether you're seeing more of these shell type deals versus a typical turnkey lease that you could do here in the future?

Eric Luebchow:

Okay, great. That's helpful. And then one more for me, Barry, you mentioned service revenue associated with kind of the legacy transport business was down about 10% from the pre-pandemic level. So, I mean, have you seen any improvement in that over the last few quarters? And do you expect that to recover back to pre-pandemic levels at some point? And if it does, kind of what will it take to get there, is it more return to office or any other kind of macro related metrics we should be looking at?

Operator:

Thank you. We now have the next question on the line from Shlomo from Stifel. Sir, please go ahead.

Barry Hytinen:

Yeah. Thanks, Shlomo. It's a good question. Appreciate that one. So the way to think about it is, we have both for service growth - storage rental gross margin, there's a factor of both sale leaseback, but you are specifically asking about other facility costs. And on that line, that's also where our power for data center pass through goes through, and so that was actually - naturally up both sequentially and year-on-year. Incidentally, just to give you a frame [ph] if you normalize for sale leaseback and excluded the power, we basically have storage rental gross margin up in both sequentially, as well as year-on-year by about 40, 50 basis points. So we feel quite good about the way the business is trending. And the other thing I'll say is, our guidance naturally assumes a healthy, as I mentioned last quarter, a healthy amount of inflation. And we continue to track at levels that are below what we were projecting earlier in the year. And of course, the pricing is doing better. So that's part of the reason why the profitability in the core business continues to outperform.

George Tong:

Hi, thanks. Good morning. You talked about favorable traction in your ALM business. Can you elaborate on how ITRenew performed in the quarter on revenue and EBITDA relative to your initial expectations?

Operator:

Thank you. We now have a question from Sheila McGrath of Evercore. So please go ahead, I have opened your line.

Barry Hytinen:

You know, Sheila, hi, it's Barry, you know, the good news about our model in light of the fact that as you saw in my guidance, we expect the leverage to be kind of inside our range and essentially flattish to maybe even slightly down by the end of the year from where we are now. We were in the fact that we have no near term maturities. I really don't need any long term at this point. As you know, we did the bond in December for the ITRenew transaction, so I'm pleased with the timing of that in light of where we were able to price it. I feel very good about where we are with respect to the capital markets for you know debt and don't have any need at this point or for the next few years, really

William Meaney:

Thank you for joining us today and you can all disconnect.

Operator:

Good morning, and welcome to the Iron Mountain Fourth Quarter 2021 Earnings. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

William Meaney:

Thank you, Gillian, and thank you all for taking time to join us today. We are pleased to have delivered record performance for both the fourth quarter and the full year. These record results are reflective of our broad offerings, deep customer relationships, resilient business model and our dedicated teams. Despite the challenges associated with the pandemic and most recently with the Omicron variant, our Mountaineers around the world have continued each and every day to put our customers first now with renewed and invigorated focus on growth. And our historically high revenue and profitability are a testament to our Mountaineers' commitment. Speaking about our Mountaineers, I wish to begin my remarks by stating that we are all saddened by the overnight events in the Ukraine. Our thoughts and prayers are with our customers there and our fellow 60 Mountaineers and their families living and working in the Ukraine. I am sure for all of us, given the current events in Europe, it deals in many ways inappropriate discussing our financial results with this backdrop. Yet at the same time, it is in keeping with our Mountaineer spirit. With that, let me begin our discussion of our remarkable and record year. In the fourth quarter, we achieved our highest ever quarterly revenue of $1.16 billion, yielding 8.5% of total organic revenue growth and record EBITDA of $431 million. For the full year, we achieved record revenue of nearly $4.5 billion and EBITDA of $1.6 billion. These results were fueled by increased demand for our services across key markets. For the full year, we delivered organic storage rental revenue growth of 2.6%, reflecting continued benefit of pricing combined with positive volume trends. We drove double-digit growth in digital offerings, including data center inside our digital transformation services and secure IT disposition, now referred to as ALM, or asset life cycle management. Our digital services and ALM businesses continue to build momentum, growing over 20% in the fourth quarter and capping off an excellent year of growth. Further to our recent success in the ALM area, we are also pleased to report that the acquisition of ITRenew, announced in December, closed in January. This acquisition will accelerate our growth trajectory in this $30 billion market, which is growing over 10% per year. Our newly created ALM division will absorb our historical secure ITAD business line. This enlarged division not only helps us provide chain of custody for our customers' IT assets, but our ALM activities also assure our customers that their IT assets are wiped of any data at the end of their life and destroyed and recycled in a responsible way. On this last point, in terms of recycling, our expanded offerings in this space around a circular economy are important for both IRM's and our customers' ESG goals leading to carbon neutrality. This expanded ALM division also strongly complements our fast-growing data center business, bringing capabilities to serve some of the largest and most innovative companies in the world in a more cradle-to-grave way, consistent with the best security and ESG practices. This expanded ALM platform will directly benefit from Iron Mountain's 225,000 loyal customer base, which includes 95% of the Fortune 1000. This global customer base is supported by 25,000 Mountaineers across 1,450 facilities in 63 countries. Our recent expansions in data center, machine learning-driven data analytics and insights and now ALM are just some of the examples of how we continue to invest in growth to capitalize on our many opportunities ahead, serving a customer base which has been loyal to Iron Mountain for decades. I have shared with you previously how in the last 5 years, these investments have taken the total addressable market, or TAM, of our products and services from $10 billion to some $80 billion. I am happy to report our continued build-out of new products and services in the last year as well as growth in these underlying markets has now taken our TAM to over $120 billion. Our continued drive in building an ever-expanding set of synergistic and customer-centric solutions, together with global reach and scale, is the fuel behind much of the acceleration in our growth. Let me share a few examples of how we've been empowering our customers' success in growth through our diverse solution offerings and unmatched customer service. Our recent customer win with a large aerospace company, where we won a backfile digitization deal of over $20 million, is a superb example of collaboration amongst our entertainment services, technology organization and our global records organization, or GRO. In order to achieve its goal of being a 100% model engineering company and to most effectively use designs and data from historical archives to refine new designs, this aerospace company sought help with the digitization and auto classification of over 50 million digital engineering assets. We were tasked to store, classify and utilize machine learning to identify relevant information whilst maintaining compliance with International Traffic in Arms Regulations known as ITAR. To this end, we developed and implemented an ITAR-compliant solution using our InSight machine learning platform operating in the AWS government cloud environment. Iron Mountain is uniquely positioned to assist our partner with this initiative with our storage capabilities, our understanding of ITAR compliance complexities, our machine learning-trained analytic engines and our technological support to ensure efficiency and success. Moreover, this project enables us to deliver critical insight into engineering data, not just to this company but also to other manufacturing and engineering customers across the globe. Another key win worth highlighting is with a branch of the U.S. federal government. We concluded a Phase 1 contract and have also been awarded a Phase 2 contract for this branch. The agency originally planned to select 3 vendors for the first contract due to the high volume of microfilm reels needing to be processed, but our solution surpassed the customer's expectations, and Iron Mountain was awarded the exclusive contract to process all 177,000 of microfilm reels or over 2 billion records needing analysis. This win was based on our unique splitting technique, proprietary machine learning, automated QA process and processing scalability that helped us to differentiate our offer from the competition. These technology innovations for the customer have enabled future use cases, which rely on advanced pattern recognition at scale, including OCR microfilm processing projects, applying machine learning extraction techniques for digital mailroom, invoice processing and extracting information from claims documents, to name a few. Another example how Iron Mountain is working with customers to support their digital transformation is our recent partnership with a production and development company operating in the U.K.'s North Sea. We've undertaken a significant back scan of their legacy archive records to meet their regulatory obligations to the U.K. oil and gas authority in order to relinquish their license to operate on 230 wells they wish to abandon. They're required to digitally upload all information assets to the National Data Repository. Using the InSight platform, we were able to solve the problem of having enormous amounts of data to sift whilst consolidating physical and digital data in disconnected information silos and resulting in millions of dollars of annual savings. Moving back above ground, recently in our Crozier Fine Arts division, we won a contract to provide comprehensive storage solutions and logistical support for the museum operations of the Academy Museum of Motion Pictures. We were excited and proud that based upon a foundation of long-term partnership and trust built up through many years of support from Iron Mountain's Entertainment Services division, they came to us to meet their evolving needs where Crozier services were an ideal match. Now turning to wins in our data center business. Recall that our bookings target for the year was 30 megawatts. We are pleased to have finished the year with nearly 49 megawatts of leases signed with over 27 megawatts of leases in the fourth quarter alone. This includes the new 20-megawatt lease in our Manassas, Virginia data center announced in December. This lease is expected to commence in phases from mid-2022 through mid-2023. We continue to see strong demand for comprehensive data center solutions from our existing customer base. This lease is indicative of our ability to meet that demand and reflects our commitment to strategically partnering with our customers to meet their individual requirements. Based on current design plans, we now expect that the VA2 facility to support 36 megawatts, up from 30 megawatts previously. With these changes and other additions to our portfolio, our total capacity is now in excess of 600 megawatts. Finally, we continue to be recognized for our leadership around ESG. This has been an important focus for us for many years, having produced annual sustainability reports outlining our commitments and progress since 2013. Some of our past recognitions have included

Operator:

[Operator Instructions]. Our first question today comes from Sheila McGrath from Evercore.

William Meaney:

Thanks for the question. So I think I'll talk about, first of all, where the revenue growth comes. And then I'll let Barry comment a little bit on the EBITDA margin, the impact that has. So I think we continue to see 2022 to have the same kind of momentum that we had in 2021. And the momentum that you saw in 2021 was driven by 2 things. First of all, a very solid foundation from our GRO business across the globe. So that continues to drive low single-digit growth and highly profitable. And then a continued acceleration in terms of our new areas, which are everything that includes data center, the digitization platform, which uses the artificial intelligence, machine learning InSight platform as well as the acceleration in asset life cycle management. So we still see that to be strong double-digit growth in those new service areas. So some of those have a different margin associated with it, but that's where we see the fuel of the revenue growth. And maybe, Barry, you want to comment in terms of what that does in terms of EBITDA progression.

Operator:

Our next question comes from Shlomo Rosenbaum from Stifel.

Barry Hytinen:

Okay. Thanks, Shlomo. I appreciate that. So first thing I'll tell you is on -- since you mentioned Frankfurt is it's not coming from that because those are really almost -- think of those as sort of pass-through revenues on the services business. In fact, that's a hit to our margins. And that's one of the reasons why our data center margin has been a little bit more muted. But as we move through finishing up those services in early '22, that's one of the reasons we expect the margin to be up year-on-year as you'll see a lot more contribution from our storage and, therefore, likely less service revenue coming out of data center. That said, where it's coming from is the core. And as we've said for quite a few quarters now, Project Summit and just general productivity coming out of our operations has been very beneficial. You saw our gross margin to be up, I think it's 550 basis points year-on-year. It was up 400 basis points sequentially. And that's just very strong operating leverage. I would say there's some incremental mix there. Bill spoke a lot about our digital solutions and our asset life cycle management. That is also contributing very nicely. There's some revenue management on our services line as well. So in terms of -- you mentioned about inflation. As I said, at this time last year, I will reiterate, we've been what I think is prudent with our outlook. We have embedded in our guidance a healthy amount of inflation more than we're currently seeing similar posture to what we took last year. And while there is certainly a level of inflation, as we all know, out in the economy, I would look at our more fixed structure and say that together with our revenue management program, we have the benefit of working to drive productivity and seeing a considerable amount of our pricing fall to the bottom line. So we feel very good about where we are positioned currently, Shlomo, with respect to services and the guide in total.

Operator:

Our next question comes from Kevin McVeigh from Credit Suisse.

Barry Hytinen:

Yes. Thanks, Kevin. Appreciate the question. So first up on CapEx. Our total CapEx guide is $850 million. Growth capital is $700 million of that. And you are right, as you point out that the data center is getting basically all of that increase. So we are planning our data center development CapEx at $550 million. That's up from about $300 million in 2021. The thing about that is, of course, as you've seen from the strong leasing we've had and the very strong pipeline we have continuing to build that -- and it's a necessity in the sense because we are -- the team is continuing to win great deals around the world. So we're very pleased with the way the data center team is planning. From a free cash flow standpoint, while the CapEx will be up, I'll note that all of our Summit costs are behind us now, Kevin. So there's -- if you think about last year, we had over $200 million of costs to achieve Summit, which go away this year. Have a little bit more cash taxes, of course, with the ITRenew services business and having some more services revenue in our business. And -- but as you look at it, as you get through your model, I think you'll find that there's considerable growth in free cash flow before growth in the model. So I appreciate the question. We look forward to showing you the strength in the cash flow as we move forward.

George Tong:

The secure IT asset disposition industry has typically grown in the strong double digits. Can you elaborate on how quickly you expect your new ALM business to grow and what key drivers you're leaning on to support that growth?

Operator:

Our next question comes from Eric Luebchow from Wells Fargo.

William Meaney:

So let me -- I'll start with the leasing activity, and then Barry can comment further. But I think the -- you're right, I mean, that with the hyperscale folks, you do have more visibility. I mean, I think you can expect that the retail side or the colo side would be -- continue to be kind of in the teens of megawatts a year. So we like that business. We continue to see the same kind of deal flow or pipeline coming in on that side. And then the thing we're also very excited about is that a few years ago, we were relatively a new entrant in the hyperscale. And clearly, if you look at the results this past year, almost hitting 50 megawatts, and this year, we're guiding to another 50 megawatts. We're making really, really good progress. So we're starting to look more like, what I would say, a typical industry player in the data center space where you're getting like kind of 60% to 70% of the volume, maybe even a little bit more from hyperscale and the rest from colocation and retail.

Operator:

[Operator Instructions]. Our next question comes from the line of Andrew Steinerman from JPMorgan.

Barry Hytinen:

Yes. Thanks, Andrew. I'll disaggregate it for you. So you would be working with $450 million for ITRenew. The net of all of our other M&A activity in 2021 is about $25 million of benefit year-on-year. So not a lot. And you might be -- might have been thinking that, that would be higher, and I'll just remind folks that we did sell our software escrow business back in June. So that's a headwind to revenue, and then we bought a small data center in Frankfurt and we also did the small acquisition in the -- relatively small acquisition in the Mid East. So the net of all that is about $25 million year-on-year. And it's kind of first quarter, it's about $5 million, and it's about $5 million in the second quarter and with the balance kind of in the third. From an EBITDA standpoint, because as we talked about before that, that software escrow business was a high profit margin business, you're only looking for about $5 million of EBITDA from all of that incremental revenue. And then the FX is about $60 million of a headwind, that's as of yesterday. So -- and that's about $25 million or so of EBITDA headwind. So if you work through that, that would get you to your organic. It's very strong, by the way. And it's benefited by the fact that we have very strong visibility on pricing. And the services side that Bill mentioned, we're growing strength to strength with our digital solutions probably being up at least 20% on top of 20% and the data center business and the storage area there being up in the 20s. So we feel very well positioned. Thank you, Andrew.

Sheila McGrath:

Yes. Bill, you called out a number of wins in your prepared remarks with government contracts and other customers. I was wondering if you can help us understand if the legacy traditional storage offering was part of the mix with any of those contracts. Or just what were the different components of Iron Mountain's business offering that helped you win that business?

Operator:

Our next question is a follow-up question from Shlomo Rosenbaum from Stifel.

William Meaney:

So first of all, I guess -- I thought you were asleep this morning, so I notice someone had taken your voice. No. So first of all, we're really pleased with the progression in terms of our records management business because if you notice that actually, sequentially, it's actually getting stronger, not weaker. And as I said, the slight negative drag on the records management business is really a second derivative effect. And as that kind of wears through, you start seeing a stabilization. And indeed, we're actually seeing an improvement in the trends in the records management. And in terms of total volume, physical storage volume, is our other areas of storage and adjacent business areas and consumer more than offset those flattening trends. I would say -- the only other thing I would say is that, yes, you're right, and you've been watching this business for a long time. You always see a little bit of an uptick in destructions in the fourth quarter because, generally, it's kind of like people do their spring housecleaning in our business as they kind of do their fall housekeeping. So we do see some -- just generally. But that's like every year. I didn't -- we didn't see more of that or less of that this year. And Barry, you might want to talk more specifically about the trend.

Operator:

Our next question is a follow-up from Eric Luebchow from Wells Fargo.

Barry Hytinen:

Okay. Thanks, Eric. A few points in there. Let me answer those. We aren't embedding any additional M&A in our guidance for this year. So we shouldn't be planning for that. As we said before, we're very committed to our leverage range, and we'll get back into that leverage range and the year within it. In terms of additional things to put in the model, I would say I would be planning for something like $150 million of capital recycling. As I mentioned in the prepared remarks, the cap rates there are phenomenal. We've seen cap rates even sub-4. So it's very, very good environment out there. And as a reminder, we're generally doing sale leaseback transactions that are very favorable, in our opinion, because we essentially have ownership-like interest in the building while monetizing it at these great cap rates. And that enables us to really just be very strategic about the capital allocation plan. In terms of your question about AFFO payout ratio, you're right, in our guidance, we'd be just above the mid-60s by the end of the year. And we've said repeatedly that our target is for that to be kind of the low to mid-60s over the long term. And at that point, we'd be looking at a dividend increase. So in fact, we'd be almost approaching sort of the REIT minimum under certain scenarios under that -- at that level. And therefore, you probably would be expecting dividends through in the future to be rising with the same rate as AFFO per share.

Operator:

Good morning and welcome to the Iron Mountain, Third Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. To ask a question you may press [Operator Instructions]. To withdraw your question, please press star and 2. We will limit analysts to one question and you can rejoin the queue. Please note this event is being recorded. I would now like to turn the conference over to Sarah Berry of Investor Relations. Please go ahead.

Bill Meaney:

Thank you, Sarah, and thank you all for taking time to join us. We are pleased to have delivered strong performance in the third quarter reflecting our broad offerings, deep customer relationships, resilient business model, and the strength of our team. This can be easily highlighted by our 7.4% total organic revenue growth. This strong overall organic revenue growth has been delivered by continued strength in our storage business, as well as double-digit growth in our new and existing digital offerings, including data center inside our digital transformation services, and IT asset disposition or I-Tech. Throughout the pandemic, including the most recent challenges of the Delta variant, our Mountaineers around the world have truly stepped up. Each and every day to put our customers first with a focus on growth. I'm both proud and humbled by this incredibly talented and dedicated team and what we've been able to accomplish through such a challenging time. Today's results, including our strong organic revenue growth exceeding 7%, is a direct result of their dedication in serving our customers in ways they need to keep their businesses growing. We have a lot to cover today, so I'll start with a brief overview of our results and key business drivers. During the third quarter, we reported revenue of over $1.1 billion EBITDA of over -- of EBITDA of $418 million, both of which are new record highs. Our results are fueled by increased demand for our services across key markets and continued positive momentum in the business. Our digital services in iPad business continue to build on its prior performance and deliver almost 20% growth in the quarter. Today, we're proud to say that 95% of the Fortune 1000 are among the 225,000 of our loyal customer base. We have a growing footprint of more than 1,460 facilities and with our recent expansion in the Middle East, we are now present in 63 countries. And we are supported by 25,000 Mountaineers across the globe. As we look ahead to future opportunities, there is no doubt the world has changed. But, we're making the improvements to our business today to serve the changed needs of the world tomorrow. That is why we have built, evolved, and expanded our trusted relationships with our customers as not only the leading storage platform of physical assets, but also the business services partner to support data center co-location, information security, data insights, Secure IT Asset Disposition and business process management. With this focus, we have expanded our total addressable market to more than $80 billion. Together with our strong customer relationships, focus on innovation, and 70-year heritage, we are operating from a unique position of strength. Now let's turn to some of the exciting events during the quarter. You'll hear us talk a lot about customer - centricity here at Iron Mountain. And when we help our customers not only protect their information, but also unlock new revenue opportunities, as well as cost efficiencies. That's a big win for our customers, and ultimately, for us. We were proud to be featured as one of the winners of Google's first-ever Google Cloud Customer Award for Financial Services for our work with a large financial institution. This is a great follow-on award from a couple of years ago when we won their machine learning artificial intelligence partner of the year. But this award, we leveraged our expertise in mortgage document processing to train machine learning models to automate document classification and data extraction and validation, deliver advanced exception management and unlock value for our customers. In line with our automation first mindset, we utilize Google's document understanding for AI algorithms in Iron Mountain's insight platform to identify, classify, extract and validate loan data to support authenticity, accuracy, and completeness. As a result of our services, the customer has seen efficiency improvements including a 25% post-closing cost reduction, increased scalability, a shortened cycle time, and increased responsiveness to market demand, among other enhancements. We are not only proud of our work with this financial services customer, but are also dedicated to continuing to enrich our customer's ability to protect and preserve their high-value assets in -- and in turn, a system with gaining market share in their businesses through higher end-customer satisfaction. I'm also pleased to report that Iron Mountain received the JP Morgan Chase Strategic Diverse Gold Supplier Award for our commitment to supplier diversity and the contributions of our very own supplier diversity program. Together with our fellow Gold Suppliers, we have collectively agreed to increase spending with diverse owned businesses and have set ambitious goals over the next three years. As part of this, we are on track to achieve our goal of $63 million in supplier diversity spend by the end of 2021. This is not just about our diversity goals, but it is also about helping our customers like JPMorgan Chase and our fellow Gold Suppliers to drive improvements in supplier diversity, which we recognize is important for all communities in which we operate. By working together, we're having a far greater impact than any one company can achieve alone. I would now like to highlight our recent win working together with General Dynamics. You will recall we have been speaking for some time about the potential for our services inside the U.S. Federal Government. Whilst the transformation of the federal government has taken some time, we have seen over the past year major growth in our business across a number of governmental agencies. This growth is due not only to the residents that our products are having with the government and assisting them on their own transformation paths, but also to the work our government team has done in partnership with the likes of General Dynamics. This partnership is already resulting in a 3-year Iron Mountain contract worth $23 million to help the Department of Veteran's Affairs with their digital transformation in order to serve better our U.S. soldiers. As part of this initial project, we're helping the U.S. Department of Veterans Affairs digitally process an estimated 15 million official military personnel files. Through digital transformation, this agency is taking a proactive approach to provide greater access to personnel files, as well as streamline the overall claims process in order to get veterans the benefits they deserve. In addition to our success with General Dynamics, I would like to highlight another win in our global RIM segment. We've had a long-standing relationship with a major global financial institution for over 20 years, and we have recently expanded our relationship with them, by signing a new 10-year global contract in which they committed to renew and consolidate all global records in data management business with us. Through this work, along with our global scale, we won an additional two-year contract for data restoration and migration services. We will provide the customer with clear, detailed information from backup tapes spanning 11 years, which will help them make informed decisions around data deletion, retention, and remediation. Ultimately, we will reduce and enhance data management and compliance. Finally, turning to data center, we are well on track to exceeding our bookings target of 30 megawatts this year. In fact, through October, we stand at 24 megawatts in addition to our continued growth in bookings this quarter, we closed on the acquisition of our new data center in Frankfurt. When we purchased the new Frankfurt data center, we inherited over 2 megawatts of existing clients, and we have expansion capacity of 8 megawatts for a total of over 10 megawatts on that site. Already in this quarter, we have signed 1.6 megawatts of new leases for this site and have a strong pipeline which should absorb the remaining capacity over the next 2 to 3 years. I should also add that our first in purpose-built data center in Frankfurt is up and running and a tenant which leases the entire 27 megawatts is moving in this quarter. With this transaction in Frankfurt, we now have a total potential capacity in Europe of more than a 107 megawatts, which provides access to important interconnection markets for new and existing customers looking for reliable, flexible and secure data center locations across the Frankfurt, Amsterdam, and London markets. Even with our rapid growth, sustainability remains at the core of how we offer data center capacity. Iron Mountain continues to source more than a 100% of its energy used for data centers from renewable energy. Moreover, as we announced in April, we took a significant step forward in the development of enhanced solutions for purchasing renewable energy by entering into an agreement to track the hourly load. I'm proud to announce that this September, we were able to report on our performance for the first half of the year for our datacenters in Ohio, Pennsylvania, and New Jersey that are benefiting from this agreement. Over the past several months, we have taken definitive steps towards a truly carbon-free energy supply. Not just by offsetting our carbon footprint by purchasing and reselling renewables, but by matching renewable energy in the very grids in which we operate. We are the first company to join Google to adopt the 24/7 carbon-free energy goal, and we became a founding signatory to the new UN Clean Energy Compact being released at COP26 this week. We can already publish 24/7 carbon-free energy performance at 3 of our campuses, becoming the 1st large co-location data center provider with this capability. We recognize that we are an important component of our clients energy footprint and we will continue to take every opportunity to minimize our environmental impact on their behalf. The awards and successes I outlined today are just a few among the various wins Iron Mountain has achieved this quarter. As we continue to deliver accelerated growth at IRM, in spite of the continued impact of COVID on some of our traditional service areas, I am confident that our resilient business model expanded product portfolio, customer first culture, and strategic transformation will continue to deliver strong sales growth. With that, I will turn the call over to Barry.

Operator:

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. We will limit analysts to one question and you can then rejoin the queue. Our first question is from Sheila McGrath of Evercore, please go ahead.

Bill Meaney:

Good morning, Sheila. So I'll start with strategically in where the product portfolio is going and then let Barry comment a little bit more on the nuts and bolts in terms of margin. So thanks for the question. I think, first -- I think part of Project Summit, you've seen that show up in the record high EBITDA margin that we have this quarter, so thank you for the call out on that. And I think that that's an ongoing benefit that we'll have. That EBITDA margin may move up and down depending on the product mix and it comes to your product portfolio question. On the product portfolio, a part of Summit that you haven't seen directly, in other words it isn't in the margin, is we've also taken a lot of benefit of Project Summit and reinvested in the business. So besides actually driving the margin improvement that we printed today, we've also reinvested in the business and that's really what's driven that total addressable market going from $10 billion to $80 billion that we've highlighted the last few quarters. And part of that $80 billion of new total addressable market is the almost 20% growth that we've seen in digital services, which is primarily our insight driven digital platform, together with IT Asset Disposal business. Those are some of the new areas that I think you're highlighting behind your question. So we actually see -- that business is growing strong double-digits and we can see that continue. You take that on top of the growth and the continued acceleration in growth in our data center businesses so we're well on track to exceed our upgraded guidance last quarter of 30 megawatts of bookings for this year. Then I do -- we do expect to see -- continue with levels of revenue growth like we've seen the last few quarters. Because this growth that we've seen in the topline, whilst we have seen -- luckily, some recovery in terms of our traditional service business. I think it's fair to say that we've seen an acceleration in terms of our revenue growth that's really driven by the new product areas and less from what I would call a rebound from historically low activity due to COVID. I don't know, Barry if you want to comment a little bit around the margin?

Operator:

Thank you, sir. The next question is from George Tong of Goldman Sachs. Please go ahead.

Bill Meaney:

Yes. Thanks, George. If you look at the 20% growth that we called out this quarter, or just under 20% growth, that's all non Data Center. So that is the -- what we call ITAD or IT Asset Disposal business and we've won some recent large global contracts for that. Mainly for corporates that are trying to make sure that they both manage the secured destruction of any information that happens to be on their devices or hardware, as well as making sure that they can be managed in an environmentally friendly way. That's one part of it. And the other part of it is just the rapid growth that we've seen in adoption of our InSight platform and overall digitization of people's information. So that's everything from people taking advantage to say, okay, when they're retrieving documents on a very simple basis, is we want to actually retrieve them electronically through the InSight platform where they can access those from a secure platform in the cloud, to Digital Mailroom, which is beyond the typical mail-room employee arbitrage model, but again allowing people to have not only access to the information that comes through their mail room, but to be able to operate in a hybrid work fashion. In other words, where people can work from home and the office and always have access to their information. To even some, what I would call larger, more complex deals, I mean, I just returned from the Middle East about a month ago, where we're working with a government there and their National Archives to help them digitize everything about the way the government works. And that's again using the insight platform. But it's not just the insight platform, but auto classification of the documents to create metadata so that they can actually share the information digitally to the right people with the right security level in a way that can be managed for the long term. So it's multifaceted thing, but those are the areas that are really driving a lot of the top line growth that we see today. And as well as our data center business. I mean, obviously the data center business with the types of bookings that we have, will continue to drive increasing levels of growth. I should -- but I should not miss how it is, the underlying growth of the more traditional side of the business, mostly driven by pricing, continues to the chug along nicely.

Shlomo Rosenbaum:

Sorry. I was muted. Thank you. I wanted to ask a little bit about the storage business and some of the puts and takes that went through it. It seems like there is some other -- with an acquisition something added about 10 million cubic feet. You guys are getting pricing. There's some organic growth. But when I go to the total revenue from adjusted storage when including the terminations and permanent withdrawal fees, it's really flattish sequentially. And so I was just want to ask you, what are some of the puts and takes that you might have seen on a sequential basis because I think you commented last quarter expecting some volumes to come in that will pent up from COVID-19. And was just wondering how this is translating into revenue as you build through the year.

Bill Meaney:

No. I think that's -- covers that.

Eric Luebchow:

Great. Thanks for taking the question. I wanted to touch upon fairly topical area in data centers today. A lot of talk in the industry about cost inflation in terms of development costs along with supply chain challenges and getting new equipment. Maybe you could just give us your perspective on what you're seeing in your footprint. Whether that's -- any development cost, inflation, any development delays in terms of timing. And also the impact of higher power cost, particularly in Europe. And then from a broader pricing perspective, do you think that this environment may be supportive of industry pricing moving upwards in the next couple of years as we work through all these challenges? Thanks.

Operator:

Thank you, sir. Next question is from Andrew Steinerman of JPMorgan, please go ahead.

Barry Hytinen:

Hi, Alex. It's Barry. Thanks for the question. Why don't I help you with both the revenue and the EBITDA the way we are thinking about it. So in the fourth quarter, you right, we said about high single-digit. So let's say that's 8% or 9% on the revenue side just to give you a couple of the puts and takes. We have a -- the dollar is stronger as we have less than a point of FX benefit year-on-year, and a similar amount from M&A less than a point because just as a reminder, as I mentioned to Shlomo, we divested that software Escrow business in the second quarter. And so as a result, it's not much M&A benefit. So that leaves you with about call it 7% of organic constant currency growth. And with the strength of the Data Center business, that'll contribute probably 1.5 points alone because that business is performing very well and so you should be working with your model and think like 20 plus percent growth in the fourth quarter from our Data Center business. The balance would be coming from low-single-digit growth in our storage rental revenue. And that'll be with good pricing contribution. Course the remainder is as Bill 's highlighted on the call, the very nice growth we're seeing out of our Digital Solutions and SITAD business. On the EBITDA stand side, we're looking at low double-digit to low -- sorry, mid-teens growth. So let's say that's 13 or so percent just to keep the midpoint there. For the purpose of this discussion, that's about, call it, $48 million of year-on-year increase. FX is a very small contribution, almost nothing, and M&A would be actually a net negative on a year-over-year basis in light of the escrow business was a very high-margin. And so think about data center as having a modest increase in margin sequentially still affected by the fit-out in Frankfurt. So a few million of benefit to EBITDA from data center. Our Summit is -- our Summit Project is doing phenomenally well and the team is executing very well. You'll probably see $30+ million of year-on-year benefit in the quarter from that. And then of course, pricing will continue to be a very strong contributor. And the services margin, I expect to continue to improve which you've been seeing throughout the year. So naturally, there are some offsets with sale leaseback, as I mentioned earlier, and higher levels of commission in light of the very good trajectory the team is driving on top line. So we're feeling very good about the fourth quarter as we sit here today, and look forward to talking to you about it in 90 days. Thank you. Have a great day.

Operator:

Good morning, and welcome to the Iron Mountain Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Greer Aviv, Senior Vice President, Investor Relations. Please go ahead.

Bill Meaney:

Thank you, Greer, and thank you all for taking time to join us. I hope you and your families are safe and well. This morning we reported record second quarter financial results with revenue of more than $1.1 billion and EBITDA of $406 million. This strong performance in both Q2 in the first half of the year reflects the breadth and depth of our products and solutions and the strength of our deep customer relationships. Our second quarter results especially reflect increased demand for our services across our key markets in is based upon these strong results in the increased momentum in the business that has caused us to increase the midpoint of our financial guidance as well has increased the expected bookings in our data center business. As we celebrate and honor Iron Mountain’s 70th anniversary this month, I am extremely proud of what our team has accomplished in growing our relationships with our large and diverse customer base in spite of the continued challenges due to COVID. Our Mountaineers across the globe have conquered every obstacle with tenacity, and an innovative mindset all with a focus on accelerating growth and services to assist our customers. Before we dive into our record results and the positive momentum in our business, I want to take a moment to reflect on the current situation with the pandemic in new variants, still wrecking havoc in many parts of the world. In addition to operational complexities, we’re also dealing with the realities of a workplace and the world changed forever by the COVID-19 pandemic. At Iron Mountain, we’re thinking how we can move forward instead of getting back to normal. All whilst remaining diligent to ensure the physical and mental health as well as the overall safety of our teams, their families, and our customers. As I mentioned earlier, this year we celebrate 70 years of Iron Mountain. It’s a legacy with a rich inspired past, which continues inspiring the future. Since that day on August 24, 1951, we have built, evolved and expanded our trusted relationship with our customers to include not just the leading storage platform of physical assets, but now includes a rapidly increasing range of business services. These new services are centered around data center co-location, information security, data, insights, IT asset disposition in business process management. And today, with this broadened portfolio of services and storage capabilities, we have become an innovative and global leader in our field with more than 225,000 customers including more than 95% of the Fortune 1000, a global footprint of more than 1,450 facilities with a presence in 58 countries and 24,000 dedicated Mountaineers across the globe. And doing all this within an energy sustainable way, with a 100% of our data centers powered by renewable energy. Many of the things about us have changed in 70 years. What hasn’t changed is our core values and commitment to building and delivering on the trust our customers have come to count on. Over the last two quarters we shared with you that we now have an expanded total addressable market or TAM of more than $80 billion. And against that expanded TAM, we’ve identified the building blocks for growth that will enable future growth and success. And in fact, you can already see evidence of this expansion through our year-on-year digital service revenue growth together with secure IT Asset Disposition or ITAD. In this quarter versus a year ago, these business lines have grown over 37% resulting in $25 million of incremental growth. I want to highlight a few examples, which illustrate our progress in helping our customers through utilizing new technologically enabled approaches and products to not only protect, but unlocked value from what matters most to them. The first one I want to highlight is in Singapore with a multinational banking and financial services corporation. We won a $750,000 annual recurring revenue, digital mailroom contract over their current service provider. At first, the bank didn’t believe that Iron Mountain could solve this need for them as they had only known us for support – to support their storage and scanning requirements. However, the account came pursued the opportunity and highlighted Iron Mountain strengths utilizing a new technologically based approach, which allows us to assist in managing the very start of much of the information entering the bank while securely facilitating a hybrid office and home working model. As we are already this customers partner for business process outsourcing and processing much of the bank’s critical information. The mail room is a key additional service, which will yield further security and simplicity for the bank. Turning to another area representing part of our expanded TAM, I want to touch briefly on secure ITAD. Think of this as an area where we apply our highly secure chain of custody with a service that allows our customers to dispose securely in an environmentally responsible way their IT assets, which are at end of life. We have continued to see good momentum in our secure ITAD solution following a number of big wins last quarter. We won a deal with one of the world’s largest banks to recycle corporate laptops, monitors and outdated IT equipment across over 400 corporate offices, 4,000 conference rooms and 5,000 retail offices, which we expect to generate annual run rate revenues greater than $5 million. This is a valuable offering given our expertise in chain of custody and compliance, helping customers securely dispose of their IT equipment. Turning to our data center business. We want to share not only our continued growth in top and bottom line, but some recent exciting developments in the last month, which has led us to increase our guidance for expected 2021 leasing from 25 to 30 megawatts to over 30 megawatts, not including additional leasing expected from the recent acquisitions in Frankfurt and India. Our increased guidance around leasing activities and based upon the momentum have seen in the business in the first half of the year, as well as the pipeline. Today, we announced not only the 3.6 megawatts of new leases, we signed in the second quarter, but also a 6 megawatt lease with a new logo to our platform that was signed post Q2 in Northern Virginia. Taken together along with our strong results in Q1, we have recorded a total of 19 megawatts of new and expansion leases in the first seven months of the year. This is a great launching off point for the remainder of the year. And we feel confident we will achieve leasing activity above the top end of our original guidance. Turning back to Q2. It should be noted of the 3.6 megawatts we leased in the quarter and majority was in the retail and enterprise segments. This result in an attractive pricing for the quarter, which increased 14% sequentially. Our strongest markets in terms of new and expansion leasing were Phoenix, Singapore and Northern Virginia. Finally, in terms of development, you likely saw from our recent press releases our data center business is expanding rapidly in Europe. We have a new 27 megawatt Greenfield build in London, adjacent to our existing London one facility, as well as the pending acquisition of a multitenant co-location data center in Frankfurt. Taken together, this will increase our total potential capacity in Europe to more than 88 megawatts. And we’ll provide access to important interconnection markets for new and existing customers looking for a reliable, flexible and secure data center location. As always sustainability continues to be a top priority. And as part of our commitments, we will power our new buildings in London and Frankfurt with a 100% renewable energy. Before I hand the call over, I also wish to touch upon some new product areas, which are leading to more growth in our traditional storage areas. One of these newer product offerings is clean start, which is a service that helps customers navigate today’s changing workplace requirements from reconfiguring the office the social distancing to office closures, or moving to a more digital way of working. Since inception the clean start product has generated over $19 million in revenue and has uncovered $1.1 million net new cube over a three-year period. In 2020, we decided to expand clean start globally with all regions engaged and growing the program. Since taking the business globally, we have seen an acceleration in bookings specifically in the first half of 2021, clean start has delivered $5 million of new revenue or some 25% of the total revenue from this program since its inception three years ago. A specific customer example in this quarter includes a $1.8 million deal with a leading global hotel chain over the next five years. Due to challenges from the pandemic, the customer needed solutions to help with compliance and storage of materials. This customer has been with Iron Mountain for years at an individual hotel level and its corporate team saw the value in our scale, breadth of offerings, compliance expertise and risk reduction solutions. This prompted the decision to deploy our services across 103 hotels plus an additional 15 one-off sites as required. We were able to manage much more than just the record storage, also meeting the destruction needs and providing Image on Demand services, all of this being done company-wide at a scale unmatched by any other provider. Another example, which showcases our innovative new products, which drive records volume and services growth is Smart Sort. Our customers want to reduce costs and risks by defensively destroying records as they meet retention requirements, which is difficult to do if records are not stored by the destruction eligibility date. For example, many healthcare accounts store records by patient number or last date of visit and not by retention requirement. With Smart Sort, we organize the records by destruction date, so the customer knows what they can destroy and when. Our team understood a pervasive customer problem took a customer centric approach and proactively came up with a solution to solve it with Smart Sort. Just in the last year, we’ve had 10 healthcare vertical wins for Smart Sort with our most recent win with Johns Hopkins Medical Center. The agreement is a five-year term, which includes a $1.2 million Smart Sort move project, bringing in additional 160,000 cubic feet of inventory, representing over 4 million individual patient records. Reflecting some of these successes, total global volume grew to a record 733 million cubic feet this quarter. In spite of organic volume being down 10 basis points in the second quarter versus the first quarter, total global organic volume was up 1.6 million cubic feet in the first half of the year. And we continue to expect organic volume to be flat to slightly up for the full year. This expected organic volume together with continued strong price increases sets us up well for continued strength in organic storage revenue growth from our physical business areas. In closing, I want to say thank you to the 24,000 Mountaineers, who have done an outstanding job navigating through the pandemic. I’m extremely proud of their relentless dedication to each other and our customers. With a resilient business model, ongoing market share growth and strategic investments to transform the company, we are excited about the significant opportunities ahead of us, which continued to exceed even our ambitious targets. With that, I’ll turn the call over to Barry.

Operator:

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Sheila McGrath with Evercore. Please go ahead.

Bill Meaney:

Good morning, Sheila. Thanks for the question. So first, I appreciate the call out it. We’re really pleased with the organic service revenue approaching 26% in this quarter, which we thought was just a very strong result. And as you pointed out, that was really driven by a lot of our new digital solutions, which was well north of 30% growth if you take ITAD and digital services combined. I think your question on the traditional service side is a good one, because what we’ve seen actually is an increase in the backlog of incoming cube, which quite frankly, we haven’t been able to get at in some countries because of continued rolling lockdowns or intermittent lockdowns. So we do expect has some of the lockdowns get ease that on the traditional service lines that – we know that there’s a backlog of incoming cube that we haven’t been able to access the offices for. So I think there will be some in the medium term in that area, how big it’s hard to judge right now.

George Tong:

Hi, thanks. Good morning. My question is on Project Summit, you mentioned that you’re realizing additional benefits from Project Summit. That’s causing you to raise your guidance and you talked about expectations of $160 million savings with another $50 million next year. So how much of the upside in savings represent the pull forward from future periods? Or would you say, this is like an increase in total savings from Project Summit. And can you just sort of map out the entire timeline of when you would expect to realize the full amount of project savings over the next couple of years. Maybe related to that the Project Summit savings, how does your increased investment into growth initiatives impact the flow-through of Project Summit savings in terms of margin expansion opportunity. Thank you.

Bill Meaney:

Yes. And the other thing I would just add to it, Barry, I think, Barry’s last point as important as the $375 million is a net number. So obviously we’re making a lot of investments to transform the business, but the $375 million is net of all the investments we’re making.

Shlomo Rosenbaum:

Hi, great. Thank you very much for taking my question. I just still focus a little more on the services business, obviously that seems to be doing a lot better you have new products and things coming to market. And I was just wondering, is there some impact on the margin from the mix of the newer products? It just seems like the gross margin was down sequentially, despite higher revenue, is they had kind of a ramp thing that’s going on. Maybe you could just give us a little bit more color on how that’s going through.

Operator:

The next question is from Nate Crossett with Berenberg. Please go ahead.

Bill Meaney:

Good morning, Nate. I appreciate the question. So first on the 6 megawatts, yes, we really pleased to say, it’s a single customer for our Northern Virginia campus hyperscale and it’s a new logo to us. So on – just a number of fronts, it’s just a great – it’s a great customer win. And as you can see, our – we keep expanding capacity in our Northern Virginia campus based on the pipeline that we see even beyond that. So really congratulations to the team. I think in terms of the pricing, you’ve noticed this month, we were up slightly. So we thought that was actually a good trend. I think generally what we’re blessed being in that sense, relatively newcomer to the data center space that we don’t have as many historical customers that were originally sold in at higher than what today market prices are. So most of our customers, because we’ve been growing very quickly over the last few years are relatively new customers that are at, what I would call, new and – the new pricing level. So we don’t have as much pressure as some of our older peers that have had that. With the exception, we’ve called out in the last few quarters from time to time, when we did acquisitions, we knew we were acquiring some customers that had been with our acquired companies for a long time and that those were rolling off. So generally, we feel pretty good where we are on pricing. You notice that this quarter, we were on the 3.6 megawatts we were up quarter-on-quarter on pricing. And that was really more about mix that we were highly focused on collocation or retail and enterprise customers, which obviously come at higher pricing. So generally, we don’t see a big change in the pricing on customers that we’ve acquired or brought into facilities that we’ve acquired.

Michael Funk:

Yes, thank you for the questions. Just one of the refocus on the RIM business for a moment, you made a comment saying as a backlog of incoming cubes. I’d love to get more thoughts there on, how that might impact volume moving forward. But then also took out the last quarter, would love any kind of commentary just on the volume trends you’re seeing, whether that’s the growth additions, the churn, and then how acquisitions also impacted the volume in the quarter.

Operator:

Our next question comes from [indiscernible] Management. Please go ahead.

Bill Meaney:

I appreciate the question. So maybe what we’ll do is, I’ll answer the first bit, in terms of the acquisition of employees, because it’s a really good point. And then I’ll let Barry comment on the inflation that we see across our business, not just on labor. I will just say, inflation for us generally is our friend, because we have such high 75% – 70% to 75% gross margin business then, obviously, and we’re able to price pretty aggressively against that. So it generally creates a tailwind towards our margins. On accessing talent, look, it is luckily – we’re blessed with a very strong culture. So if you look at our employees and I’m referring mainly to our frontline employees, who really are the heart and soul of the company, these are the people that you see our trucks out on the road or people see our folks coming into the facilities or the people that keep the lights on in our data centers. They are very long-term employees. Culture is very strong and we have very low churn, for a service company, probably one of the lowest churns in the industry. So we’re blessed that we don’t have a lot of outflow of employees. That being said, the growth that we’re seeing in a number of our service areas, as well as our data center means that we are actively going out there and acquiring talent. And I’ll be honest with you, it’s tough at sometimes, but our biggest reference, our current core employee growth. So we haven’t seen a situation where we haven’t been able to grow with the demand except as a backlog I mentioned, because we just can’t access facilities. And there has been some short-term blips that Barry called out in terms of we had to use some expedited labor in a couple of cases, so that we could meet the demand. But generally, we feel that our culture has been our friend in terms of being able to acquire the necessary talent.

Operator:

The next question is from Eric Luebchow with Wells Fargo. Please go ahead.

Operator:

Next, we have a follow-up question from Shlomo Rosenbaum. Please go ahead.

Barry Hytinen:

Hi, Shlomo, it’s Barry. Thanks for the question. Let me clarify that of the $5 million, about $4.5 million is in the core. That’s from the small deal we did in Asia, which is a $4.5 million acute. The rest is in the adjacent business category. And so when you work that through the model, you should find that the core was down just about 30 basis points, which to your point is – Bill’s earlier comments, very consistent with what we’ve been seeing even a little bit better than where we were, let’s say, a year, year and a half ago, in terms of sequential performance. We continue to feel good about our core business and expected as we guided earlier to be flat to slightly down on an organic basis for the full year. And in light of the dynamics that Bill mentioned in terms of the backlog for incoming cube and likely for the pandemic to continue to ease over time. We expect that that performance will continue to bump along and maybe even slightly improved. So we feel really good about where we are there.

Operator:

Good morning and welcome to the Iron Mountain Earnings Conference Call. [Operator instructions] Please note that this event is being recorded. I would now like to turn the conference over to Greer Aviv, SVP, Investor Relations. Please go ahead.

Bill Meaney:

Thank you, Greer, and thank you all for taking time to join us. I hope you and your families are safe and well. We are pleased to have delivered a strong start to the year with both revenue and profitability coming in ahead of our expectations for the first quarter, despite the ongoing challenges of the pandemic and continued lockdowns in many parts of the world. Some of the key accomplishments of the quarter include, we achieved a record level of quarterly revenue, pricing continues to yield strong results as highlighted by our organic storage rental revenue growth of 1.7% year-on-year. Total organic volume grew some 2 million cubic feet versus last quarter and we continue to forecast overall volume growth to be flat to slightly positive for the year. We saw strong performance from our growth areas. For example, digital solutions is showing year-over-year organic growth of 11%, while secure IT asset disposition or SITAD has shown 30% growth. We are in line with delivering over $50 million of revenue growth from these two dynamic areas this year. Our global data center team leased nine megawatts in Q1 versus our guidance of between 25 and 30 megawatts for the full year. We continue to grow our footprint acquiring a new land parcel adjacent to our campus in Northern Virginia, which will increase our total potential capacity in that key market to 145 megawatts bringing our total potential datacenter capacity globally to 445 megawatts. Finally, adjusted EBITDA grew 2% year-over-year on a constant currency basis and our margin expanded 100 basis points. It should be noted that Q1 this year is even more impressive given that we are comparing it to a year ago where COVID, for the most part, was affecting very few of our customers. Whilst the impact from COVID during this quarter continues with many of the 56 countries we operate in to be in various stages of lockdown, we are proud of the consistency and stability of our core business and we continue to deliver on our strategic plan. This reflects the diversity and scale of our portfolio, the depth and breadth of our service offerings and the efficiencies that have been created through project summit. To further underline the point, our sales productivity remains strong and our mountaineers persevered, resulting in Q1 overall revenue slightly ahead of last year, whilst our traditional service revenue, which is most closely tied with being in the office was off 7%. We continue to expect to see very modest improvements in core service revenue as we progress through the year and we are not factoring in a full COVID recovery for the traditional side of the business before Q4 and perhaps for some parts of the world, even Q1 next year. In the meantime, we can see in our results and our improved guidance, our growth from new product areas will continue to deliver overall growth in our business in spite of the COVID impacts elsewhere. We remain committed to taking purposeful and bold steps to transform our entire organization, both operationally and culturally. We remain true to our plans to accelerate growth and continue our digital transformation journey, which for us includes both an internal focus as well has expanded product offerings for our customers. We are confident that our continued delivery of overall revenue growth, together with the expansion of margins due to Project Summit will enable us to continue our acceleration and cash generation which will allow us to continue to invest in our future whilst returning more and more cash to our investors. Project Summit is well on track to deliver $375 million of annual run rate adjusted EBITDA benefits exiting this year, even after investing in new growth areas. In addition to adding $375 million to our EBITDA through margin improvement, Project Summit will continue to enable us to invest in the growth areas we identified and discussed last quarter, further accelerating our growth in revenue as well as profits. Some of these areas you will recall include digital solutions, consumer storage data center and SITAD. Examples to illustrate the impact of our focus on revenue growth can be seen from recent wins in digital services in SITAD. One recent win in digital services was with a global insurance company, which was managing its exposure from a large and complicated liability claim. This customer desired end state was to streamline underwriting and claims management processes by providing digital accessibility to records to quickly identify risk exposure, reduce processing times, improve SLAs, ensure chain of custody and gain scalability for large discovery audits. Our unique solution was to integrate 440,000 of their physical boxes with their digital information to provide a single view to search across and identify relevant and required information on demand. By leveraging our insight platform, we were able to immediately improve their legal discovery efforts and automate their claims processes. Another recent win was with the Government of Canada to leverage our Image on Demand or IOD solution to process applications for immigration, refugee or citizenship status. The government experienced a backlog during COVID, as staff could not access offices and applications kept piling up. This digital solution enabled the government staff to work through the backlog. We are currently imaging more than 4000 applications on a weekly basis, which are then digitally delivered for processing by the Government of Canada's employees. Switching to SITAD, this quarter, we have secured contracts with for large global clients to provide services across the globe. These engagements cover everything from enterprise infrastructure, such as servers, routers, switches, printers, copiers, to small personal devices and specialized equipment such as card readers. Our solutions in SITAD are the only ones on the market built around a secure chain of custody where assets attract at every stage of their journey, and our customers' data is kept secure. Also, our disposition process is built with sustainability in mind. We are a leader in thinking and acting for the environment. Demand for these services is particularly strong as companies look to consolidate and transform their physical footprint to move to new hybrid collaboration models post COVID and we expect to partner with many more of our enterprise and global clients throughout 2021 and beyond. Now, let me switch gears and spend some time discussing our ESG commitments including the sustainability of our products, services and operations, as well as our efforts focused on diversity, equity and inclusion. Our Eighth Annual Corporate Social Responsibility report will be published later today. In that report, we share sustainability goals as part of our ESG commitments to reduce our environmental impact. Whilst we have been extremely successful in achieving targets that were previously said, including exceeding our science-based targets to reduce greenhouse gas emissions six years ahead of schedule, we are introducing even stronger commitments to our planet, our customers, our employees and our communities. Some highlights include we are committed to achieving carbon net zero by 2040, 10 years ahead of the Paris Climate Accord. We are proud to be ranked number 81 on Newsweek's list of America's Most Responsible Companies in 2021. By 2025, we are committed to building all of our newly constructed multi-tenant data centers to be certified to the BREEAM green building standard. In addition to contracting for renewable energy equivalent to 100% of our data center electricity load worldwide and passing through the carbon reduction benefits to our customers who avail themselves of our green power pass, we have announced our first electricity supply contract that matches our load 24/7 with local renewable generation for our facilities in New Jersey and Pennsylvania. Additionally, we shared with you our recommitment to diversity, equity and inclusion, not just because it is just but also because it is key to our strategic success and being a more creative and dynamic organization, which can deliver more value in tune with our customer needs. For example, by 2025, we have committed to increasing representation of women in our global leadership team to 40% from 31% today, and people who identify as BIPOC in our US leadership team to 30% from 19%. Thanks to the true commitment of my fellow mountaineers across the globe, and with the guidance and engagement of our employee resource groups, we have made significant progress on our journey, but have a lot more to do. To further us on our journey, I'm pleased to announce that we have recently recruited Charlene Jackson as our Global Chief Diversity, Equity and Inclusion Officer. Charlene brings a strong set of experience and skills as we continue building our global enterprise into an organization which is both diverse and inclusive. Finally, before handing the call over to Barry, I would like to provide a bit more information on the data center performance. As I mentioned earlier, our global data center team is off to a strong start leasing more than nine megawatts in the first quarter. As you likely saw, this included six megawatts with an existing US-based Fortune 100 technology company. We also signed a one-megawatt lease in Singapore with a leading e commerce end gaming company. The remainder of the leasing for the quarter was co-location and we continue to build our pipeline for both hyperscale and retail deployments. Subsequent to the end of the first quarter, we closed on our joint venture with Web Werks, and have already seen great growth prospects from that partnership. Web Werks recently announced that they have acquired a land parcel to build a standalone purpose-built Greenfield data center in Mumbai. This new data center will be designed to support 12.5 megawatts of IT capacity with a rich, interconnected ecosystem consisting of major telcos, over 150 internet service providers, and three major internet exchanges. The new facility expected to be operational by mid-2022 abuts Web Werks existing data center in Mumbai, which would result in a campus with 15 megawatts of total capacity. We also continue to grow our platform organically with the recent purchase of a land parcel adjacent to our existing Northern Virginia campus. This parcel is expected to support 32 megawatts of IT capacity at full build out. In addition, we redesigned our Manassas Campus master plan and can now support 30 megawatts of IT load at VA-2 compared to 24 megawatts previously, as well as an additional 35 megawatts of capacity at the campus. With these designs and scope changes, our NOVA campus capacity has increased more than 90% to 145 megawatts with 16 megawatts built in 72% of that leased. Our total data center potential capacity globally now is 445 megawatts and/or an increase of more than 18%, giving us a long runway for future development and growth. In closing, let me say thank you to our mountaineers and their families for their continued support and dedication in what has been a difficult and heart wrenching year for many. We and our customers count on our essential workers every day. And I personally always come back inspired after meeting with many of our teams around the globe. Our results demonstrate accelerating earnings growth, the resiliency of our business, revenue growth in new areas and the benefits of our culture. Our culture supports customer first with an innovative mindset. With that inner DNA, we will continue to climb higher together with our customers. With that, I'll turn the call over to Barry.

Operator:

[Operator Instructions] Our first question is from George Tong of Goldman Sachs.

Bill Meaney:

Good morning, George. Thanks for the question. So taking back, as you referred to, the last meeting, so over the last five years, we've been developing a number of new products and market approaches that really have taken us from a total addressable market where our products and services range from 10 billion to over 80 billion. So the things that we've been doubling down are consistent with that roadmap and picture that we highlighted last year, and that 80 billion, I should highlight, is also growing kind of low teens in terms of organic growth rate. So if you think about highlighted SITAD, for instance, in digital services today, I mean, I wouldn't say that we've just been doubling down on them in the last quarter, this has been a continuous build with I would say acceleration is part of Project Summit. And part of Project Summit, you're seeing the 375 million net EBITDA improvement that we are delivering and committing to. This is net of the investments that take us - that's required to actually invest in our digital services SITAD, our continued investment in data center, further acceleration in consumer, for instance. So the investment is already in there. The 375 million is a net number that's coming out. And I think you can expect, as we said today, if we just looked at SITAD in digital services this year alone that will add roughly $50 million of revenue on a year-over-year basis. So, we feel pretty good. Obviously, we just highlighted those two today, but across the board, and you can see it also in data center with nine megawatts leased in this quarter. So we feel pretty good about now aiming towards an $80 billion market in terms of revenue growth and that was part of Barry upsizing the revenue guidance for the full year.

Eric Luebchow:

Hey, good morning. Thanks for taking the question. Just one on the guidance, I'm just wondering if you can parse out the guidance increase what's coming from really operational outperformance versus perhaps some slightly more favorable foreign exchange rates that you experienced in the quarter versus last year? And then, another question on the data center side, just wondering, if you look at future growth areas, are there potentially any new markets either domestically or internationally that can make sense for Iron Mountain to enter either via M&A or through new Greenfield development or do you think you're just going to continue to develop in the markets that you have today? Thank you.

Bill Meaney:

Yeah, the only thing I would add, Eric, in terms of other areas of growth for datasets - so I appreciate the question is, let me kind of parse it out into theaters or parts of the world. So if we look at domestic, as you know that we have a land bank in Chicago, we continue to like the Chicago market. So it's just a matter of where our priorities are in capital allocation. So I think you can expect at some point Chicago will be on the map. Also we continue to like the potential opportunities to repurpose some of our electricity meters, if you will, in California, where we can actually buy wholesale power, which gives us an advantage in terms of power costs, by taking a records management facility and repurposing that into a data center. So, California continues to be an area that we remained focused on as potential market for further development. On Europe, as we highlighted a few calls ago that we started building Frankfurt and then sold the thing out 100% of the 27 megawatts, so Frankfurt is a market that we continue to look at further expansion to it, because it's a key market serving continental Europe. London too, as we noted, is in full development but that's also looking to be pretty buoyant. So we'll continue to look at if we need more capacity in London. And then the last aspect I would say in London is we have had a few of our customers approach us on looking at edge deployments, and where we were considering actually repurposing some of our industrial real estate footprint into data center. So if you think about, we have a land bank for our data center business, which takes us up to 445 megawatts but that's not including the 80 million square feet of industrial warehouses that we have around the world, a number of those are suitable to be repurposed into data centers. So we continue to look at that mainly for as an edge kind of deployment, which can be anywhere from, let's say, from two to six megawatts. On the Asia front, as Barry highlighted and I mentioned in my remarks, we're super excited about the joint venture that we have with Web Werks. India, we think has a lot of potential and we're already seeing pent up demand, partly it's regulatory driven and partly, it's just the growth of the economy. So I think there's a lot more for us to do in India. As you would have noted that we're now 100% sold out in Singapore. So we're working through the permitting process on finding additional capacity in that market. And there were other areas in Southeast Asia, which I think are early days that we're looking at countries that would be interesting to expansion. And I would put Latin America in the same category is that there are a number of areas in Latin America that we're starting to look at, but we're at earlier stages for those areas.

Sheila McGrath:

Yes, good morning. Bill, the short interest in the stock is down but it still looks elevated to reap. Certainly not something you can control but I was just - the concern has always been storage volume, given paper trends. Can you just give us your updated insights on how Iron Mountain is still growing storage volume, total revenue and effectively shifting to adapt your business to these changing trends?

Operator:

Next question is from Shlomo Rosenbaum of Stifel.

Bill Meaney:

Thanks, Shlomo. I'll talk about the physical volume side and then Barry can give you our thinking around the guidance around storage. So I think on the physical volume, if you've been watching this story for a very long time, I mean first of all, that the record storage is just one aspect of our physical storage business, right. And at the end of the day, it comes down to occupancy and our ability to drive cash returns for that business. So we feel that, I wouldn't say a large diversification, but a purposeful diversification of our physical storage business, I think you can even see that our data is showing the robustness and continuity of that business, which we feel really good about. Specifically to your question on the sequential Q4 to Q1 improvement in the records management side of the business, we're really pleased with it and that's why it continues to give our confidence that overall physical storage will be flat to slightly up for the year. And part of that improvement, which you can say during a COVID timeframe is kind of interesting, is really I give a lot of credit to our global strategic accounts organization, which we set up I guess, about 12 to 18 months ago, is their degree of mining and broadening the conversation with our customers is showing real results, not just in the new areas that I highlighted in my opening remarks around digital services in SITAD, which we've had, obviously, really nice growth in that area, but they actually is part of a broader conversation they're having with our customers, which quite frankly has delivered more box to our facilities as well. So, we feel pretty good across the board. We feel good about the different conversation we're having with our customers due to some of the investments we've made in our commercial operations. And Barry, you might want to talk about that.

Operator:

Our next question is from Nate Crossett of Berenberg.

Barry Hytinen:

Hi, Nate. It's Barry. Thanks for the question. So, we certainly did, as I mentioned in last call, include some level of what I would say is kind of normal inflation, the levels that were being talked about at the time. We don't see anything that is outside of our expectations that were embedded in the original guidance and that's part of the reason why we were able to continue to raise the guidance for the beat that we saw in the first quarter. I'll note that with our structure in our relatively high margins on both storage and service, it does result in with inflation, the opportunity to price that much more incremental profitability for us. And as you know we kind of price comparing to other logistics companies. So in some respects, it helps a little bit with our revenue management program. In terms of funding growth, a couple of thoughts. One, obviously, we're continuing to expand EBITDA, thanks to Summit and the team's underlying performance, we will be doing a level of capital recycling this year, call it $125 million is what's embedded in the guidance. I'll note that the market there is very favorable and we continue to like cap rates. And so those would be the principal things I'd mentioned in terms of where the yield is and where the stock is. We feel very good about our ability to fund our operations within our framework and so we'll be funding from things like recycling and the growth in EBITDA.

Jon Atkin:

Thanks. So, I guess a commercial question, and then more of an M&A question. I was wondering, as you think about your leasing objectives, where you see the greatest potential in your supplemental, there's obviously a very good layout of your pre-stabilized portfolio, the expansion pool, and new development. I can imagine any one of those three would be potential sources of new pre-leasing or leasing. But within those three categories, is there one or two that kind of standout as - of those categories that stand out as to where you see the most potential for these through the balance of the year?

Jon Atkin:

Okay. And then if you could maybe just refresh us on going forward interest level in inorganic expansion, and so whether that's sale leaseback private read portfolios, shells that are occupied by cloud players, and so forth. I think there's been a little bit of cap rate compression recently, for instance, in the US, but just interested in any updates or thoughts on types of M&A that you would continue to entertain?

Operator:

Last question is a follow up from Sheila McGrath of Evercore.

Bill Meaney:

No, thanks. So, Sheila, I'll answer your question on the edge data center deployments using our existing footprint. At this point, it's only a conversation. So there are a couple specific sites that we're looking at in Europe at the moment with customers but it's still early days, I would say. But I'm encouraged by the conversations we're having there and the flexibility that our industrial real estate footprint potentially gives us down the road.

Operator:

Ladies and gentlemen, that concludes the conference. Thank you for attending today's presentation. You may now disconnect.

Operator:

Good morning and welcome to the Iron Mountain Fourth Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Greer Aviv, Senior Vice President of Investor Relations. Please go ahead.

Bill Meaney:

Thank you, Greer, and thank you all for taking the time to join us. Let me start by saying I hope you and your families are safe and well. As we close out a year, which has been marked by first quarter delivering near record growth to our remaining year where we had to manage headwinds from COVID, I want to take a few minutes to reflect on where we've been and where we're going. First, I want to pause and acknowledge that we continue to fight COVID-19 and we maintain making the safety of our employees, their families and our customers our first priority. Whilst we are optimistic of the positive impact the roll out of vaccines will have, we continue to believe that 2021 will look similar to 2020, albeit in reverse in terms of the macro economic landscape. However, 2020 was also a year where there was much to celebrate, which came out of the creativity and resiliency demonstrated by our teams. I couldn't be more proud of my fellow mountaineers around the world in terms of the way we responded to the COVID-19 pandemic. In a phrase, we managed the crisis, the crisis didn't manage us. We continue to serve our customers where throughout the depths of the crisis, more than 96% of our facilities remained open. We maintained our focus on Project Summit, where we increased our targeted sustained annual cost savings from $200 million to $375 million and have already achieved over $200 million on an annual run rate by the end of 2020. We accelerated our growth in data center, with 58.5 megawatts of new leases announced in 2020 versus 16.9 megawatts in 2019. We continued our investment in new products and innovation with a focus on supporting our customers' remote workforces. These services led to growth in our digital solutions year-on-year of 8%, excluding FX. And we continue to see good returns from our global strategic accounts organization and maintained our focus on shifting our culture as part of Project Summit to be one more in tune with accelerating our revenue growth through new services and solutions. This continued focus on expanding our service offerings to our customer base of 225,000 customers in organizations, in spite of COVID has allowed us to guide to organic revenue growth of 2% to 6% in 2021, the highest level of growth in the past decade. This significant investment in innovation, in new product development is supported by our purpose to be our customers most trusted partner for protecting and unlocking the value of what matters most to them in innovative and socially responsible ways. Our strategy is highlighted by an important balance between accelerating growth, driven by developing end-to-end solutions to help our customers unlock value from their content as well as sustaining growth in physical storage and data center. In other words, being both the lock and the key to many of our customers' physical and digital data assets. The strategy is underpinned by our high performance, customer obsessed culture and our strong customer connection with not only 225,000 customers, but over 950 of the world's largest 1000 companies. It is not simply investment in products that has given us accelerated revenue growth, but a deliberate focus on shifting our culture as part of Project Summit. This shift in culture is marked by a singular focus on our customers as our North Star and acceleration in our commitments around diversity and inclusion, not just because it is just, but also because it is a key to our strategic success in being a more creative and dynamic organization which can deliver more value in tune with our customer needs. And an increase in our commitment to carbon neutrality. 2020 saw us continue to secure renewable energy to meet the power needs of a 100% of our data centers, even with the rapid increase in bookings and new facilities operating. Some examples of our laser focus on how we have responded to our customer's needs in more creative ways included processing unemployment benefits to get them into the hands of people in need during the crisis and setting up 12 digital mailrooms around the globe for customers who didn't know how they were going to stay connected with their remote workforce. In a phrase, we helped our customers when they needed it most. What that all means to me, is that we came out of 2020 stronger than ever. A company with a new sense of momentum that will fuel both our top and bottom-line growth. In the next few minutes, allow me to illustrate for you what I mean by momentum. If resilience was the word for 2020, growth is the word for 2021. We're already seeing evidence of this growth in data centers, for example, and expect this to continue. As we have discussed before, we are also seeing good growth in digital solutions as well as physical storage, both from the continued durability of our records management business, together with an expanding consumer business, and believe this growth should continue. This change in revenue growth trajectory is a direct result of the investments we have made in new product areas, coupled with changes we have made in our commercial engine. One of the fundamental changes we have made in our commercial approach is that we have invested in creating more time for our salespeople to engage differently with our strategic customers. This extra time with customers has allowed us to uncover new revenue opportunities, not just for additional physical storage and new datacenter customers, but for digital services, which provides both greater visibility for doc data as well as deriving much more value from data born both physically and digitally. As a result, you can see both from our performance last year as well as the guidance we have provided today for 2021, our company is more and more seen by our customers as a partner who, yes, protects and manages all their physical and digital assets, but also gives our customers the key to integrating their information, unlocking its value, as well as accelerating their own digital transformation journey. For 70 years, we've offered protection for the assets our customers' value most. We now more and more catalog, index, govern and manage complete information across physical and digital domains, securely storing what customers need, disposing of what they don't, and helping them unearth the insights that drive business transformation. Let's now explore some exciting growth opportunities ahead of us. These are areas where we see great opportunities for growth as we position ourselves to unlock greater value for our customers and include data centers, fine arts and entertainment services, consumer storage, secure IT asset disposition or SITAD, small and medium business, content service platform or CSP. Think of this as electronic content management or ECM on steroids and secure offline storage or a highly secure air gapped data storage for cost effective protection against ransom attacks. Let's go into a little bit more detail about a couple of these areas. In data center, we have built a strong global platform with 15 operating facilities across three continents since 2017. And we just announced an agreement which once closed, will mark our entry into the very fast-growing Indian market through our investment in Web works. The total addressable market for our data centers globally is $20 billion and is growing at over 10% per colocation or retail customers and over 40% for the hyperscale segment. If you look at fine art stories and entertainment services, it's roughly a $2 billion market for both together. Just two months ago, the L.A. Times wrote an article about our entertainment services business. They called us the Fort Knox of Hollywood. The article highlighted how we are driving a different level of growth in that business through not just storage, but how we facilitate more opportunities for the studios and artists in distributing their assets to viewers and listeners. In consumer, we've grown the business in one year from about 2 million cubic feet of storage to more than 7 million cubic feet of storage, so three times as big in just 12 months. The total addressable market for consumer storage is more than 35 billion, and it is growing at about 5% to 6% per year. I note that our segment focus is on Valet storage, where our logistics expertise gives us a strong competitive advantage, as well as being a nice submarket which represents a significant opportunity for future growth. Our SITAD business has an addressable market of $10 billion, and we have seen strong growth in this business over the course of 2020. More importantly, we have found that our strong heritage around data security and chain of custody is proving a differentiator, as we recently took on the global responsibility for SITAD on behalf of two large financial institutions. So hopefully this helps you appreciate why we are so excited about the growth opportunities as we look to 2021 and beyond. Taking together, the seven areas I highlighted earlier, represent a significant market opportunity for us. Let me put some context around that. If you look back to 2015, the total addressable market we competed in was $10 billion and on average those markets had low growth rates. Over the last five years, as we've listened to customers, built expertise and developed new products and solutions, the addressable market we now compete in is over $80 billion, yes $80 billion. Additionally, those products and services that we've developed expertise in are growing at a 13% organic growth rate. So not only has the addressable market for expanded services grown by over eight times, but these new areas have double-digit industry growth rates, which helps facilitate our entry. Let me now shift gears and briefly review our performance in the fourth quarter and throughout 2020. At a high level, we couldn't have been more pleased with the way our mountaineers navigated the challenging environment in 2020 brought on by COVID-19. Throughout the pandemic, we were laser focused on execution and controlling those factors that we could, leading to outperformance against our own internal expectations through the last three quarters of 2020. This resulted in continued strength and total storage rental revenue, which grew nearly 4% on a constant currency basis in 2.4% organically. While service revenue declines continue to offset the solid storage growth, we grew adjusted EBITDA 1.3% when adjusting for currency. And our margin expanded a 110 basis points in 2020. This all in-spite of total revenue being down $115 million due to service activity declines. I want to thank our teams across the globe who stayed focused in the phase of so many obvious distractions. Our success is a reflection of our mountaineer's dedication and most importantly, I have been inspired by the way our teams looked after both the physical and the mental health of each other as they navigated the threats from COVID, both at work and at home. Turning now to our physical storage business. Total global organic volume was essentially flat compared to the third quarter. Contributing to this was a 1.9 million cubic foot increase in consumer and adjacent businesses, offset by a similar decrease in records and information management volume. For the full year, total global organic volume was flat, which is a good outcome considering the environment in which we were operating. This year, we expect total global organic volume to be flat to slightly up. Looking more specifically at RIM organic volume, this was down 1.9 million cubic feet sequentially. For the full year, organic volume declined 1.1%. In our Global Digital Solutions business in 2020, we were actually able to grow service revenue 8% year-over-year, excluding FX. Despite the pandemic, our team grew revenue. This goes back to the different mindset I mentioned earlier. We see a further acceleration in our digital solutions business going into 2021 and expect to exceed $300 million in revenue for the year. Turning now to our Global Data Center segment, the team had a phenomenal year. Blowing its leasing targets out of the water, quarter after quarter. For the full year, we leased more than 58 megawatts. Remember, our target coming into 2020 was 15 to 20 megawatts. I want to underscore that that success was not just the result of leasing to hyperscalers. We had a very good commercial momentum in our core enterprise retail colocation business, which represented 12 megawatts of the 58 megawatts or close to 40% of our bookings, excluding Frankfurt. We attracted 73 new logos to our platform during 2020, adding to our broad and diverse base of more than 1300 data center customers. This should enable us to strengthen our network ecosystem and increase the stickiness of our deployments. We also had a busy year in terms of development, with more than 10 megawatts commissioned across multiple data centers and geographies, increasing our leasable megawatts to a 130. Our team is actively adding to our development pipeline to ensure we have the right capacity in the right markets to meet robust customer demand and we are excited for the opportunities we see ahead of us in 2021, where we expect to end the year with over 170 leasable megawatts. One of those opportunities is further expanding our data center footprint into new fast-growing markets. As I mentioned earlier this morning, we announced entering into an agreement for a strategic JV with Web Werks, which once closed would expand our reach to India including Mumbai, Pune and Delhi. The data center market in India is projected to grow rapidly in the coming years and India is the second largest telecommunications market in the world. We are excited to be an early mover into an emerging market where the demand is high and the supply is low. Turning to Project Summit. We generated adjusted EBITDA benefits of a $165 million in 2020, consistent with our most recent expectations and significantly ahead of our initial estimates of $80 million reflecting strong execution in swift and decisive actions - activity actions on early initiatives. This gives us an exit rate of annual savings of over $200 million heading into 2021. As you will hear from Barry in more detail, we are fully on track to recognize the estimated $375 million of adjusted EBITDA benefiting this year and we are excited for the tangible benefits we will experience this year as we continue to enhance our technology and processes. Before I wrap up, I'd like to provide a little more detail about our continued commitment to cut our carbon emissions I referenced earlier. We were one of the first 100 or so corporations worldwide to have an ambitious carbon reduction goal approved by the science-based targets initiatives as being aligned with the Paris Climate Accord. Already in 2019, we reported that our goal to cut 25% was more than doubled by delivering a 52% reduction six years sooner than our 2025 commitment. As we did this, whilst growing our global data center business, one of the most energy intensive industries in the world. We continue to flex our innovation muscle around energy consumption as well as having introduced the green power pass to our customers. This is the first solution of its kind and allows us to pass the benefits of a 100% renewable energy data center platform to our customers for them to use to meet their sustainability targets. We're confident based upon the momentum we are building in this area that we can achieve a 100% carbon neutrality well before 2050, in spite of our rapidly growing data center business. To summarize, I've never been more optimistic about our opportunities for growth at any other time in our history even with the anticipated continued headwinds due to COVID impacting our traditional service areas. And I'd never been more proud of how we behaved as an organization over the course of 2020 and through the pandemic. We went above and beyond for our customers and our teams and embraced new collaboration tools in change how we work. Our mountaineers truly lived our values day-in and day-out. I'm excited to be on this journey with you all and I can't wait to see the future together. With that, I'll turn the call over to Barry.

Operator:

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from George Tong of Goldman Sachs. Please go ahead.

Bill Meaney:

Hi, George. No, thanks for the question. I think this year most of the growth will be around the digital services, which I highlighted. So, I said last year we did 8%, then we see a further acceleration in that growth rate going into this year. And on SITAD, you'll continue to see its relatively small portion of the business. But as I said, to give you some idea of the scale, those two global contracts that we've signed early in this year to serve financial service institutions, those two combined are probably in the order of about 15% year-on-year growth. So, it's pretty high levels of growth on what it traditionally was smaller parts of our business. But over time, over the next year, what you can expect is over the next year or two, we'll start guiding more and more to those individual pieces of business. But if you think about it, what this all means is more on a consolidated basis. It gives us the confidence on guiding say that, we said that 2% to 6% growth in terms of top line range. And if you take the midpoint that's 4%. It just gives us much more confidence as we go forward that we can really start driving bottom line growth, not just through margin expansion, but through top line growth, because of the resiliency and the attractiveness of these new segments.

Operator:

The next question comes from Shlomo Rosenbaum of Stifel. Please go ahead.

Barry Hytinen:

Sure, Shlomo, thanks for the question. If I take the total revenue guide, which is 4% to 8%, that's a little over $250 million at the midpoint or slightly over 6%. We're expecting data center, as I mentioned, in the prepared remarks to be up, kind of double-digits so we're approaching mid-teens. So, let's call it $40 million of pure revenue growth be a small amount of FX on that number, since you asked about that. And then turning to the global RIM business, we're projecting in a 200 plus million of total growth. Now, that's assuming revenue management of the normal levels that we've been experiencing 2% to 3%, maybe even a little bit closer to the high end as we continue to roll that out. And as I mentioned in the prepared remarks, certainly the vast majority of those actions will be in place by the end of the quarter. We're certainly expecting with COVID for planning to flat to slightly up volume. And Bill mentioned the digital solutions, which would be probably in the vicinity as much as $50 million of year-over-year benefit. And that results in a very slight service activity recovery for the balance of our services. On adjacent businesses, we're continuing to see the business improve. But I'd say we're being a little bit conservative and prudent with respect to the COVID impact as we continue to see those underlying markets recover. I will note that, we did see for the second quarter in a row, very nice volume out of our adjacent businesses. And that's the entertainment services business continuing to see improving trends. Bill, anything you'd like to add there?

Barry Hytinen:

The only other element Shlomo, I would add is from an FX perspective, it'll be about call it 1.5 in total of the 4 to 8, something of that order in light of where FX rates are in terms of forward projection on banks - bank views, so thanks for the question.

Nate Crossett:

Hey, good morning. Two quick questions, if I could. I was curious on the specs of the new JV, how much will you guys own? How did it come about and is this the kind of platform where there'll be opportunities over time? And then also just a question on capital recycling? I think you mentioned $125 million. I'm just curious, how much of your industrial portfolio would you be willing to recycle long-term?

Barry Hytinen:

And Nate, thanks for the question. This is Barry. On the recycling point, we as you know, see recycling of industrial assets is highly attractive as we see the valuations as really good at these levels. And together with our development pipeline and data center, among others, it's a really good move for us to invest in faster growing opportunities. The way I think about it is industrial assets continue to increase in terms of valuation. So the level of recycling that we've assumed in the plan this year would kind of be a mid-single digit percent of purely the industrial asset base. So, we've got a - and that is obviously a base that continues to expand in terms of value in light of what's going on in asset prices out there. So over time, I think planning for something in this level, annually, is not a bad place to plan if I were you. And I would also note that, if we continue to see opportunities on both sides on the industrial side, as well as incremental opportunities in the development pipeline, we would not be afraid to continue to recycle even at a little bit higher level, but for the year, we're planning 125. Thanks for the question.

Michael Funk:

Yeah. Hi, good morning. Thank you for the question. A couple if I could. So, first thinking about the potential impact of wage inflation on the business with the $15 minimum wage, being pushed through. Wondering how that might impact your proposed cost savings?

Operator:

[Operator Instructions] The next question comes from Sheila McGrath of Evercore. Please go ahead.

Bill Meaney:

Okay, thanks Sheila for both questions. So first, I guess my flippant answer to your first question is, I think 58.5 megawatts this year says that we're pretty competitive. So, I tell my congrats to our team who have really dug in. I think the other thing what I would say is just another proof point. Then I'll say how we're compete, is that if you look at our, especially on the sales side, but also in the operation side of our data centers, most if not all of these folks come from leading what I would call pure play data center companies. And so, you can almost say and to me it's not - you measure the success of your offering in two dimensions. One is, do customers buy it, right, which is the 58.5 megawatts this year of leasing activity our new leases signed, I think is a pretty good proof point. On the other side is, are people willing to bet their career and their livelihood by coming to join you who are specialists in the field and I have to say that market who leads that business has done a remarkable job in terms of attracting really, I would say, top tier focused data center talent. Now, in terms of the synergies between the business, which goes into the secret sauce, which you alluded to, is still about 40% of our whole own leads come from our traditional records management sales force. And that's you're seeing that even more and more now that we set up strategic accounts. So, I don't go to a strategic account meeting where they pulled out a strategic account executive for me along where we're not speaking about data center opportunities. I mean, just last week, Barry and I were with the number two executive of a global bank and he brought up data center even before we could, Barry and I with one of our strategic account executives. So it's a - people definitely see the connection, the decades, this is our 70th year, the decades of trust that we've had with financial service institutions. And it's the reason why the likes of Goldman Sachs and Credit Suisse have trusted us with their colocation installs. So, definitely the trust is a big factor. And the team seems to be really getting great traction in the market.

Kevin McVeigh:

Great, thanks so much. Barry, can you help us just understand how much the EBITDA methodology changes in fact the 2021 EBITDA if at all, just based on the recapture the air back at stock-based comp and growth capital and then the JVs?

Operator:

The next question, comes from Eric Luebchow of Wells Fargo. Please go ahead.

Bill Meaney:

Yeah, I think to your first question I would say, yes. And in part of that, that recovery is based on the success that we've had in consumer is I mentioned in my remarks is that, we went from 2 million cubic feet to 7 million cubic feet last year, I'd say in 2020. In terms of the incoming volume, we still see the similar trends as we saw pre-COVID. At this point, we haven't seen a - we have and you can almost you can see that no supplemental, we haven't seen an acceleration in that headwind that we're getting. But we're still for sure going through what I think I described on a few calls previously, maybe was a year ago, what I call the second derivative action. In other words, virtually all our customers are continuing to send us new boxes. But some of our historically, fastest growing and largest verticals are sending them in at slower rates. So, we continue to see that what I call the second derivative drag on volume coming in slower than boxes aging out at their normal kind of 15-year lifespan. So, we expect to continue to have what I would call the same pre-COVID headwinds on the traditional document side of the business more than offset by the growth in consumer.

Stephanie Yee:

Hi, thank you. I also had a question about incoming boxes, just as people returned to work maybe later in the year, would you expect the incoming boxes to kind of pick up to pre-COVID levels? And kind of along with that, as incoming boxes pick up would constructions also pick up when people are back in the office more?

Operator:

The next question comes from John Atkins of RBC. Please go ahead.

Bill Meaney:

Okay, thanks, John, for the question is quite a bit in there. So, let me kind of start about how we think about the JVs or we use India as an example. So, India is a country that we're pretty comfortable in. That's why, specifically, it's actually been more than three years, actually I think, five years. I go to India, at least a couple times a year. But I would say five years ago, I started going there with a focus on finding the right data center entry. Even though we have a little less than 2,000 people working on the records management side in India. So, it's a market we know is for us, it was important to find the right not just physical opportunity for entry, the right footprint, but also the right team that we could build on. And with Web Werks, we found that I think from a Web Werks standpoint, they also appreciate it is that we are not a financial sponsor, or we're not a newbie in the Indian market. So, that they see how we operate in India already today. Culturally, we're tuned to the challenges that they have in a very supportive of their journey. And so that, in this case, Deutsche Bank ran the process. But I think one of the reasons why we won was the relationship we were able to build with the entrepreneurs and the way we the way we operate. So that to me is part of our secret sauce is that, we are a company that is in 56 countries around the world, over 20,000 mountaineers around the world so that we can make those connections. And then also it's not lost on these entrepreneurs in this particular case, that we were actually refusing data center demand. We had a number of customers, they were asking for capacity in India, and quite frankly, we just couldn't deliver for them so that we can bring that network to bear. I think if you kind of think more broadly on build to suit, as we build out our reputation with some of the large hyperscale players, so as we announced the Frankfurt started off, not as a build to suit but ended up being a build to suit effectively, because we had that interesting data center asset, and it was hyperscaler that needed the whole 27 megawatts. So, the design and engineering got modified to satisfy them. And that was one reason why we put it into the type of joint venture structure that we did, because it turned out to be a completely stabilized asset from day one, if you will. That has also led us to have, we haven't done any at this point but there's more and more that are approaching us to look at build to suit opportunities. And quite frankly, we just look at the returns. If the campus supports that, and it allows us to actually further expand or even upgrade the capacity of a campus by bringing in more power on the back of a build to suit opportunity, then we absolutely entertain it. The last thing I would say is that we are starting to see more pipeline. Now, whether or not we execute on that is interesting is that, when I was talking about the Frankfurt situation is that, what the customer there admitted to me that he really does see us as one of those handful of suppliers that he looks to when he's needing third party capacity. So, just naturally we are starting to see those kinds of opportunities, whether or not we actually execute on them really is going to depend on the types of returns in this specific campus opportunity.

Operator:

Good morning and welcome to the Iron Mountain third quarter 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Greer Aviv, Senior Vice President of Investor Relations. Please go ahead.

William Meaney:

Thank you Greer, and thank you all for taking the time to join us. Let me start by saying I hope you and your families are safe and well. The third quarter provided us with a great opportunity to demonstrate the significance of the measures we have taken over the last few months in response to the pandemic and set a marker for outperformance through top line resilience in our physical storage and growing data center businesses, adjusted EBITDA margin expansion, and by maintaining our strong cash generation track record all while continuing our investment in innovation and new product development. I would like to thank all of our Mountaineers for this remarkable performance and for their steadfast focus on safety and execution. Despite lingering uncertainty related to the global COVID-19 pandemic, we have seen improvements, albeit gradual, in key U.S. and international markets as it relates to our service activity levels while showing continued strong performance in both our physical storage business and our global data center business. I continue to be inspired by the tireless efforts of our teams as they support and care for our customers, each other, and our communities whilst accelerating progress on our strategic priorities. From the start, we set our priorities to deal with the situation clearly and take care of the health and safety of our people and work hard to honor the commitments we have made to our customers. In April, we had up to one-third of our workforce out on furlough or other temporary leave. I’m happy to report that we have brought a significant number of these Mountaineers back to work to serve our customers and we now have over 90% of our employees working regularly. Whilst this has been a very difficult time, we have proven to be very resilient. We are financially healthy with strong and reliable cash flow driven in part by our brand and customer loyalty. This was evident in how we’ve managed the heightened uncertainty of the past eight months. We quickly aligned on the right mix of priorities to maintain strong near term momentum whilst continuing our investments in innovation and new products as we execute our plan for long term value creation. This combined with the benefits from Project Summit has allowed us to continue to invest in transforming and modernizing our company. As demonstrated by our year-on-year constant currency year-to-date adjusted EBITDA in storage revenue growth, we can already see the evidence supporting our belief that we will emerge from this pandemic as a stronger company on all dimensions. Clearly, there are still many uncertainties around COVID in terms of the development of the pandemic and how the governments worldwide will continue to respond with varying degrees of restrictions as infections rise. However, in the third quarter we saw signs of improvement in customer trends and as a result, the decline of our service revenue moderated. In addition, there is clear evidence that as and when the restrictions lift, customers do come back to us with needs from both a physical and digital document storage perspective, and while some elements of our business may have changed forever, our positioning with the communities we serve remains strong. Throughout the pandemic, we have continued to adapt and transform our business model and solutions to changing customer needs due to challenges created by COVID-19. Our customers are evaluating their real estate needs, business processes, and ways to increase digitization in a remote workplace setting. We have been focused on helping them navigate these challenges and have tasked ourselves with accelerating our response to our customers’ needs. One thing is certain - the pandemic has created opportunities for us to help our customers in new and innovative ways. The fact is we’re a different company than the one most people know. The strategic journey we have been on has driven this change, and to remind folks, our focus remains on three pillars

Operator:

[Operator instructions] Today’s first question comes from Shlomo Rosenbaum with Stifel. Please go ahead.

Barry Hytinen:

Sure, hi Shlomo. Good morning and thanks for the question. We really feel very good about the Frankfurt joint venture and what the team has done there with that fully leased up facility. We invested about $100 million at closing essentially with the deal. Over time we’ll cash out nearly all of that, in fact all of it, and nearly of all that at the close. We retained over 20% retained equity interest in the venture. We will earn fees for things like property management, development and construction, and we’ll take those proceeds and redeploy it into development pipeline, which has nice high return opportunities. So essentially, we see it as the opportunity to monetize essentially what is a stabilized asset, boost that return, and then redeploy. You asked about debt - yes, of course the entity would, as you’re expecting, have debt on it. That debt will approximate the incremental development costs, so that might be--over time that could be as much as a couple hundred million euros. We have a very attractive rate on that debt, I might add, and we feel very good about the way the development is proceeding. Bill, anything you’d like to add?

Operator:

Thank you. Our next question today comes from Nate Crossett at Berenberg. Please go ahead.

William Meaney:

In terms of AGC, they do have an appetite for these things, and in fact they have a similar structure with a different customer in the United States, and we ran a process so I would expect that they would be interested in any further processes that we run down the path. I wouldn’t be surprised at all for us--to see us do other things with AGC, but it will depend on the location and the opportunity. I think in terms of your question on storage revenue growth, is that it was about 1.7% if you just look at the physical storage and took out the data center, so it goes from 2.5 to 1.7, but still strong positive growth based on some of the success that we’ve been having on the back of consumer, so really pleased both in terms of record management did better this quarter and also consumer is really starting to show that it’s starting to hit a groove. That being said, we do expect--you know, the quarters are going to kind of go backwards and forwards a little bit because consumer is a seasonal business, but we think the trajectory is moving in the right direction for both businesses. On the pricing side, you can see actually that we are continuing to get roughly the three points of price that Barry highlighted. We don’t see any slowdown in that at all, and we have more to get in the emerging markets, which are relatively new to the game in terms of our revenue management processes, so good response from the customers. We’re still considered very much an essential business or essential service to our customers, so it’s a great position to be in.

Kevin McVeigh:

Great, thank you. Not to put another question on the data center, but from an accounting perspective, will you recognize that as kind of the revenue--is that below the line or will it be reflected in the revenue and EBITDA, or is that below the line based on just the equity JV?

Operator:

The next question today comes from Sheila McGrath at Evercore. Please go ahead.

Barry Hytinen:

Hi Sheila, this is Barry. Thanks for the question. For the most part, you’d be thinking about sales-leasebacks in terms of what we’re talking about. The couple of opportunities we monetized in the most recent quarter were also sale-leasebacks. Frankly, we’re seeing very, very strong performance from the team as it relates to cap rates in light of where the market is - think something like sub-5, even 4. Then with relatively long term leases together with options to further renew, we have the ability to effectively control those facilities, we feel like whether we lease or own them. We feel good about that monetization strategy, and then in terms of priorities, it really is into higher return IRR projects that are in the development pipeline. As you know, and you know the business really well, that’s focused principally on data center but not exclusively there, and so you should expect us to continue to recycle and likely step up that activity some going forward.

Barry Hytinen:

You’re welcome.

Michael Funk:

Yes, thanks and good morning, and thank you for the questions. A couple, if I could. Going back to the digital transformation that you were talking about, working with customers there, can you help us think about comparing the revenue contribution from a customer transitioning to more of a digital solution versus a physical solution, and then where you see the growth opportunity there as well?

Operator:

Thank you, and our next question today comes from George Tong with Goldman Sachs. Please go ahead.

Barry Hytinen:

Sure George - hi, this is Barry. Thanks for the question. For the--if you recall in July, we mentioned that total service activities were down kind of mid to high 20s for the quarter. If you look at new boxes inbounded, they average about 31%. October is slightly below that level and September was, as you might expect, the best performance of the quarter in light of trajectory we’ve been mentioning, and that really is the case for all of the other service activities - they’re generally following the same trajectory. I would say that we look at--going forward, we’d use the September-October levels as being indicative of what we’re expecting, and that’s embedded in the forward outlook that we mentioned as it relates to third quarter and fourth quarter looking sort of similar in terms of revenue and EBITDA.

Eric Luebchow:

Great, two questions, if I could. The first one on the data center business, wondering if you could let us know of what your leasing this quarter--the split was between more hyperscale logos versus enterprise. Typically hyperscale is lower return, so could you update us on whether your approach has changed at all, whether you’re actively looking for more hyperscale business or if that’s just more reflective of the market this year, and then what the targeted deals you’re looking at are in the data center business and how that breaks out between those two customer segments. Then Barry, just quickly on the guidance, I know you said flat revenue and EBITDA for Q4. I’m wondering if that implies--how you split that out between service and storage, should we expect service to maybe be flat to slightly down and storage up, or if there’s anything to call out in Q4. Thank you.

Barry Hytinen:

Eric, it’s Barry. Thanks for the question. As it relates to fourth quarter, I would say that we’re working with a modeling of service revenue decline being similar in nature Q3-Q4 versus prior year, and that’s what’s essentially embedded in that outlook. That should work through--you’ll be able to work through the storage number. I would note that that’s aligned with my answer to George earlier about where we see activity levels as being fairly consistent to slightly better. Thanks for the question.

Shlomo Rosenbaum:

Hi, thank you very much. Can you just comment a little bit about the step-up in fine arts volume? It’s something that we really haven’t seen for a while, and I’m wondering what’s driving that.

Operator:

Thank you. This concludes our question and answer session and today’s conference call. A digital replay of the conference will be available approximately one hour after the conclusion of this call. You may access the digital replay by dialing 877-344-7529 in the U.S. and +1-412-317-0088 internationally. You will be prompted to enter the replay access code, which will be 10147841. Please record your name and company when joining. Thank you for attending today’s presentation. You may now disconnect.

Operator:

Good morning, and welcome to the Iron Mountain Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note this event is being recorded. I would now like to turn the conference over to Greer Aviv, Senior Vice President of Investor Relations. Please go ahead.

William Meaney:

Thank you, Greer, and thank you all for taking time to join us. Let me start by saying I hope you’re all continued to stay safe and healthy in these trying times. Before we get into a discussion of our second quarter performance, I’d like to take some time to touch on 2 topics that are top of mind for many of us in the current environment. First, the killings of George Floyd and countless others have left me and my colleagues upset, angered and heartbroken. I want to reiterate that racism, discrimination and hate have no place at Iron Mountain. Our commitment and stated as one of our core 5 values for many years, to equality, inclusivity and diversity is part of our belief that our people are our greatest assets. Given this fact, we must continually attract, listen to and develop a broad talent pool reflecting our global demographics in order to deliver to our customers and protect our future. These tragic events have sparked difficult but important self-reflection in conversations within our organization about how well we are living up to our stated value and to commit ourselves to do much better. It is up to us to work together, educate ourselves and encourage open dialogue to promote proactive measures to help eliminate incorrect biases and spread awareness, not just because it is the right thing to do, but also because we will only be successful in serving our customers if we attract and retain the best talent. Having the best talent can only happen if we are recruiting and developing people from diverse backgrounds across the broader demographics we operate in. We remain strongly committed toward taking decisive and strategic action to create a truly inclusive Iron Mountain. We’re committed to listening, learning and taking the necessary actions to support long-term positive change for the black community specifically, and people from all backgrounds in general. Whilst we cannot change the past, we have an opportunity as an organization and as individuals to positively impact the future and help fix the racial inequality prevalent in our society. Now, I’d like to update you on the impact we are seeing with respect to COVID-19. As you all know, the virus is unfortunately still spreading across the globe. My thoughts and prayers go out to all those who have been affected by the virus, including those who have fallen ill as well as their loved ones and their caregivers. As always, our top priority remains the health and safety of our Mountaineers, their families and our customers. I want to acknowledge and thank the mighty Mountaineers around the world, who despite extraordinary challenges have kept their focus on ensuring that Iron Mountain continues to move forward during these uncertain times, and doing so with a view towards safety. This is all [brought home] [ph] to me again last week, during a visit I made to Northern New Jersey, so I could thank our frontline teams personally. One of our couriers relayed how he has been serving a large metro New York health system every day through the crisis and how thankful the customer is for our continued service. This particular customer went so far to send one of their doctors to our facility to assist in the protocols and training to protect our staff. For me, this is what it means to be in a true partnership with our customers. Whilst we continue to serve many customers during this crisis, as you would expect our second quarter results were impacted by disruptions due to office closures and other restrictions put in place as a result of COVID-19. Fortunately, 100% of our records management facilities are now open and operating across the globe. However, many of our global customers continue to operate at significantly lower capacities due to existing restrictions depending on geography. As a result, global demand for many of our core service offerings declined during the quarter. Looking back, no one could have anticipated the magnitude of the impact from this pandemic on the global economy and our own business. However, our team moved quickly to assess the risks, understand the consequences, and take decisive action to ensure the safety of our employees, customers and communities. As I mentioned, these various decisions have not been made lightly. And we are aware of their consequences, especially for our Mountaineers that have been impacted by furloughs and other temporary, and in some cases, permanent actions. We told you in May that approximately a third of our global workforce has been impacted by these actions in an effort to keep our labor costs in line with levels of service activity. Fortunately, we have been able to bring a number of our Mountaineers back to work. So at this time, this number has decreased to approximately 20% of our global workforce. Furthermore, the mix has shifted over the past few months, so fewer of the impacted employees are on full furlough, and a higher percentage are working reduced hours, or using vacation or sick times. At this time, we have also reopened all our corporate offices with the exception of London, which we plan to open at the beginning of September. We are practicing strict protocols around social distancing. And as such, the majority of our salaried workforce is continuing to work remotely. We should know we have been strong – we have seen strong productivity rates with working from home. That being said, given some of the increased stresses of working remotely, we continue to monitor and care for our Mountaineers’ mental health and resiliency as part of our overall focus on wellness. Turning to our financial performance, our continued navigation of this challenging and uncertain environment has delivered a second quarter performance that further demonstrates, improves the durability and resilience of our people, and ultimately, our business model. I’ll touch on a few highlights here. Q2 constant currency revenue declined $58 million or 5.6% year-over-year, driven entirely by a 21% decline in our service revenue. This was partly offset by strong storage revenue growth, which increased 3.7%. The early benefits of Project Summit are evident as we delivered constant currency adjusted EBITDA line, in line with the year-ago level despite the revenue decline, leading to a 200 basis point margin expansion. Barry will review the rest of the Q2 financials in more detail. Looking at our service business, we have seen improvements in activity levels across the various product lines since the end of April as global economies are starting to reopen and customers are increasingly utilizing our core service offerings in many geographies. However, the pace of our recovery still remains uncertain. Whilst the revenue decline wasn’t as steep as we expected when we last spoke in early May, we continue to see some risk around the second half, depending upon what happens with the progression of the virus and possible additional restrictions on a country-by-country and state-by-state basis, as they continue to fight specific localized outbreaks of the virus. Turning now to our core Storage business, total organic storage rental revenue grew 2.3% supported by strong revenue management contribution. Moreover, we saw cash collections improve both in absolute terms year-on-year as well as by 2 days outstanding. This level of organic revenue growth underscores the durability and essential nature of our Storage business and our ability to continue to generate substantial cash flow. Total organic volume declined 1.8 million cubic feet sequentially, contributing to this decrease was in records management volume, partly offset a 2 million cubic foot increase in consumer and others. Looking more specifically at records management organic volume, this was down 3.9 million cubic feet compared to the first quarter. This shouldn’t be surprising based on the decline of incoming boxes in April and a decline of 45% for the quarter. We have been asked by many investors as to what we see happening to physical volume post-COVID. So let me take a step back and provide some further context on organic records management volume. We estimate that the impact from COVID in Q2 was somewhere between 4 and 4.5 million cubic feet, net of a slowdown in permanent withdrawals. If we continue to normalize Q2 for similar levels of volume in Q1 combined with our expectation for a pickup in permanent withdrawals, volume would be flat to slightly up on a normalized basis. To get to a total physical volume impact, I will now be factoring consumer performance. In the second quarter, we added 2 million cubic feet, analyzing this would imply we would be net positive 8 million cubic feet or approximately 1% volume growth on a base of total physical volume of more than 720 million cubic feet. However, Q2 is a seasonally highest point for consumer business, so this would be overly optimistic to assume for a full year. When we net all this out in a post-COVID world, we would expect physical storage volume growth to be roughly a 0.5% with volume from records management flat to slightly up with a small net positive growth coming from consumer. It should be noted that this is all before the contribution from our normal price increases, which generally add approximately 2% to 3% to the volume growth, yielding approximately 3% organic storage revenue growth from the physical side of the business. However, when we will see this reversion to post-COVID normalized business environment remains uncertain, and it’s certainly not before the end – before the second half of 2021. Despite the stress constraints from dealing with COVID’s impact, we have not led up on our investments in innovation. Specifically in the quarter, we had many instances where we were able to serve our customers with a focus on delivering innovative solutions in order to help them navigate their challenges that have arisen from COVID-19. For example, regarding the commercial impact, in April, pipeline of more traditional offerings was down 40% versus the same period last year due to COVID in the resulting lower economic activity. However, we recovered one-third of this loss through new solutions we recently launched that help address our customers’ needs during this time. This is just one demonstration of the resiliency and dedication of our mountaineers as we expect many of these solutions to be additive to our top and bottom lines even after our base activities rebound. Turning now to our Global Data Center segment. This business continues to perform exceptionally well, delivering strong results in the second quarter. In June, we announced a 27-megawatt data center lease with a U.S.-based Fortune 100 customer in Frankfurt, Germany. This customer will occupy the entire Frankfurt facility which should result in stabilization significantly sooner than we originally anticipated when we purchased the land last year. In addition, we signed a 3-megawatt data center lease with a Fortune Global 200 company in Singapore, another signal of strong momentum in that market. These bigger deals have been won alongside a series of smaller but significant agreements including a number of new logos. We welcomed an online gaming platform, a state government and a global logistics supplier provided to the IMDC ecosystem in Q2. All of this is contributed to a strong performance in the first half of the year with nearly 39 megawatts of new and expansion leases signed against our initial guidance of 15 to 20 megawatts for the full year. Given this great success in the first half of the year, we now expect to be able to sign leases for a total of 45 to 50 megawatts this year or an additional 10-plus megawatts of leasing in the back half. I’d like to congratulate the entire data center team for an exceptional first half performance. Thank you. Based on the strength of our pipeline, we will continue to prioritize investment in data center growth. We are actively building our capacity across our global footprint with new development projects started in Amsterdam, Singapore and Phoenix. In early July, we completed the first phase of 4 megawatts and our new building on our Northern Virginia Campus, and customers are already deploying. As I mentioned earlier, Projects Submit is already paying dividends. No one could have predicted the depth or breadth of this pandemic when we first announced Project Summit in October 2019. Thankfully, the decisive actions we took early in the program allowed us to reconfigure our cost structure as well as realigned our organization to be more nimble and customer centric. These changes enabled us to be more responsive in delivering new solutions to our customers’ specific needs during the crisis as well as matching our costs to a changing demand environment. In addition to the cost reduction Project Summit has achieved as demonstrated by our increased margin, we’ve also made progress on the next phase and improving our customer intelligence as well as simplifying our IT systems, one such example being our master data management initiative. Through this initiative, we’re improving the platforms and processes that handle all of our data. This intelligence will allow us to better understand and serve our customers making data and asset for our business. Finally, I’m also very pleased with the initial success we have seen from the recent changes to our service delivery model. The rollout of the SLA changes or service level agreement changes we discussed last quarter had gone smoothly. We have already seen the early benefits of denser routes and less frequent pickups and deliveries. Our Image on Demand service has seen an increase in activity as more customers look for solutions, which include the use of digital solutions, as it helps them integrate more contactless process to reduce infection risk at their businesses. A recent survey indicated that more of our customers are interested in converting to digital versus physical delivery. In particular, our customers tell us they value speed of delivery, ease of use, and security as the most important considerations when evaluating the use of Image on Demand. To summarize, there is no doubt that COVID-19 pandemic has been a challenge to our business. However, this challenge provided confirmation that the changes we have made to our organization and the investments we have made in the recent past were the right ones. COVID-19 accelerated many workplace trends, and we have demonstrated that we can provide the necessary solutions to help our customers adapt to their new unexpected work environment. Despite the unprecedented volatility of COVID-19, we remain focused on long-term growth and doing what’s right for the health of our employees, our customers and our business. Importantly, we have also recommitted ourselves in our fight against racial injustice prevalent in our societies around the globe, and in creating an inclusive and diverse workforce. We are fortunate to have a strong balance sheet and a durable business model, which are helping us successfully navigate this challenging period, whilst providing us with the flexibility to continue investing in our long-term growth plans, which go beyond Project Summit. As Barry shared with you last quarter, we are proactively managing expenses and have additional levers to further adjust our cost structure if necessary and appropriate. In closing, whilst the hide degree of uncertainty remains as we look to the back half of the year, we are confident that the value of our offerings is more relevant to our customers today, and we will continue to provide innovative products and services that address their evolving business needs. Our confidence is further shared by our bondholders as evidenced by our $2.4 billion issuance to refinance some of our notes. Strong investor confidence and demand allowed us to upsize our transaction, as well as extend our maturity profile. On behalf of the leadership team, I wish to extend our heartfelt gratitude to our frontline mountaineers, who have kept our operations running seamlessly to serve our customers. Stay safe and well. With that, I’ll turn the call over to Barry.

Operator:

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And today’s first question comes from Eric Luebchow with Wells Fargo. Please go ahead.

William Meaney:

Okay. I’ll let Barry answer the last one in more detail. I think the answer to – the short answer to your question is, yeah, we continue to like the idea of third-party capital for stabilized assets. But I’ll let Barry give you a full answer on that. On the first one, in terms – so, thanks for the question, Eric, on innovation and the importance of that, not just in a post-COVID world, but absolutely in the current environment. We continue to see traction on some of the things I highlighted last time in terms of what I call remote collaboration and collaborating remotely. Like I gave the example last time I think on unemployment benefits, where we’re actually facilitating folks to be able to be working away from home and both receive the application for unemployment and approve it, and then, also some of the areas around mailroom which, again, I think I highlighted last time. One area I would add in addition to that, so we continue to see more and more traction for those kinds of solutions. One area too that we’ve seen, a good uptick in the recent past is what we call our Clean Start program. And the Clean Start program is something that we launched a year ago, which is really helping people to re-imagine their needs to their office space, and get information flows to be more seamless when they’re at work, and then, also to get things off site for things that they don’t need around the office and it allows them to work in a much more flexible way. When we came into COVID that actually got – the brakes got put on that, because part of the Clean Start was, we would go into offices and do surveys and help – working with their real estate people to help them re-imagine and rebuild their work processes. And some of that, the exhaust of that process, obviously, is storage, but also some of the other services that we provide is Iron Mountain. When we got into the crisis, our real estate team product management, sales and marketing team collaborated and they created a Clean Start kit in a box, if you will. So what we’ve done is we’ve been able to put that together in a kit that allows us to deliver the same type of assessment in survey virtually without actually going into their offices. And we just recently, for instance, had a very large win with a global insurance company that was selling part of its insurance portfolio to a life insurance company, where we not only did facilitated moving sensitive records, many containing PII or Personally Identifiable Information across to that new owner of those policies and that information, but transfer a number of their employees across and at the same time help them repurpose the real estate footprint that they were left with. So it was kind of real estate optimization, helping them transfer a business to another person, transfer of people and then take a step back and say how can we actually improve the information flow in what they have left. So it just gives you another flavor of the types of things that we’re finding out there.

Operator:

And our next question today comes from Shlomo Rosenbaum with Stifel. Please go ahead.

William Meaney:

Oh, okay. Hey, Adam. Thanks for the question. A couple of points there, I would say, look, our service business performed better throughout – in the quarter than we had anticipated. As you know, on the last call, we noted that we thought we’d use April as a proxy going forward for the entire second quarter. April and May, generally speaking, really across the world and across our various service activity lines were very consistent. Shred was down kind of high 20%s in April, about 30% in May. It also recovered just like directionally the rest of the business was down in the vicinity of 10% on activity basis in June and kind of stayed at that level in July. I would say that, that trajectory of improvement in June, as I noted, was really pervasive across all of our activities. As it relates to paper price, in particular, the way I would think about this, Adam, is on our last call, we were – well, in the first quarter, we had a $10 million hit to EBITDA from paper prices, as you recall. In – on our last call, we thought that we would have kind of low- to mid-single-digit dollar decline as a result of paper price for each of the next couple of quarters. We actually had a $2 million positive to EBITDA as I mentioned on the call. Now, I will say that paper prices have been very volatile and have been declining quite significantly over the last couple of months, you’ve probably seen that in the industry data, I know you follow that. And so our view for the back half is that it will be basically neutral year-on-year as it relates to EBITDA. So thanks for the question, Adam.

Sheila McGrath:

Yes. Good morning. I was wondering if you could comment on what percentage of the new data center leasing is from existing Iron Mountain customers? Just more details on synergies there. And if you can comment on how the global sales relationship strategy might be going?

Operator:

Thank you. [Operator Instructions] Today’s next question comes from Nate Crossett with Berenberg. Please go ahead.

Barry Hytinen:

Hey, Nate. This is Barry. Thanks for your both questions. So data center contributed 40 basis points to that number. So it really speaks to the fact that it’s a nice contributor, and we expect obviously that to ramp over time as that is, as you know, a big focus for the company. We see a long-term trajectory for continued growth there. And, as I said earlier, the team is just doing really well. And that also speaks, I think, to the fact that our records management business continues to see nice growth and revenue management really contributing very, very well. As it relates to credit, as it relates to structure, I think it’s a little premature to talk too much about what we do there. As it relates to third-party capital, we know that we’re just evaluating but as it relates to stabilized assets, we do think that where various rates are in terms of certain folks that are willing to invest in this kind of market, it makes for very enhanced returns. And we think it’s also another opportunity to help fuel incremental growth. Bill, did you have anything you want to add?

Barry Hytinen:

Thanks for the questions, Nate.

Jonathan Atkin:

Thank you. I’ve got couple of questions on the data center side, if you could maybe comment on Amsterdam and then Singapore, each of which have seen some non-COVID-related pauses or freezes in terms of new permitting, and may or may not affect you equally in both markets, but just it has had some impact on your competitors. And is there kind of any sort of an update as to the lifting of these pauses in each of those metros. Thanks.

Operator:

[Operator Instructions] Today’s next question comes from Sheila McGrath with Evercore. Please go ahead.

William Meaney:

Okay, Sheila. Good morning and thanks for those questions. First off, we feel great about how Summit is doing. I think, the team is very aligned and they’re very focused on delivering. I think the total company is energized by the fact that this is really an opportunity to transform the company and support our customers that much better. In terms of how it’s stacking up, the second quarter of $40 million benefit year-on-year was right in line, if not a little bit ahead of what we were expecting. So we’re at $65 million year-to-date, obviously, those are elevated levels as compared to what we were expecting earlier as we increase the benefit this year last quarter. So we’re well on track to deliver $150 million of benefit this year. My guess is that next year, we will have another $150 million to $200 million of incremental benefit. And we’ll exit next year at a run rate that has all of the benefits the entire $375 million by 2022. So a little small amount of incremental benefit there in 2022 to plan for your models in terms of where it’s coming from. It’s generally been thus far, probably in the vicinity of 70%, 75% from SG&A and the balance and cost of sales. You’ll notice you’re looking at our performance this quarter, our cost of sales, obviously, down a lot more and that reflects the fact that we made those temporary cost cuts that we talked about in the form of furloughs and et cetera. Going forward, I think, you’ll see even more of Summit coming from a more balanced approach across the income statement. As initially as Bill, as commented before, the first rounds of summit were really in the SG&A area. There will be more going forward. But I think as a relative basis, sort of last quarter, we talked some about the SLA changes, which by the way, are going very, very well. Those will continue to stack incremental benefits going forward. And some of that, obviously, will be in the cost of sales line. As it relates to the tax refund, I think that was the last question. We did have about $27 million of cash refunds in the quarter as compared to prior year. Last year, we actually paid more on a cash basis. So if you’re looking at AFFO, it’s almost a $35 million swing year-on-year. That’s one time. And we – those are for prior-year refunds that we received during the quarter. So thanks for those questions, Sheila.

Michael Funk:

Yeah, thank you for the question, guys. Good morning.

Michael Funk:

A couple if I could, can you comment some more on the churn that you’re seeing? Any kind of update on the monthly progression for customer churn?

Michael Funk:

Yeah, sorry about that, on the records business, please.

Operator:

Thank you. This concludes today’s question-and-answer session and today’s conference call. The digital replay of the conference will be available in approximately 1 hour after the conclusion of this call. You may access the digital replay by dialing 877-344-7529 in the U.S., and +1-412-317-0088 internationally. You’ll be prompted to enter the replay access code, which will be 10145480. Please record your name and company when joining. Thank you for attending today’s presentation. You may now disconnect.

Operator:

Good morning, and welcome to the Iron Mountain First Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Greer Aviv, Senior Vice President of Investor Relations. Please go ahead.

Bill Meaney:

Thank you, Greer, and thank you all for taking time to join us. First and foremost, let me start by saying, I hope you are all healthy and well and our thoughts go out to all those who have been impacted by COVID-19. I also would like to say, thank you to our employees in particular our front line mountaineers, who are on the road and in our facilities every day. As many of our services are considered essential, many of our colleagues have been ensuring our customers' needs are met as seamlessly as possible. Our mountaineers have shown selfless dedication and resilience in these challenging times. As we go through this morning's call, I will focus my remarks on a few key subjects. How we are responding and managing the business in light of COVID-19 pandemic; the new service and storage revenue opportunities we have seized, as we respond in real-time to our customers' changing needs, and the durability and strength of our core storage and data center businesses, which provide valuable recurring revenue during times such as these. First, we continue to closely monitor the COVID-19 situation, which as you are aware continues to evolve at a rapid pace. Our top priority is to ensure the safety and security of our people, their families and our customers. As a global business, we have been assessing the situation and implementing extensive precautionary measures since first learning about the virus in January. We have been constant. First in Asia and now globally in striving to minimize the spread of the virus and its impacts on our people, the communities we operate in and our customers. We have been serving our customers many of which are considered essential businesses in new and innovative ways as they navigate this pandemic. Now let me address the current situation, the impact on our business, and what we are doing to mitigate that impact. As an example, we are reserving storage base for critical assets and unanticipated inventory volumes, including supplies needed by health responders in food and drug retailers. We are also providing outflow storage for businesses now stockpiling inventory due to service or supply chain disruptions. In addition, we are availing our customers of our digital and AI-based services to facilitate remote working on a range of activities, including distribution of mail from corporate mailrooms to providing a digital solution allowing the processing of unemployment benefits remotely. The first quarter introduced unprecedented challenges and required us to closely examine our priorities and focus on what we could do beyond our normal course of business to remain strong, resilient and well positioned to support all of our stakeholders. Fortunately, Iron Mountain is considered an essential service in many locations and sectors where we operate. In our global records and information management business, we have been able to keep more than 96% of our facilities open at varying levels of operations all with heightened safety and cleaning procedures in place. We are seeing a need for new and more creative solutions in our digital solutions and global data center businesses. To help our customers respond to COVID-19, we are providing storage and distribution of PPE and other critical health care supplies and are offering innovative solutions around document scanning and application of artificial intelligence through our Insight platform, which can help enable our customers' home-based workforces. Whilst there is a high degree of uncertainty regarding the length of the COVID-19 pandemic and the ensuing recovery from an economic perspective, I am confident we will get through this and come out an even stronger company. We are already seeing customers seek out new services that have resulted in revenue. So whilst it's possible that customers may not use our services the same way they did historically, we are confident that we will be able to continue to generate new revenue streams. Our customer-facing teams have been closely listening to customers, engaging differently in solving problems that didn't even exist a few short months ago. We are deepening relationships with our customers and further differentiating Iron Mountain from our peers, many of which do not have our level of financial strength, breadth of digital and physical offerings and flexibility. We believe this positions Iron Mountain better for the longer term. Liquidity remains the top priority from a financial perspective, and we are operating from a strong liquidity and cash position. Barry will provide more detail on the specific actions we are taking but at a high level we are prioritizing cash generation, and we have taken action to reduce operating expenses in discretionary capital expenditures, including M&A. As of the end of the first quarter, we had more than $1.2 billion in liquidity between cash on hand and availability on our revolving credit facility. This strong balance sheet should provide us with sufficient runway to operate the business in this uncertain environment. As you would expect in a crisis such as this, our service levels have experienced significant declines in numerous geographies as many customers have instituted mandatory work from home policies or ban visits to their offices and facilities from external parties. The timing and magnitude of decline in service activity has varied by market and by product line. Whilst we are a global company with operations in over 50 markets, our exposure to countries that saw a peak in Q1, such as China, is limited, so we did not see a significant service activity decline until mid-March for the majority of our business. In our records management and secure shred businesses, which account for approximately 75% of our service revenue. Service activity has declined by 40% to 50% during the times when the respective markets have had restrictions in place as compared to the prior year. As restrictions are lifted, we expect this service activity to gradually pick back up. For instance, in our Chinese markets, we are seeing current service activity at 60% to 70% of normal levels, which has improved from only approximately 20% at the peak of the virus spread in China. While service generally contributes only about 20% of our profit, given the size of the decline as well as some of the fixed costs in the business, the impact is significant. As we have encountered this slowdown, we have made tough decisions that impact our fellow Iron Mountain colleagues. In an effort to keep our labor costs in line with levels of service activity, we have either furloughed, reduced hours or utilized other temporary reduction measures for approximately 1/3 of our global workforce. We have also managed costs by putting on hold our -- on recruiting activity in terminating most of our temporary and contract workers in our global records and information management business. Decisions that impact our employees are never taken lightly, and we have set up numerous resources to support impacted employees during this unprecedented time. This includes, but is not limited to, continue to provide benefits in sponsoring the employee portion of health care for impacted employees, helping our employees utilize their respective government programs available to those individuals unemployed or furloughed, assisting our colleagues with outplacement support and actively assisting employees through our employee funded relief fund. At the same time, our core storage business remains durable, and we continue to benefit from our deep and long-lasting customer relationships. Whilst we have seen a slowdown in the new boxes that we have been able to inbound, the majority of our storage revenue is from existing boxes that were inbounded in prior months and years, and we continue to earn revenue on that inventory. However, the impact the crisis will have on our future organic storage rental revenue growth and volume remains unknown and is dependent on the severity and duration of the COVID-19 pandemic. In Q1, total organic storage revenue grew 3%, supported by strong benefits from revenue management. Global organic volume in Q1 was flat compared to Q4, driven primarily by growth in adjacent businesses and consumer of 8% and 5%, respectively on a sequential basis. Organic global records management volume declined approximately 600,000 cubic feet from the fourth quarter. Due to the impact of COVID 2019, we expect our volume of incoming boxes for the remaining of the year to be lower than we initially expected entering the year, but we will continue to look for ways to mitigate the slowdown. As I mentioned before, we also remain in active dialogue with our customers about leveraging existing and customized Iron Mountain solutions to help them navigate this difficult situation. I want to briefly mention a few key examples. One of our digital services that have benefited our customers during this crisis is Image on Demand. This service provides safe, contact list, digital delivery, which enhances the chain of custody security and provides a quick 24-hour turnaround online delivery. This solution enables customers to be more effective by sharing information with those who need it, whilst ensuring the information security and privacy are maintained, which is even more necessary in today's remote environment. Another example is one where we are helping one of our customers, a national health care provider, which was struggling with a surge in the need for medical supplies and supply chain challenges. This particular customer needed to distribute critical PPE to 32,000 employees at 750 sites in 36 US states and required a secure location to prep PPE kits without taking up valuable space that was being used to care for patients. In order to meet those critical needs, we provided non-records business storage and logistics support. We in-bounded in stored pallets from multiple suppliers, prepared PPE kits made up of 12 to 15 items and distributed the kits to healthcare sites. This is only one example of how we have helped many of our healthcare and medical customers during these trying times. A third relevant example is a government labor department that needed to maintain critical processes whilst enabling home-based workers to process high volumes of unemployment claim records as quickly as possible. The government agency leveraged our InSight Essentials platform, which enabled the government department to receive the scan claims via our InSight application to more than 800 unemployment examiners. We will continue to store the hard copy records for them until they need to be securely destroyed. We are currently speaking to multiple U.S. states about similar solutions to address both elevated volume and unemployment and Medicare claims during this crisis as well as the need for remote working of the teams approving the claims. As you would expect, our global data center business has also been resilient as an unprecedented number of organizations are adjusting to remote working practices, which has driven a substantial increase in traffic and the need for additional bandwidth. Moreover, the current pandemic further underscores the vital and expanding role of multi-tenant data center play in an increasingly digital economy. COVID-19 is causing companies to evaluate and accelerate their digital transformation journeys, especially as it relates to outsourcing their IT infrastructure and fortifying their remote capabilities. In fact, industry experts believe that COVID-19 is serving to fast-track trends that were already evident in the data center industry, which bodes well for this portion of our business moving forward. Looking at recent performance, our global data center business had a strong Q1 with organic revenue growth of almost 10%. We signed 6.4 megawatts of new and expansion leases and our pipeline remains robust. This leasing consisted of a 3-megawatt booking with a new logo, a leading hyperscale enterprise software provider, which also includes a contractually committed reservation for an additional 2-megawatts and our expanded campus in Phoenix. We also continued to maintain good momentum with our enterprise customers. Commercially despite an unprecedented macro backdrop, our data center team continues to receive significant engagement in RFPs for both hyperscale, corporate and government requirements. The team has quickly adjusted to the new normal of remote working and has been innovative and continue to meet our current and prospective customer needs, including hosting virtual data center tours to support demand and the increased need for capacity. We are committed to ensuring uptime and resiliency for our data center customers and we are ready with capacity and our staff to handle support, upgrades and new installations if additional bandwidth is needed whilst remote workforces are supported. One area that we continue to monitor closely is the impact on the pace of construction of our -- for our data centers currently under development. While it's not significant, we do see modest delays across many of our projects, which is also happening across the industry. Given our relatively high capacity utilization of almost 90%, should delays extend or increase in length, this could create a tight supply situation. As I said, we are keeping a close eye on this and are in regular contact with all of our vendors and construction partners. And at this moment, we do not foresee it will materially impact our anticipated bookings and delivery for this year. As we look ahead these are truly unprecedented times and the path to recovery is clouded by uncertainty and will likely be choppy. It is very difficult to predict how long this current environment will go on. And what the new normal will look like on the other side. It will undoubtedly be lasting changes to how we work and how our customers will conduct business. Given the combined effects of the pandemic and the associated financial impact on the global economy, we believe a conservative approach is warranted. As you can see from our Q1 results, Project Summit is off to a strong start. Now that our project teams are up and running, and given the speed with which we implemented Wave One, we have identified additional opportunities to accelerate strategies to streamline our business and operations. We have pulled forward a number of initiatives that were planned for waves two and three of Project Summit and expect to see those benefits materialize at a faster pace in 2020. In addition to finding new ways to work differently with our customers as we roll out Project Summit, COVID-19 has uncovered ways for us to support our customers as they adjust to remote work -- to a remote working environment. Our customers' increased need for digital delivery has allowed us to reassess our service delivery model. Our R&D and growth initiatives have well positioned us with services like Image on Demand to address customers' changing needs as they adapt to new ways of working. Leveraging these new technology capabilities, enables us to adjust our service delivery model and more efficiently utilize our fleet, labor and real estate. The most impactful changes to our service delivery model revolve around new service level agreements or SLAs. These new agreements will allow us to better align our external customer SLAs with our internal record center SLAs as well as leverage more effective use of digital delivery to serve our customers. In addition, we will also utilize third party logistics providers more extensively than we have historically for our pickups and delivery. We have proactively communicated with our customers in some of our largest markets regarding these changes and have begun implementing the SLA changes, which has resulted in some additional reduction in force across the business. This broadened scope of Project Summit should result in even higher levels of adjusted EBITDA benefit and associated charges than we initially expected. Project Summit is now expected to generate $375 million of adjusted EBITDA benefits exiting 2021. This represents a meaningful increase from the prior expectation of $200 million. The total program is expected to cost approximately $450 million, up from our prior expectation of $240 million. In closing, this additional benefit from Project Summit should only further propel the underlying strength of our business once we emerge from COVID -- from the COVID-19 situation. Our strong performance in Q1, together with the additional promise from an expanded Project Summit makes us confident that we will emerge from the COVID-19 pandemic as an even stronger company than envisioned before. We continue to demonstrate resilience and determination and show all of our customers and communities that they can count on us in their time of need and that Iron Mountain really is iron. I want to thank all of my fellow mountaineers and their families again for their perseverance in these difficult times and I pray for their safety. I hope all of you and your loved ones are remaining safe and well. With that, I turn the call over to you Barry.

Operator:

We will now begin the question-and-answer session. [Operator Instructions] The first question is from Shiela McGrath with Evercore. Please go ahead.

Bill Meaney:

Good morning, Sheila. Thanks for the question. So as we got into COVID-19, as I alluded to is that our customers needed to be served a different way. And we already had a Summit teams spun up to look at our cost of sales. And what we found was, if we look specifically at SLAs for instance returning a box in 24 hours -- returning a box in 24 hours in this environment where people are working remotely wasn't going to help. So what we've done is we've actually in the major markets we've already implemented this. So this is United States, Canada, Ireland, the U.K., Australia and New Zealand. As we said, we're taking that to five business days so once a week we will pick up or deliver physical boxes. If they need something quicker then we will actually digitize it and we'll send it to them in a digital secure link through our InSight platform in Image on Demand. So we're actually giving them a better service and at the same time changing from 24 hours to five business days or once a week. You can imagine how significant that impact is on our logistics operations and allows us to really take out quite a bit of cost.

Bill Meaney:

Well, I think we're blessed by being kind of an industry one. So we're a specialized REIT and our operations are still running strongly. We – although service has been impacted as Barry said 40% to 50% that's on 20% of our profits or 40% of our sales. So whilst it's impactful it's not a threat to our liquidity. So for our – from our standpoint, there isn't a liquidity reason that we would have to adjust our dividend. And then, as if you look at 2022, where we think we'll be looking at COVID in the back – in the rearview mirror by 2022. So we're assuming that it doesn't happen until then. Then we're actually gliding quite nicely into our original goal in our financial models as we get into the 2022 and 2023 period in terms of getting into the mid-60s to low-70s as payout as a percentage of AFFO. So we feel good about where we are. We'd rather not have COVID-19 because we would have gotten there much faster, but we feel good about the position.

Nate Crossett :

Hey, good morning. Just a follow-up on Sheila's question about Summit, so how much of that $175 million benefit is coming from that SLA change, and are there any other kind of big drivers in there?

Operator:

The next question comes from Andrew Steinerman with JPMorgan. Please go ahead.

Bill Meaney:

So Andrew on the first one yes this is -- and we communicated that to our customers. This is beyond COVID. And in fact, this probably is something that could have happened before, but it's easier to actually get people to change their mindset in terms of how they want to be served given the current environment. Because if you think about the 24-hour SLAs than something that was historical in the business for decades. And the way people use the information that they retrieve now is very different. And quite frankly, lots of times they'd rather have it electronically. So yes this is -- COVID was -- it allowed us to have the catalyst to have that conversation with the customers, but it's permanent going forward.

Andrew Steinerman:

Thank you.

Marlane Pereiro:

Hi. Thank you for taking my question. Just a quick one. Just to clarify, under your extreme scenarios, you anticipate not staying within both your maintenance and incurrence covenants, is that correct?

Marlane Pereiro:

Okay. I mean, do you have -- would you be able to provide roughly an idea of how much cushion or headroom that you would have under those scenarios?

Operator:

[Operator Instructions] The next question is from Franois – it’s from Kevin McVeigh with Credit Suisse. Okay, excuse me. The next question is from Andrew Steinerman with JPMorgan.

Bill Meaney:

Yes.

Operator:

The next question is from Franois Mambo [ph]. The next question is from Kevin McVeigh with Credit Suisse. Please go ahead.

Bill Meaney:

On the storage side Kevin post-COVID-19 there – right now our surveys there's many customers that say that there will be no change as there – those that say that will be continuing on their current program. So no, we don't expect a major change in the trends that we're seeing on the storage. On data center, as we said is that we've seen actually continued building of our pipeline through COVID-19 and we expect that to continue to be strong on the other side. We can't tell you right now if our strong pipeline is just because of the momentum we were building into the – in the data center business as we were coming in or specific to COVID-19. But yes, there's nothing that we're hearing from customers that's saying that their demand post COVID-19 is going to be any different on the data center side than what we're seeing in terms of the positive momentum in the basis today.

Operator:

Good morning and welcome to the Iron Mountain Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Greer Aviv, Senior Vice President of Investor Relations. Please go ahead.

William Meaney:

Thank you, Greer, and thank you all for taking the time to join us. Before we get into our discussion of the Q4 results, I want to first welcome Barry as our new CFO to the Iron Mountain family. Barry brings a successful track record of navigating transformation and effective change at various organizations. Most recently, he led efforts at HanesBrands to increase operating cash flow, reduce leverage and produce strong international growth. His insights will be very valuable as we rollout Project Summit, our transformation program to simplify our structure and create a more dynamic and agile organization. We look forward to his contributions as we enter 2020 and beyond. With that, let me start with a look back at where we have been on our journey over the past six years. Looking first at total organic revenue, in 2013 it was flat and adjusted EBITDA declined 1%. Today, we reported total organic revenue growth of approximately 1% and 2% if we hold paper prices constant. In terms of adjusted EBITDA, 2019 saw growth of 3% or nearly 5% if we apply 2019 paper prices to 2018. More broadly, progress over the past six years is visible in nearly all metrics not the least being the expansion of EBITDA margin by almost 500 basis points. This macro look back is important as it is the basis that continues to provide momentum going forward. We feel this positive momentum in sales and profitability coupled with Project Summit in a broader portfolio and service offerings to our core customers is the platform from which we expect this trend to continue. Of course, this progress just didn't happen. It is the result of the successful execution of our strategy of shifting our revenue mix to faster growing businesses, including emerging markets, data center and adjacent businesses and successfully implementing our revenue management program. We also made important progress on Project Summit, our transformation program designed to accelerate the strategy and create a more streamlined, simplified and agile organization better suited to solve our customers’ challenges. Furthermore, I am pleased to share with you that we are very much on track with our execution on Project Summit. We moved quickly with a headcount reduction we announced in order to ensure minimal disruption to the broader organization. If you recall, we announced plans to reduce the number of VP level and above positions by approximately 45%. As of the end of December, we had completed approximately 70% of the reductions. We all recognize that change is never easy. In over these last few months, our organization has shown great resilience and focus. This is a testament to our great people and the fact that a large number of mountaineers are already feeling energized by being able to more easily address and serve our customers. As it relates to the savings targets we communicated, the actions we took in the fourth quarter have resulted in $50 million of annual adjusted EBITDA benefits that will begin to flow through in Q1. We have good line of sight to the incremental 30 million of in-year benefits we expect to generate in the second half of 2020 with a number of the process and systems improvements underway. We are excited about the new ways we are embracing technology to improve the way we work so we can all show up differently and drive change. Ultimately, we expect Project Summit to expand organic revenue beyond the current growth rates, all whilst boosting adjusted EBITDA by an additional $200 million over the next two years. This is all on top of the 4% plus organic adjusted EBITDA growth we have been achieving the last few quarters. Turning to fourth quarter performance, constant currency revenue increased almost 3% over the prior year. We delivered solid adjusted EBITDA growth of 8%, adjusted EPS growth of 24% and AFFO growth of 18%, while simultaneously increasing investments to support future growth. Barry will provide more detail on the financial performance as well as our outlook for 2020. Turning to business performance, organic global records management volume remained relatively steady with a 10 basis points decline over the trailing 12-month period. To put this into perspective, globally volumes declined approximately 500,000 cubic feet on a base of nearly 700 million cubic feet driven mainly by fewer acquisitions of customer relationships. More specifically, in 2018, we acquired 3.5 million cubic feet of customer relationships which tend to be some of our highest returning investments as opposed to only 2.8 million cubic feet in 2019. We expect the impact of fewer customer acquisitions in 2019 to continue its drag on volume through the first half of 2020. However, we are confident that this is a temporary deviation and that records management volume along with incremental storage opportunities in non-box categories such as consumer and alternative storage and adjacent businesses should result in flat to positive levels of organic volume growth for the full year 2020. Now coming back to current volume trends. Apart from the dynamic I just discussed, the single biggest headwind on volume today is the rate of change of incoming boxes from our existing customers. You will recall from previous calls the average life of a box in our inventory has remained rock-steady at 15 years. Whilst the average age of a box when it is destroyed has remained steady over many years, the average age of our inventory will naturally skew during periods where the growth rate of incoming boxes is undergoing change. For example, if a vertical is experiencing a slowdown in the rate of incoming volume, then the average age of our inventory will reprise. Whilst we can’t predict when equilibrium will again be achieved, we feel in the meantime it will remain a minor impact given that our customers continue to add new boxes to storage annually, just at a lower rate than historically. To help you better understand, let’s take a look at what has become one of our slowest growing yet most stable verticals. The North American legal vertical began its digital transformation journey many years ago. This change in customer behavior is resulting in a deceleration in the rate at which existing legal customers send us new boxes every year until recently. The good news is that we have seen the growth rate stabilize to slightly positive net volume growth. We expect a similar trend across other verticals that are not as far along on their digital transformation journey. To provide further context, let’s say a legal customer stores a 100 boxes with us. 10 years ago, they would send us six new boxes a year and destroy or remove two boxes so they would be net positive four boxes or a 4% growth rate. Today, a similar customer would send us two to three new boxes and still destroy one or two boxes making them flat to net positive 1% growth rate, which is the new normal for this customer vertical remaining stable at this lower growth rate given the age profile of their inventory has stabilized. We should remind you that what I just discussed is only affecting volume from existing customers. In addition to that, we continue to focus on new customers, competitive wins, opportunities in the unvended and federal channel, and as we talked about earlier other methods of customer acquisition. We expect all these various sales channels to continue to contribute to overall organic volume growth for global RIM over time. This is what gives us confidence in the durability of the recurring revenue stream and strong cash flow generation that comes from global RIM organization, and we do not anticipate a change in the foreseeable future. As I like to say, it's the financial beast that allows us to fund growth opportunities, whilst returning cash to our shareholders. We have also made considerable progress in transforming our core RIM business to a more diversified model and are on track to achieve our targeted geographic mix, which as a reminder is 20% of revenue from faster growing markets, by the end of 2020. We ended 2019 with these markets contributing 19% to total revenue, and for comparative purposes faster growing markets represented less than 10% of revenue in 2013. Moreover, over the same period of time, we have expanded the adjusted EBITDA margin for these relatively new and faster growing markets from 20% to 30% in 2019, and we believe we can continue to expand margins as we scale our presence in these geographies and to select new markets that offer superior growth opportunities, all whilst managing our cost structure efficiently. Related, our global digital solutions business had a record year with revenue increasing 10% year-over-year. As we shared with you last quarter, our digital solutions offerings such as InSight are increasingly enabling us to approach our customers with a differentiated solution resulting in a pull through of other products and services. Just one example of this was a recent win with a large, highly regulated financial institution. This customer previously managed its physical file room storage in-house with over 600 employees across five global locations. We will assume responsibility for the management of all file storage, processing of the files and begin providing value-added services. We plan to transform the operation by consolidating locations, reorganizing workflows, adding workflow software and applying digital solutions such as RFID and artificial intelligence and machine learning through our InSight platform. When completed, this effort will not only help our customers significantly reduce costs, but it will also be the foundation for future enhanced digital products. We’re able to win the business based on our unique combination of document management and workflow expertise, combined with our digital solutions which we expect will result in close to $30 million in annual revenue for the next 10 years, making this one of the largest single deals we have signed. Turning now to our data center business. We had a good year executing 17 megawatts of new and expansion leases, including our first hyperscale deal. Whilst we are pleased with the steady commercial progress we have made leasing up our facilities ending Q4 with a stabilized utilization rate of 90%, we did see some deals in the pipeline shift from Q4 into 2020. The 17 megawatts leased in 2019 shows good progress on a base of approximately 100 megawatts at the beginning of 2019. Within our leasing for the year, we were successful in attracting over 100 new logos to our global data center platform, further diversifying our enterprise customer base and underscoring our brand strength in this dynamic industry. We continue to make good progress organically building out our global platform delivering almost 20 megawatts of capacity in key markets around the globe, including London, Amsterdam, Singapore, New Jersey, Northern Virginia and Phoenix. We are excited about our newest development in Frankfurt and currently have a strong pipeline of pre-leasing opportunities in various stages of discussion. Additionally, in Q4, we entered into an agreement for a second site in Slough which will allow us to expand our presence in the important London market by adding an incremental of 25 megawatts of capacity. Under the terms of the agreement, the landowner will build the shell after which we will finish the build out of the data center to our specifications. Our existing footprint in London, which is adjacent to this new site, is nearing stabilization and this new agreement provides capacity for larger requirements in a very desirable market with low latency network conductivity. Looking into 2020, the first half pipeline looked strong with a number of larger opportunities on the horizon. That said, these larger deals tend to be lumpy and timing is often harder to predict. Putting this all together, we would expect to be able to lease up another 15 to 20 megawatts of capacity in 2020. We feel very good about our commercial momentum and a building pipeline of demand, including hyperscale interest in a number of our markets such as Phoenix, Northern Virginia and Frankfurt. In summary, 2019 was not without its challenges in terms of consistently declining paper prices, but we ended the year in line with our expectations having a number of strong commercial wins, whilst making measurable progress on our strategic plan. We are focused on maximizing the benefits from Project Summit, not only financially but in how we operate as a team and an organization. We have a unique opportunity to translate a streamlined and more agile organization into speed to unlock further revenue opportunities through how we connect with and build additional value for our customers. With that, I will turn the call over to Barry who will walk you through Q4 performance and our outlook for 2020.

Operator:

Yes. Thank you. We will now begin the question-and-answer session. [Operator Instructions]. And the first question comes from Sheila McGrath with Evercore.

William Meaney:

Good morning, Sheila. Thanks for the question. So let me answer the question on two levels; one, in terms of the technology aspect that you alluded to and then the other in terms of the operating rhythm in what we’re doing differently in managing and leading the company. So on the technology side is one of the biggest areas of change is going to be upgrading and applying new technology in terms of the way we track and interact with our customers. So to give you specific examples, we have four instances of sales force which is very hard to get a single view of a customer globally. The second thing is, is we have over 40 billings systems, which, again, billing is an area where we need to make sure that we’re consistently not just billing but responding to queries around billing for our customers. So that’s an area where we’re applying technology to allow our mountaineers to have better visibility of our customers, which helps them on the selling side, but also in terms of serving those customers with they have inquiries. So that’s one area in technology. The part that we’re already starting to see a big effect is in terms of how we’re leading the company. So one of the things that we talked about, but probably not as directly on the last call, is Summit isn’t just about taking cost out. It’s actually redeploying cost. So we’re actually adding cost or adding resources around people that are interacting with our customers, especially in terms of strategic account management. So to give you an example of that – and also in terms of the way we lead the company. So we now have an expanded enterprise leadership team which we met in January. And first of all, the energy in the room was noticeably different because now we have the top 40 leaders and on a regular rhythm every quarter in a room to discuss where we’re going and how to get there faster and better. But also part of that briefing was the strategic account team had the opportunity to put up a slide of one of our most mature customers that we serve globally. And the interesting thing is if you had surveyed people beforehand, they would have said that they’re customers probably 80% served if you look at a matrix of our product offering and the geography that they fit in, and they’re completely a global company virtually in every country we’re in and then some more. And the interesting thing is it was just the opposite. We’re serving about 20% to 30% of the potential of that client rather than 80%. So a combination having strategic accounts taking a global look at how we can serve that customer better, and then the energy being able to have that discussion with the top leadership of the company globally on a quarterly basis I think is going to make a real change.

William Meaney:

So, Sheila, I’ll take the JV question and then I’ll hand it over to Barry on the sources and uses. So we continue to look at entering a JV for the Frankfurt facility as we’ve spoken about in the last couple of calls. We’ve slow rolled that slightly because the pre-leasing activity on Frankfurt is very, very strong. So, obviously, we want to line that up before we finalize the negotiations. But we still expect to put Frankfurt into a joint venture. We’re quite far down the track with a couple of potential investors, so we feel good about that. But we also want to make sure that we put our best foot forward and we’re really encouraged and quite excited about the pre-releasing activity to the Frankfurt site.

Sheila McGrath:

Okay. Thank you.

Nate Crossett:

Hi. Good morning, guys. The volume decline in the quarter, I appreciate some of the color you gave, but can you give us some more detail on the declines? Like what’s the breakout of declines for North America versus international? It sounded like you said at the end of 2020, you’re expecting volumes to be flat to up. Did I hear that correctly?