IRM - Earnings call transcript Q4 2017 | Iron Mountain Incorporated

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Operator

Good day, and welcome to the Iron Mountain Fourth Quarter 2017 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 Melissa Marsden, Senior Vice President of Investor Relations. ahead. go Please

Melissa Marsden

today’s Hello to and Keith. user-controlled everyone our along today to that our available Thank Relations webcast. Investor year and XXXX quarter site in to referring full will the The remarks earnings fourth are we on link you, with be welcome prepared today’s conference slides call.

and financial financial About Alternatively, you Presentations. together can the highlights, release, PDF going You press & file find supplemental presentation Financial to Us/Investors/Events at the the one in investors.ironmountain.com, presentation access information Information. ironmountain.com today’s full under by can under

supplemental on Form results in could a those the contain language most that to our progress financial Additionally, Please supplemental Iron we on refer forward-looking statements. one we’ll and the for of for financial President followed annual release, will toward on our XX-K call our information X presentation who call, press notably today’s Mountain’s earnings earnings first will Harbor are cover morning’s and Stuart guidance. up related forward-looking results available from Referring Safe X-K, longer-term website. report of the CFO, slide, financial presentation, our to differ Relations All open report, prepared presentation, and XXXX documents risks statements, Q&A. and the who hear On this forward-looking actual and risk Brown, performance. CEO, and uncertainties. slide have as After filed our the outlook this highlights discussion all and for Investor call, our cause factors major now discuss our XXXX also plan; Meaney, operating financial which statements Bill remarks, is and to will we’ll subject of by the strategic to Page today’s from phones

included in measures Bill, please measures, several With information. required this use are that, we non-GAAP to these supplemental financial would when as the by and our reconciliations financial Reg-G, addition, presenting you In results begin?

Bill Meaney

you, and Thank everyone. hello, Melissa,

a progress to Centers report business to clearly year, momentum results. XXXX Moreover, pleased storage significant in strong us of fourth with Fortrust growth. earlier not are in strategic characterized by internal our goals XXXX, Data in durable Business will the quarter our coupled growth, deliver sustainable growth finish platform revenue and but that higher IO We demonstrated drive plan, with our with the solid acquisition provides also for the the only Adjacent and XXXX against

to growth Slide will having on of structurally up that of X% shown X.X% from of north as As XXXX. X, the a are on track end business well deliver mix EBITDA we before acquisitions, about

than XXXX, Slide Turning of adjusted strong a X% And the synergies, in by which over margins stand-alone two XXX growth, Full our represents X. basis improvement Iron EBITDA points Recall improvement to outlook, was with driven revenue past XXX up This Recall. expectations. slightly XX% integration line internal margins full above in over strong years from and transformation EBITDA performance historically contribution a had and growth of was adjusted XXXX the year despite Recall, of our of over Mountain. basis lower point year

year up XX%. more for was full AFFO addition, than In the

three years Our headwinds. benefited translation from strong favorable XXXX currency performance after of FX

growth North achieved the our worldwide results in revenue X% X.X%, strongest was more prior XX growth internal net revenue acquisitions. continued America, For progress, inclusion essentially growth This growth to growth QX, the revenue of whilst performance internal as the total, healthy volume quarters. management last ongoing in flat, internal revenue service than was storage storage the across at supported our In X.X%. rental growth by strong primarily of and was minus rental expected, fourth in continued revenue quarter, internal reflected We business.

seven these with of volume is one on of net past of positive before generate records growth. stay every effectively XX the XX storage supports feet time. million durability importantly, over length to for globally us boxes the average with months. And that cubic as new continued the in This acquisitions We for years next annuity

the We our also made strategic significant progress execution on of plan.

recall, is durable growing markets Businesses As focused into our on continued as as you entertainment through extending such business will well storage-related core services expanding faster-growing and nurturing developed centers. Adjacent art emerging our of our data as plan and model markets, our

innovative new to capturing and provide new We customers. service opportunities are doing existing solutions this whilst to

robust plan. a shortly. continued Stuart details internal will We storage outlook of execution markets, European trailing and X XXXX plan, on achieved related for our XXXX, internal strategic reflecting have with both X.X%, include highlights we basis. our a volume which In American is review revenue Western Slide North growth strategic more have successful against to segments, a positive and developed of XX-month modestly growth RIM our

Europe, As quarter, revenue revenue has is it our driven that It increase volume noted not existing caused by increasingly, important volume impacted Western storage incoming it organic North successful by than management has management growth is to significantly the last note and internal rather an new customer terminations in may impact whilst in growth. destructions. from customer customers, or marginally America efforts revenue behavior nor in

to release America, from It government Eastern management will Europe our continue we Australia yet well volume. during more or revenue from Given that are inbound U.S. example reporting such from we through and records seen we in last customers federal resources seek federal penetration our reported services, on and federal week unvended North Europe management Western existing and secured we the the add as can Furthermore, growth management U.S. to from prison a of focus XXXX. from from that successful of the customers programs Patent late volume America, with U.S. potential can mid-market reflected further of therefore, segments. segment, Asia, in our XX federal implementation volume awarded this year to records Office the be those the take Latin the win months revenue in will last sometimes in sales press to as U.S. and system. plan the as An not government growth

the relative more almost at Looking than represent goal revenue a to dollar basis, size total the on double expand to from about XX% of markets, faster-growing emerging constant years they our XXXX now four ago.

in times Our weighted progress acquisitions a this were: by closed in supported emerging transactions multiple the in than purchased entry in our the Fe the a Santa moved Korea, and Notable into in China; stabilized shredding business Africa deals Cyprus; the Stericycle; small more and that acquisition was India totaling purchased South Peru, Philippines of XXXX a market-leading market portions EBITDA. against of we from goal South in into remaining Middle the $XX of East; among which year emerging us position. transaction at million, market average seven during

in pleased that We of a and growth. attractive acquisition we’re opportunities the continue internal digit continue presence strong, emerging are markets high-single to our strong pipeline making progress growth with deepen key experience markets storage to have to in

or it in of our IO segment. our Data out Given Note reported for we as QX not our reflected separate January, IO in business acquisition Centers, that XXXX. data so is a have closed breaking center figures reporting begun

and and In it Management more addition, businesses North American customer nature for art similar. we segment storage from Data are with two have removed bases combined services our storage of the as these entertainment assets the

Services we services supplemental. to XXXX, the data the the in improved appendix found the business. to With can be new quarterly of expect consistent QX, The acquisition see Bonded for synergies in with the segmentation, entertainment in

segments market extends platform as in business, inexpensive the data we and data a as center well Turning IO well January. Jersey. the X substantially Data important expansion was our relatively It to capacity our and IO billion high-absorption absorption with shifting made closed co-location existing energy for towards cloud step green the has fourth strategically took U.S. $X.X provides to attractive is last our faster-growing in center mix approximately few and have Centers over Slide which business the power providers Phoenix major attractive significant of New highest of diverse market transformative of investments our in where and Phoenix high-growth, as past sources year. acquisition a in market environment years. market as business very

into Jersey is data New IO’s center Fortrust not do represented contracted. $X Northern financial greenfield is of basis, a and market opening the the times XX to our multiple transactions, significant market outlook. The the our our expansion million. of our September. York business post-integration for a about including of and of provide IO partial portfolio for to acquisition synergies, which the growth, metro global given public critical is EBITDA the compares a growth This favorably already follows forecasted EBITDA including importance area and of importantly, poised New high-margin XX% Virginia recent deal on services purchase also many customers. in IO same multiple of synergies private The

addition, to In the the and acquisitions center XXXX, the purchase the in close be Suisse of IO accretive Singapore data Suisse quarter. in to and AFFO we In these to centers ATM issuances London data first Credit we plan impact in finance for deal to the two issued expect aggregate, on transaction. modestly of including Credit shares

with and margins guidance basis, Slide and pretty IO plan our have the ability of for our center of important inflation, XXX potential share, Pennsylvania track megawatts. on given the of impact expand data our in annual ability a with we have will Virginia are our the fundamental data growth inflationary span value on sustained address remain stocks. the driving sheet data annual of I’d in business and with to capacity inflation. increase business. centers, income-oriented create a with note few that of as is well for in characteristics see a existing time pressure. interest briefly whilst base, underground On inflationary increase with and solid in Boyers, and margin, following outperform that acquisitions X% believe through and REITs financial For same coupled including million word, pass that growth We storage Businesses. environments world the expansion To these of shortly, an markets our model. XXXX the disappointed hikes in wrap specific a and improved we’ve transactions we Markets transaction, data of issuance the depiction normalized platform capacity more rates, Kansas our recognize associated generation generate at shown rental business inflation rate in on data helps XXX whilst this ahead XX-plus organic selloff storage the foundation XXXX, accelerated EBITDA. us customer further to operations increases assumes generally which center up, million XXXX, of an is targets brand it will megawatts the payout our X, had the Stuart generally than we’re In portfolio. dividends eventful market total REITs, uniqueness and the space, accelerate deleveraging of reiterate additional growth expect and us we I high-margin in the accelerated Unlike center In our increasing detail to the more anticipation our inflation-based XX% which those but with real in line Including to a revenue the debt we three and equity unique further to results our expansion to in our XXXX of per Emerging balance City, of Iron to our development progress higher given $XXX year pricing given like the the additional very $XXX we rate these nutshell, in laying minutes. in with characteristics increases approximately cash revenue megawatts, meaningful will as bringing business, in and data through Mountain’s of storage flow-through shareholders helps financial faster-growing centers on center gross to our our of the from want finance Stuart profitability, those Adjacent a many portfolio entered, Northern and for ratio from underpinning

ability EBITDA Our growth share dividends and progress to over our that delever cash grow continue drives time. per supports ultimately adjusted flow and to and

growth is Iron companies and growth continue XXX unique top-yielding In with demonstrate Mountain S&P we potential. internal fact, revenue that to long-term amongst attractive strong

our a We made financial turn consistent to we framework. our tremendous manner are to XXXX and to in Stuart. encouraged is like with disciplined that XXXX, about call growth I’d progress in by moving will momentum accelerate to the and With deploying continue capital be over the into that,

Stuart Brown

morning, Thank and good Bill, you, everyone.

toward margins, quarter growth will quarter’s our steadily full lay strong I faster-growing, teams. operational and also I data strength disciplined strategic Then XXXX recent and compared another our on investment and update of to for deliver deliver review of global goals, rental call, financial anchored expectations drivers. of We the value-creating strategy robust businesses. our On year will today’s position out XXXX storage management performance the track cover to acquisitions. plan, center the enhanced on our our a discipline XXXX and year fourth and excited considering expectations We’re with oriented an our remain to financial on and the reflecting with

as Revenue with call. translation on our came above internal percentage our growth, of the result driven XX.X%, X at SG&A in full with our middle management efforts revenue billion discussed by year benefits. presentation. performance range EBITDA $X.X of storage just revenues. basis gross margin in last and year Adjusted of as the a lower strong XXX our billion adjusted of full revenue Slide and improved higher as to in on were of the quarter’s well currency Turning guidance the XXXX, as $X.XX margins line Results range. EBITDA to a to generally Compared was our

higher tax taxable our in structural to discussed following the as capital end the lower the slightly we Our the QX due acquisition came call at projects for between QX year the of America mix North and income the in to was AFFO had in Recall, efficiencies quarter. of range than on taxable entities. maintenance guided last rate due

Let’s for now turn fourth the to our results quarter.

storage the service metrics, it quarter shows cycled As year X, total ago. you Internal revenue project strong while key our our year or declined rental internal constant-dollar Slide entertainment large quarter, financial basis. against in a can see grew a on X.X% a increased a on X.X% revenues last X.X% we fourth services revenue over as X.X%

the quarter Our flow-through Adjusted profit almost the from a basis year-over-year, increased by quarter, to indicated. the with have ago this to down our million, labor synergies gross Recall our revenue in primarily margin Compared program. fourth share improved leverage Adjusted due year for leveraging EBITDA year, growth have was per X% compared line acquisition capital to management over adjusted an per $XXX ago. points expectations estate a and Recall’s the $X.XX adjustment of share, to the in ago, previously of customer amortization XXX $XX a cash points On share facility and a constant-dollar $XXX reducing expenditures weighted fourth in XXX swing and expense, of we labor driven reflecting AFFO relationship margin were by expenses million to year non-real associated investments basis quarter excluding a to the discussed was of there the but approximately basis. last million of value. as expenses. the year And cash increased this been million a our catch-up year-over-year EBITDA $X.XX $X.XX on Maintenance life costs catch-up. XX% back-end a in XX.X% more call, costs. increase we compared and to as timing EPS was with $XX as in inclusive increased of per EPS would taxes,

growth XX Turning the to in Slide performance quarter. internal for

services emerging X.X% On was service volume X.X% a internal paper. ago. growth. in growth prices cubic which growth to Recall the internal we total over continued other with mix. lapping by was cycle in in of in growing X.X%. project a business which had we're in shifting revenue entertainment over strong markets data half growth average modestly offset of of strong records resulted base in high on in the and projects Internal developed legacy year as we the momentum revenue of In Service storage a basis, Internal positive growth north more XX-month continued lower down the in markets other volume revenue, business trailing management efforts Other growth reporting In flat Other to shred continue of business. increased revenue the XXX business, XX%, internal our which to developed to internal supplemental, of revenue the level We of markets are as the our our are saw and revenue growth million of details which Almost recycled slightly very recent our feet segments, the from due acquisitions. center continue from comes developed where revenue flat pleased revenue storage. Corporate storage for and excludes held year-over-year due segment the storage growth, records slightly internal in service project-based International, in markets see was destruction

and Recall down Turning our America and Europe EBITDA North a margins continue in benefits invest North realize slightly year-over-year expanded programs margins the to for development Slide synergies EBITDA revenue as ago. management year America from of than flow-through from we and adjusted Management, compared benefit to new more product as a we in the transformation year XX. Data continue initiative. Adjusted were our In ago to to the records management Western quarter

which In the been longer As to margins adjusted as EBITDA and segment, than Center scale this includes our services skewed restated Data service reminder, segment is improved business. towards has the Global continue a business, a no we more entertainment storage.

the XX% acquisition to a we long-term, range integrate to high and closer continue scale. mid to Over the as IO we

guidance turn balance XXXX, me sheet. our to cover briefly I Before let for

offering XX% a our reduction bond weighted GBPXXX to in quarter at at fixed the year-end. our resulting successful over continued rate our interest in debt X% a having and We average of refinancing in efforts rates fourth with our

maturity a our schedule. efforts average extended addition, X.X In years to well-laddered these with maturity

the the acquisition, raising of Data our closed was this with of Center ratio helped January quarter, capital Xx, end of IO by year. the which As December leverage fourth lease-adjusted associated the in

We our the growing first data year, XXXX, there will a flows to and expect mid-Xx the our ratio remain then to as Xx plan closer quarter leverage to track I synergies with from and our we EBITDAR for lease-up. of remain to leverage and moment. reduce the by cash discuss for in about We most as acquisition centers, on recognizing decline be begin lease-adjusted

underpinning to XX our Let's on XXXX expectations rates. guidance constant-dollar Please on on turn for presentation. January that and exchange our is note a the Page results summarized of guidance XXXX basis based

XXXX In addition, new to it is recognition adopted At the total on with expect by between in markets. center we XX% our basis, effective is constant-currency very and long-term XXXX. which revenues emerging growth, data This reflects XXXX driven the will revenue and X% by revenue revenue revenue the line EBITDA total of storage much in developed impact to guidance markets adjusted XXXX. to by compared management expected X% ongoing grow efforts reflecting growth growth in X.X%, reflects AFFO January and midpoint and expectations and we standard with grow a platform. be volume by growing in X, internal X%, be

will that For a remember of North that first significant had amount quarter, year customer prior be new activity. the a period lapping America

improve basis we markets' a growth up QX the through points result, XXXX year. decline internal is move in expected volume trailing developed as then to to XX As and reporting XX-month

markets. Europe, growth slight For decline to existing while Western in North we income in lower volume leading anticipate America, volume see in year, overall from internal a full and volume the to developed positive customers we expect

over feet. be expected net markets to basis base in a XXX million is cubic XXXX in down points internal a on developed As volume XX result, of growth to flat

storage of deliver emerging markets growth However, revenue projected growth to as and revenue management to are X% rental mentioned, X.X%. revenue total

approximately Our is not as center be for part internal wouldn't calculations revenue growth guidance year acquired be leasing operation as data margin but the management center does continuous center megawatts, and the include expected ongoing XX XXXX. internal a to business $XXX is of to continued The take EBITDA growth well our related savings would a of our to data the realization occupancy data XXXX. in be less recently the in approaching accelerate improvement will revenue as million expansion initiatives. than initiatives Adjusted business expected with these with our for Recall and revenue not of all expansion acquisition, from

standard our recognition from EBITDA the will addition, revenue commissions about $XX initial million due $XX adjusted million benefit capitalization to and costs. intake new the to In of by

adjusted at standard, Excluding the will be would impact and margin from increase midpoint, basis of the approximately EBITDA XXX XXXX. the adjusted EBITDA points revenue recognition growth XX%

from IO data Data interest adjusted the revenue There recent reflects Center material be tax the lower to recognition storage from is our amortization acquisition. reflecting AFFO while to XX% our of between Adjusted offsetting to taxable to $XXX by increased and million expected durability these EPS expense the growth strength Interest of continued no related million, XX% around subsidiary, capitalization be in EPS structural XXX XXXX, count for Our as is and expenses. to amortization the be new and $XXX in to is our financing the rates shares in businesses. center be standard expense expected offset growth will largely is the cost rate international U.S. depreciation business. average in XXXX, share lease reflects benefit the to between XXXX acquisitions. million reflecting expected

X% recognition next X% expect back the of guidance, of estate to of related to growth $XXX Also, revenue and midpoint no representing million with we with roughly revenue the investments impact. don't commissions maintenance year, approximately material capital so new standard to of has add together We $XXX calculate non-real million XXXX. consistent expenditures the AFFO, amortization to

our expectations. Let me turn to investment capital

prudent value shareholder in hurdle rate. expanding excess we capital where remain can through As returns always, our we of achieve deployment focused on

markets, is plan. our M&A million in XXXX transactions centers. acquire to Credit the data we Suisse $XXX continue XXXX, as $XXX on with core For to as million activity well expected the emerging bulk expect spend two higher-growth The consistent to to be core of

including in we Virginia on Northern come to Phoenix, halls which million $XXX will revenue stabilized storage online beyond development, data NOI yields. expect in and generate expansion with double-digit addition, XXXX center and In data invest

investments expect from to particularly We to fund the center a fund Suisse cash acquisition. as estate real of potential as through sale issuances, these of debt, from data recycling Credit capital well operations, combination ATM the growth

our CAD, Lastly, presentation. or well can as to the growth as XX our maintenance as our fund and continues Investor XXXX center our of cash see core recent that Day. business, available data in out have With dividend we on plan for distribution, Slide investments, updated you the expansion on we've previously laid

share As or dividend you XXXX by XX%; continues a strength can discussed, performance to compounded XXXX, from Bill payout rate see with we Overall, and very a on be a XXXX. to our around of With adjusted growth over as be in expect revenue around AFFO our the X% grow EBITDA annual growth per pleased the and X%, of on rental XXXX; basis. leverage in grow Slide on are an mid-XXs share per XX, basis, anticipate by storage expectations XX% and which almost ratio grow we to over we in AFFO business. to Xx durability to X% underscored to ratio by our

I'll data investment expand to up as We're accelerate the remarks to we'll on closing near Our value confident over growth, excited flow financial shareholders. cash long-term thereby we well-positioned in space growth deliver for our the Q&A. our time the to for in the Bill for enhance returns continue and that, create We growth and call the core fuels funding to we center business built. With and before shareholders over open we've turn by it remain projections. platform to

Bill Meaney

Thank you, Stuart.

points. few a Just

data revenue The centers drive both of storage internal QX growth emerging X% business growth expansion developed Suisse expected markets. and the acquisition EBITDA through acquisition the XXXX. recent X.X% take Credit of IO over Fortrust organic our our to and We in will in from continue and across to improved center of data

S&P a to all We be Q&A. financial have committed for in the a with sustainable and to targets. whilst all continue standout this strong it to and this, would dividend over done plus that, like the operator Net growth. of we our to With framework remaining I hand robust

Operator

Thank you.

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

Sheila McGrath

just us more was guidance, give you I I bit color. little on a a – first, could question if had

will more get this higher Now to centers, owning data to AFFO? mean and adjustments CapEx straight-lining

Stuart Brown

be We're development Yes, and it interest. CapEx we'll Jersey – right? Arizona, pipeline. will be AFFO. New out in really as adjustment obviously, standpoint, to from we'll the Denver, the straight-lining really initially that comes, a build in of building pipeline, the rent the will going small we growth that from pipeline, the in mean will development but have development having pretty well, most as a that then capitalized With Virginia we GAAP well into the campus, grow, be continue expenses capitalized And as leases opportunities coming

Sheila McGrath

the and insight integration? data update IO on going is of some and on at center transaction Okay. And us projects how a follow-up. Could some an leasing give you the

Bill Meaney

for good acceleration new also think records terms our of by customers the so IO, side, conversation side, sales center some speak, existing are We're of force. really Yes, on pleased the new for has pipeline, from to it's – the we the I which really expected for both logos, management question. or in in terms but in an a of them Mountain data but both, a guess, number I sales, getting us, accelerated IO data the but Iron also our

an in obviously interest seen in encouraged. from that activity, the sales in already they've getting It's what increase is days, but been increase we're So the an teams offering. I've really we're feedback early

Stuart Brown

Virginia, halls. lease-up. Northern in year plans for got that's in potential up we've hall pipeline data why first out as built expectations and next our to seen what a next the the we two we've the go In of multiple leased interest, of data and lot for is about a got two-thirds already, our build We've

got So we've megawatts we're next year. pretty XX in the that guidance for confident in the

Sheila McGrath

I’ll Okay, get great. queue. back in the

Operator

Thank And Shlomo you. with follow-up the next is Stifel. from a Rosenbaum question

Shlomo Rosenbaum

Hey, good morning.

just just some risk like to why explain Can sounds mathematical of volume calculation volumes Just decline you kind in XXXX, over the it there's the decline? on two, particularly there.

Bill Meaney

morning. Hi, the going is got I anyway, phone Yes. – couple your there's Shlomo, but up. question, on. way, breaking your good of things But the By a

look as of out, that lapping America. that America that of we've incoming customer same I'd existing One volume it's seeing from Europe, where out is you comparable steady North some Western incoming Europe, North trend seen because from the growth we're overall, called we're kind strong at Stuart in new the we if existing a say, Western QX percentage of, But customers, a still of last time activity. customers in pointed is things, last what in year reduction versus

being of a be may out more in we unvended, being of rolling in it bit in and some before couple see terms an in and Now aggressive customers management rate, and see because obviously, as Europe. of destruction we said, don't rolled That revenue out we mid-market which, we we actually increase kind we on Western of a uptick we're of government. years new don't terms start – focus slight federal that a

think, volume driven And we to think, and in kind QX. minus continue. X.XX that America. basis we bit customers of expect by those flat mainly markets forward, there said, customers trend And to still more existing continue expect comparable mean, that new volume of but incoming to growing, of continue will our going little seek incoming be high So overlap overall, as and continue, optimize – for from – a existing an it's point. of But I trend a I Stuart opportunities. price more we developed from unvended in to slowdown we is and from a will of to North volume a slowdown

Shlomo Rosenbaum

if I better, to decline? – to guess were or in [indiscernible] XXXX this be to start I roughly volumes understand flat to Just look

Bill Meaney

But will we volume you Well, continue for in – maybe No. be developed I basis or think you in I I from if and be these markets, developed slightly flat, feel maybe let's if so look plus roughly still are forget, kind it so volume, not going roughly going maybe X.XX at negative, the will markets, hover at is million flat. think – markets. to up. we're I be, to this probably that you're share flat, don't mean, XXX cube, on to minus, think continuing it point, of say, a look

think appropriately, to we're of using management we do the existing thing not sure we're increase to to the so trying is from amount And revenue customers. growth right so that make

Shlomo Rosenbaum

a can get Okay. and be how invest are the XXXX, delever XX% to you some down some And should Xx center to data you build just, Stuart, data build to some XX% the to that and give big kind be understand center need going us ratio? margin that in walk these out of Is you're of to expecting beyond pieces step-up AFFO puzzle you coverage going leverage we to if get going improve XXXX can in of to of through to help to Just this? will model assets? we us there that to the that us continuing assumptions are the us

Stuart Brown

got of target our – leverage with capacity able I is for no from standpoint. our the we're today for framework leverage of be sheet a, to our really and – a of sure cost in liquidity two There's start that – the we've around b, opportunities. Shlomo, balance leverage to sitting mean, take where issue optimizing things: and making advantage capital; built let me

about to dislocations. take to us want So time, creating for back over that to as getting we advantage capacity delever it's of more

delever with that a So will time said with we organic in purchased related that said, IO naturally taking that to that we we will leverage when step-up over be and growth.

we back putting be to work as However, capital well. development will in

of funding our kind We going to we will some fund get from as additional And are of center data center the pipeline operations. REITs, build cash like we flow so that? data other how that development

Credit use a will – Midlands an like and we've over into for ATM the at just properties, fairly much been think – we've of capital now couple is I years. the of We of you outside the opportunities. city, got the sell right things London. recently closer Suisse, are as to the to purchased one in out give we're we've example some we're that move looking Midlands in next And high-value we to property it's three And going recycling properties

can if fast pull don't model as we on AFFO. out a as we've that the provided expansion. sell archival move of going through your got not are of that to opportunities the payout we the can move to dividend to those back a And to anticipate so becomes more center grow properties data that we where to at So fund right, back properties and the look number you XXXX, types and as of types we leaseback then coming ratio short-term – those question, cheaper levers management we're records

down mid-XXs. again, the so payout natural you into ratio of And a reduction the get

Shlomo Rosenbaum

us, Okay, And revenue, data for? me of normalized are what give center then can on excuse to of that. when XXXX, normalizing – in million give $XXX and expected EBITDA is you're saying I'll acquisition me, the the $XXX provide million – with you work you

Stuart Brown

that when $X that's only is built That to center guidance, into $X data is the that the IO, million. for total EBITDA costs to So million normalize look but million the related in normalized number. just million you thing $X number and to integration that's we straight for at $X our

Shlomo Rosenbaum

you very thank Okay, much.

Operator

you. from comes the Andrew question next with JPM. Thank Steinerman And

Andrew Steinerman

the Andrew. XXXX was team it’s share plan higher gives margin Hi, assumption. What underlying on margin in it is of is looking confidence implied XX, there goal assumptions margins XX.X%. at The previously the dividend thought? XXXX to one the status $X.XX current XXXX of Previously, now higher is your Slide per achieve the for a When than XX.X%.

Bill Meaney

traction high-level on let confidence gotten we've So view the is comment us I'll Stuart the of the Andrew, the give management revenue kind storage then let more. that it, the the that's given business. of side But really me you part of and

margin of expansion amount internal boxes the XX because and that growth X% revenue we're in price. to You because X.X% relying at take doing think time the place of the to is able can now minimizing that we're side, have whilst still that we on and same we in the maintain on we've what we're the see last put right racking gotten terms to doing months boxes in that the we'll be storage more more to and

seen feel margin of Stuart, an We've our want may comment and acceleration you more But good we we to specific increase. that. in really – already our see mean, in So terms margin I target. about

Stuart Brown

I'll in little things in, Just two outperformed higher point a bit right? other right, of we're expectations We've out, a base, quick coming in XXXX.

accounting that. The revenue an margin you for that other thing, to as don't need forget, recognition the Andrew, normalize change on impact well, has so is

Andrew Steinerman

Right.

I'm have recognition, not it's you're the So to higher revenue of cleanly, success transformational synergies previously but thought initiatives. saying like say, than or just to going Recall XXXX, on higher

Bill Meaney

It's gross on no. the margin No, really driven business. the by

Andrew Steinerman

Perfect. Thank you.

Operator

Thank MUFG Securities. you. And the Ford next question comes Karin with from

Karin Ford

morning. good Hi,

What couple a and are guidance. growth service the on more questions for Just XXXX? margins expectations on revenue side in the

Stuart Brown

the see to the little because It better We is side bit past will on had expected side. of than growth be Revenue flat. shred the shred service a on really growth the be in stronger business. we've

Karin Ford

Okay. expect steady margins And do based that? on you

Bill Meaney

the as terms made actually, on I storage it, growth. progress that we've years, think, well storage but last Well, over we're of in three the historically the just look at Karin, if in both you pleased you look if at really as also margin

historically some how service growth with we're And and we developed with see internal rate You the momentum there. so that – of transportation, emerging was feel progress positive markets the – really and can the we've the the bedrock, have start which replacing storage as new markets. offerings, really that for you with that's of we both with good building seeing through been

Karin Ford

Great.

in you're emerging the to markets? that management organic question in rolling emerging How XXXX. is, the you going do be markets much boost could out growth into Next you revenue revenue mentioned think

Bill Meaney

to you We're and as not we flavor forward. out, X.X% go X% I – that stay overall. give our going overall more guidance within laid we're the Stuart mean, we'll

quarter, in of a focused some You when impact getting harvesting you're that it were a then in little lot of And about revenue primary start you're volume to with the focused at volume still that those we're bit position, this still and looking them past but Think could see market-leading a you markets. optimize markets, those your And at. management. on market-leading lever position. a obviously, is point,

low-hanging management some terms Western there that as at market. optimize be further of a we – we think our more revenue I call, being revenue some of at we're So markets. we some think because mean, than volume because first the look – just think quarter there more growth there's are that to And the that is in volume to are of allocators. sort markets we in you tools emerging now lot Western I in is Europe, look fruit can introducing applying capital relying if more can growth some But we those get of are still Europe we done speaking, think that on in growth revenue than we efficient growth that

Karin Ford

the want REIT on And guys law know maintain is calls status? But thanks. did you you consider not your I review de-REIT-ing? you you that Okay, whether to I've question tax now asked this or did past. settled,

Bill Meaney

course, us unique. an kind if we and mean, right? I you close, look about as start, answer. Stuart then of even give you of think Yes, income-oriented but I I'll stock, mean, technical at the we're not could these it's things,

our on terms shareholders, it fact forward. and our have We – nature paying real attractive just REITs going service to generate give they're storage less the side of we And are have REIT that investors, to our yield given tax rates come the the drive whether investors. benefits for to framework nature we still we business from our is type business. of means income-oriented down, of C-Corp tax in a way and an of the And have of we're a estate they business. most revenue where the high And the cash, of strong or lot efficient us growth the

– I but you to mean, So want Stuart, comment. may

Stuart Brown

relationship the with center that create the centers of status on the customers The provide clearly you're tax mean, if you're world, we add leverage shield have Credit that the to I things. right? on Suisse to on as can REIT as So well, not the a helpful REIT those getting ability is expanding data main other data value, the we ability we're thing side, our I'll our reason and the is

that centers on place of REIT. C-Corps the data better actually balance than a sheet are are in of a lot a of balance So sheet

well. as continue we'll that So to leverage

Karin Ford

from you guidance? have GDP economic in what And X%? increase goes demand baked Last seen In when me. cycles, Great. one you the have forecast past growth type of above

Bill Meaney

Yes.

growth. storage of time, where I the my But does think our amount business, I the months, every course, that XX than We in come the inflation inflation what bit next X, And number the or day of I of with baked less I – like XX% a be is think of the that's a if graphs expands change inflation, driver think point rain is in the a of of – a by is line term, of had for long been to us really gross inflation shown probably, margin GDP, the inflation. And haven’t following growth every to company for guidance, biggest I sure, drive volume XX inflation. the it's expect our if GDP in a work look going change dance, we've for driven near a pray think because top GDP predecessor little in because I kind given you've growth of we at margins. of – we right, benefit over

So you of kind sense. that unique in were

growth at dividend. to I inflation the because that our pace don't It In us our outperform allows even it's just So the it's case, opposite. of a income-oriented keep allows dividend know with with more lot companies like to inflation inflation. – hard

So inflation so near term, it's dance. I'm the – my I think in doing

Karin Ford

taking question. for Thanks Great. the

Operator

a you. is And Thank McGrath next with question the from Evercore. Sheila follow-up

Sheila McGrath

impact in insight about Recall Yes. update, how Any transformation should and we think XXXX?

Bill Meaney

that say may there's said little I bit still you mostly give it's mostly at there's point. a of it, of I would on think – real more, done – mean, the that. but we It's we facilities this always in bulk mean, mean, terms in still to I integration done picking integrating to want we're But some and Stuart, I the get of more Stuart. estate, through

Stuart Brown

Bill up. as the of some have the into mentioned. is and we the guidance built some of as We numbers, investments. costs Yes, in systems done Recall And of well, as estate to track. still It's right continue that well sort will through the do and Recall it back-office the we're flow real ramp bulk on IT as terms synergies

Sheila McGrath

wonder that just provide And forecast can a should about than quarter. you item if higher we and on any then on that this fourth I in line little Okay. had detail think was G&A, going we how forward.

Bill Meaney

of at, If Sheila, would happened is of what things takes, because there there's puts you look at that the certain – seasonality I and look end terms in a the at aspect year.

SG&A tick the between mean, fairness, year-on-year, the for we a But If a improvement, to see what and you if look were we've look that slowly improvement. nice you the you we baked if year-on-year, XXXX. to in most to we a and still of we're QX saw But of year-on-year, at There lot I think the flattening our got you're between that we're instance, the in working at year. year-on-year, end But right, issues had through, quarter QX But look you out QX see is of some bit into continue was guidance at flat. that VAT in happy. we I some in continue for noise pretty we'll QX India. little down.

Sheila McGrath

to this anything sales force? force Or restructuring Okay, Are to to that's Iron helpful. you specific And wondering or Mountain data data and could new the rely force center if on expanded bit the segment is Mountain. a sales going then center cross-selling and about sales mostly talk all was the I you segment? little sell of Iron incentives encourage

Bill Meaney

No, us about great one the things That's of space. center excites that really the it's data question. a

management that degree, time been the records XX% we've overlap. data we back a that in a we right And certain that Iron as have has even management in XX% with the might in increasing. and, December of centers see to think of now And customers about mentioned IO, is through I are folks inquiries our short ones. coming owned our especially our sales Mountain data there's – then our our it

been pretty both – with there's and a how we coordinate always we it that, coordinate So and art good science. coordination, but

the So is fixed. art

The example. Europe Suisse relationship strong data Credit why the years, force the our carry out So you excited. a I'll almost some XXX customers, through are both been a But in sales quota in with even in for we is Suisse. have Credit reasons Credit of And as say, have came have one folks the with data of of an because our just over we're on and – basis. people centers I Suisse North that management are really not it. And that use the alone number and XXXX spiffs, records America and those relationship that's of a of of management we manager just centers science we actually people the a give data the XX,XXX part with Fortune which weekly also of

starting it show benefits. is So to real

Stuart Brown

Just to as the IO's color. And onto well, have be at of together. the facility, data right, teams the is And to owned team of been Iron got that we sheet able you first the add platform capacity part able able companies provide team these met be a bigger quick even don't sell. commercial balance for have just our be center to customers. got commercials that a I point to to the one sort data provide Mountain bit right, they're now reasons little much be of give our closed equity, to mean, the sales to a the to day center private they've team, or district the of to by one IO excited and entire

of and I team. in got customers roster to a a transactions they've great the I guess them welcome And lot Mountain all the pipeline. So Iron of probably potential should

Sheila McGrath

Thank you. great. Okay,

Operator

the Deutsche question comes And Kevin Bank. from Thank next McVeigh you. with

Kevin McVeigh

like that in algorithm? kind terms just versus a was one-time QX. Great, on full growth, range up pure internal X.X% growth That job that? termination X.X% Was of X.X%. fee to the like Or versus the the the X% thank making price you. in of kind storage kind Really took of year Hey. there to there volume anything or nice anything of of in the a

Stuart Brown

in which year fee talked item it SimpliVity in termination in was the fully second we center. data quarter, back we SimpliVity we the unusual and for that the there the about only that The on was have annual the an – basis, had

But for than the And the basis just points rental for storage year. that, it's points so that XX quarter. the impacted strong XX basis about underlying other performance, growth

Kevin McVeigh

Great.

Stuart Brown

Yes.

Kevin McVeigh

For full the year.

So the X.X%, been right, X.X%, would x Stuart, that? have

Stuart Brown

Correct.

Kevin McVeigh

to the it? way that think Is about

Stuart Brown

Yes.

Kevin McVeigh

emerging you emerging much kind market unit folks be about on And volume is to versus tighter kind try think the in what markets get X.X% in range would get management there kind to Super. any just that is just to price to to of management revenue the in the as versus revenue of way volume bracket X% a versus range, XXXX, growth, X% X.X%? of how to

Stuart Brown

the mean, we guidance you the I No, top at gave level.

markets, you similar upward similar trending, trend at those you and and that's we a the the X.X%, the can but calling businesses. see and pretty is momentum you the on it's would momentum look a the that management lines. momentum slight expect trend we in similar I continued in in look at emerging out between continue growth revenue of clear. And if we're – Effectively, volume If built terms what a instead or X% driving how business

Kevin McVeigh

$XX that the And all? not from service? internal revenue $XX to sit I million Or it. EBITDA, million And that The be is the storage last could. $X in of million Got then does growth, part rec, in would rev considered of of $X just if one that million that and me, or the revenue? impacted at

Stuart Brown

really – service because mostly that's capitalized it's was getting the EBITDA. mostly It side, on right, in commission

Kevin McVeigh

no? Got it. or terms impacts internal that in the And growth Stuart, of the revenue

Stuart Brown

No, no, definitely we growth. will exclude internal

Kevin McVeigh

you, awesome. guys. Okay, Thank

Operator

Thank Rosenbaum Stifel. with question is next follow-up from [Operator Instructions] And Shlomo a you.

Shlomo Rosenbaum

but for XXXX specificity? can is give in you is, give in. of the you on million you what just back your know bit squeezing detail majority vast for $XXX us organically thank little were Hi, how EBITDA, more much of data acquisition? center the it Stuart, I me us a versus center revenue, can a little more $XXX expectations million data

Stuart Brown

Yes.

revenue the – $XX of ongoing I million, legacy business about side, of about the the then $XX it, I the around talked million the with acquisition top a be, head, top was an think integration. kind – had standpoint. offering, IO On that, then it my legacy but remember and off from – $XX business, then the you about revenue from we and on that about Fortrust from IO equity the million perspective, EBITDA And after of transaction, will from

Shlomo Rosenbaum

other acquisitions $XX think million So should expecting, like and be EBITDA like acquisitions? more the about when from I I Suisse it, including everything, from Credit

Stuart Brown

provided we've include I Credit mean, that right. Suisse, the numbers

the guidance include Credit assuming So quarter. in closes Suisse first here that numbers later the

Shlomo Rosenbaum

Right.

was I Okay. trying acquisition what you just organic to of versus kind growth growth. of are an guys expecting a the seeing, get

Bill Meaney

expect previous think slower have I years. we of think the acquisitions some bit Shlomo, little think the in it, if will you so than can because this out about capacity, a the to – this year is what some be we that organic seen have, growth I we've we build way,

EBITDA of bit I revenue stabilize mid-teens bit EBITDA of But growth better terms kind So obviously, some of think as grow a will on organic up margin. little terms – of and revenue and in I that moving it's kind a growth, of than I'd of little say EBITDA. we're, our the mid-teens in terms faster because expect assets in would

Shlomo Rosenbaum

you. thank Okay,

Operator

the for And comments. to call you. last return that I would the management to question, Thank like any closing as was

Bill Meaney

a like for just thank a in everybody listening We'd and in, day. XXXX. good to Have forward look strength continued to we

Operator

This concludes session and our call. Thank you. conference today's question-and-answer

Iron Mountain (IRM) 16 Feb 182017 Q4 Earnings call transcript