IRM - Earnings call transcript Q1 2018 | Iron Mountain Incorporated

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Operator

Good morning, and welcome to the Iron Mountain First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. 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

remarks Hello, webcast. first Kate. slides morning Welcome the today's everyone. we Relations our Thank along site XXXX and earnings our with prepared in to quarter be to user-controlled available conference to on will Investor today's you, link referring good are call. that The

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

Additionally, who who documents from available first we which will discuss toward progress will CFO, today's have plan on filed one also hear CEO, all we'll Bill of highlights by and Meaney, On the is Stuart strategic website. Brown, call, as cover our related Iron the Mountain followed results. Relations Investor financial and X-K, President

slide results of a of call slide open All forward-looking cause XXXX could to our Please operating center presentation, for press our this risk release, lines Harbor X notably Annual also supplemental General actual most data now risks to supplemental Safe XX-K, forward-looking earnings Report call, presentation, major business, have those of we will Form discussion financial and are and information financial forward-looking for differ to in refer when factors and statements on statements. our our language statements, our available call subject on page uncertainties. to performance. today's the report, from the that the the financial Manager today's joining up Q&A. outlook and Referring earnings Kidd, Mark presentation and for We contain the today

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

William Leo Meaney

and everyone. Thank you, hello, Melissa,

IO XXXX. strategic financial plan. XX% expectations of strong strong progress our and quarter's that of X the the of have recognition the acquisitions adoption the to discussed total revenue the of of against our benefit on solid internal more storage minor last adjusted last Data new Suisse count, of of internal results first two is those Adjusted XX% ago, business year, by our year per the for and of durability our associated are we Credit centers growth internal X% the which quarter It the with data revenue AFFO. of IO revenue and our shortly. upon a on XXXX first well XXXX delivering Including at same five demonstrate Suisse with annual drivers first with track companies' shown centers; included margin in Mountain expansion until pleased expectations, by XX% of another quarter as with and the growth inflation, page our EBITDA growth continued quarter X.X%, EBITDA also in smooth positive our and strong growth are next from for start to overall pleased therefore performance, report the that are last in in will and of quarter should year. the in some reflecting be and in a The increased one-third. internal Centers presentation, years line increase of Iron the operating We Furthermore, the growth growth to, revenue AFFO another integration continued reported call. company in results business service Credit the with both strength has versus quarter, data on growth is and revenue in share growth base added in standards annual of targeted noted punctuated whilst including on rental figures high-end excess and not grew share storage the Stuart dividend about of growth, the in guidance, closed the some of was this strong metrics supports with best core for from which

for support net in to revenue roughly This our digitization revenue X feet an as the of volume acquisitions as months. digital the million of service developed business internal expansion storage recent physical paper management partner in growth, the cubic XX growth improved management Revenue continues contribution larger governance from build in special average and Our durability from hybrid our projects, imaging our internal to by growth years. in the momentum by our market increasingly growth higher first remains well excited those driven XX worldwide over lower growth as as digital our solutions in driven managing markets. which quarter We're before was continues In traditional provides markets, Western supports box projects. of as in is in than of go-to Overall, with well year-over-year in achieved despite Europe volume trailing pipeline facilities information markets, information perform records the shred services needs. these in we and increase and growth pricing revenue more businesses, pricing, of us their business than and their leadership and emerging we a customers see quarters. as core prices

improved consistent growth our time business, X, of our together businesses, slide goals. drive the our in and As us margins in and with shown confidence achieving growth XXXX recent on expansion in over adjacent center core platform transactions other gives data faster internal with this should

are our adjacent approaching data acquisition, which our mix. center, pending – acquisitions already progression, is storage internal XX% portfolio data XXXX, achieve internal recent and above on businesses well consistent growth are of by the recently growth given business growth. track acquisitions with adjusted mix EBITDA markets, We before X% announced revenue is a center art fueled – approximately delivering X.X% this the and quarter to emerging and revenue by Moreover, that

Turning progress to the on made slide we strategic of X, our plan. further execution

durable we is of of storage Information As you basis, model records our Management to customers. decrease such services, solutions will continued and our Data even And North the as North find Western significantly we growing revenue recall, to into the markets quarter, European and customer terminations business noted a enhance evaluating will through our X.X% internal we expanding or may X.X% data opportunities core and as whilst emerging our markets, and as on new with pillars existing businesses, services February a with In consistent American well our growth by impacted has adjacent marginally our nurturing art markets, management American centers. the trailing behavior and extend volume incoming it storage-related faster efforts which developed entertainment on Also revenue customer earnings segments, and volume and to in successful new Records our continue provided growing ways customers, as identifying we innovative not to plan from achieved core Management, internal our impact to last strategic provide call. developed guidance include destructions. of plan and XX-month existing

adding management broad growth range storage, from and to marketing and digital early Following are markets in signs XXXX. customers physical the certain emerging we Furthermore, information we management in of existing through Western resources achieve North of implementation America during our revenue progress services. storage, Europe, governance in successful continue data

unvended continue government. focus we Additionally, as of and growth the volume further federal from the to on penetration segments, mid-market such U.S.

Federal the we total secure customers increased demand has record government federal and in with records. cubic to reduce record spending have agencies and is attractive hosted This center, Records are Joint Archives National and to Maryland, their XXth February, or potential to XXX X.X government We million physical NARA-compliant Base of grand more storage of Administration In than feet adjacent their of our seen in opening Andrews attendance. on who seeking storage. a footprint facility minimize capacity Records to

occupy facility have we expect agency in of we cubic one moved by fully federal year feet that fact, In records secured XXX,XXX end. already will from once this

Artex, presence complementary whereas give has important and to with announced institutional important plan art our existing art we is we transaction business significant our This a entity. competitive Art with storage in During position will this museum industry presence markets. Fine a perspective acquisition traditionally our significantly to acquire quarter, dealers us more Crozier deeper an from and and had key galleries. This an customers expect strengthen Crozier it to a

as New facilities we and megawatts IO special in the well which on as very is Virginia is integration Turning are IO built-out teams. development on to bringing locations. capacity Suisse and of Singapore. new business, Whilst The the in developing our commercial Centers, IO in of Data had during The will at the Denver of on focus data limited well, with additional together Credit our acquisition center the quarter, now closed capacity Phoenix going with London XX team we pre-leased. add acquisition, activity development top Northern and current XX% availability Jersey of

opportunities center from for of in $XXX are outsourcing existing on some data as of You can after contribution Driven million as these the annualized characteristics by full for EBITDA reported adjusted from growth acquisitions, platform. segment, and capital and of this quarter business, about enterprise within results shift well the our targeted revenue to smaller, for acceleration our transactions. we for we of center normalizing results third-parties center see may track data data of growth development our the million attractive year both two $XXX towards

business, solid as for attractive our markets emerging to Turning records as see well to internal continue growth acquisition opportunities. we management

India and in in scale on we we During infrastructure South Korea, tuck-in transactions and Africa the leveraging two we additional and on end, Dubai in and acquisitions the markets. quarter these since closed have quarter South closed

per to on into cost as we we as growing to assumes of the X% we our balance our ratios in a and our interest penetration as higher with drive increase dividends deeper On deleveraging on which further supports address progress and terms slide shown markets X, made sheet, will that we've Our of I Stuart margins in our both for shortly. reiterate expect as want track payout XXXX, faster enhanced depiction share model. remain these scale. this financial annual leverage well in leadership

it on turning with year-to-date rental pass is Before shareholder return we basis. to inflation the flow-through REIT return our business. to total you XX% our our inflation-based inflation. often the I'd have like associated total directly, that on just over MSCI rates helps index, gross increases, This to call meaningful the And recognize down characteristics is storage remind furthers in cash nominal same increases and ability increasing as the in inflation, given important through of annual growth, the percentage of whilst rate with accelerate storage with terms. dividend that Stuart, per generation, an margin interest to the us to ability about to high those our More price deliver not meaningful well share in ability real excess of margin achieve but line grow business we growth

grow ability I'd supported are line delever our growth from are margins, internal growth, our growing quarter, as and up, These well adjacent in like also over the growth to per results we contribution that, flow the that as With Stuart. sheet, our a yielding revenue we has great continue solid data and top by in core, are first and in company durable Additionally, growing businesses. the dynamics solid growth in the turn top time. both portfolio. cash a over the today strong ultimately potential, S&P XXX to call and share our long-term we with acceleration in in To storage pleased standout are and wrap healthy to that and that expanding supports dividends in a driving faster balance to both center

Stuart B. Brown

Thank you, Bill. Good morning, everyone.

Mountain outlook We another key for enhanced business. with growing financial today's faster excellent touch to operational businesses, in margins. unchanged highlights, and disciplined with combined and strategy, strategic make goals, progress I'll call, our management records anchored growth be XXXX, Iron team core continues strong at February. revenue pleased financial on reporting cover which on a focused On investment and from is robust rental on against metrics quarter by The certain our to are value-creating our continuous improvement and

highlights. the diving Before through details, into you the let walk me

First, growth benefits February. the reflects out we calculated growth revenue our X.X%, revenue we and ahead achieved fundamentals impact in any program. of guidance been underlying of internal to revenue management X% the recognition to Note our annual of tracking new standard. strong revenue X.X% This internal that from laid storage solid exclude the has

mix. However, storage the on accounting some change minor has impact and reported service

revenue basis XXX the a benefits from our initiative, on the adoption transformation margins Second, of XX% of initiatives the ago, dollar expanding and we delivered basis, recognition impact the Recall with compared to revenue flow-through growth reflecting of points adjusted year standard. constant management EBITDA of new synergies, a

net the acquisitions. the of from a Internal key Revenue as from and business project-related impact presentation, primarily of volume $X growth and in growth shred or shows growing growth billion a year Let's were growth turn up, with a of over to last line with imaging data Results our revenue well driven global increase, which revenue management, center as storage in slide X and service internal our as XX% dollar came financial our our strong revenue ticked generally at X.X% ahead constant metrics. expectations. result by on of and X% just basis, revenue. over

pleased depending are with size timing lumpy be upon we projects, progress of While the service quarter. the revenue this and can

a quarter of from to tailwind for favorable first benefit a exchange currency a rates translation year. appear on the rest the had don't basis, be While year-over-year the

are In in with rates exchange our current addition, guidance. rates the consistent relatively assumed

sales in resulting profit increased basis revenue gross margin management to as EBITDA Our of basis XX% slightly leverage. driven program. of XX% adjusted a percentage on by improved and our on also constant basis, year margin primarily from improved year-over-year the in increase adjusted than labor EBITDA to acquisition of dollar an increased Compared first approximately SG&A Recall by ago, flow-through revenue our points XX.X%. or the the XXX year-over-year, synergies a a XXX more points quarter

let on few touch a segments, me Before first on business points. other the providing color

share, IO shares $XXX was estate included per Adjusted center Maintenance line investment non-real million in quarter rate acquisitions. recent heavily $XX $X.XX of adjusted million approximately up expectations. structural impacted of of increase. up items from EBITDA with number data recognition the a year year-over-year, accounting AFFO tax in being as of depreciation slightly half $XX CapEx change. benefit and was from was that in $XX and million Also, these first second the EPS quarter revenue First, EBITDA million our XX.X%, in adjusted over totaled the CapEx the the more weighted year, to year. AFFO the increased the leading a compared Remember ago. as but million, toward half well first to the and quarter increased our last by with the amortization, $X flat for for year, our increased following other the line

legacy our the Service segment as over growth in good this off of records Developed basis, in call Center performance strong Markets year revenue of internal increased to prices growth on growth, or we in of a feet internal and cubic details Data a supplemental, Turning ahead about lower Markets trailing On growth service grew recycled X.X%. albeit X% total strong Other where ago. ago. base. a the X.X% nicely Markets our X.X%. In the comes segments, saw storage for year paper internal to XX% are internal cycle guided the business average storage volume shred see we the you impact due Internal activity negative continue was growth storage, million more XXX X, over internal results, are XX-month which quarter, growth. to mix, other million to Developed revenue revenue growth see X.X $X to point, new compared with management in slide base customers Almost internal for from a as last the growth by on project small in quarterly growth business over In Developed from of which of our offset can in slightly Developed business, International, a our of half of Markets' efforts of we had reflected the shifting inflation. of by internal in revenue

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

scale no Europe segment with now been and in strongly As includes restated margins on good has our and and margins compared Margins synergies EBITDA to a business, included Corporate Global is improved expanded we ago. continued reminder, Other flat controls to businesses. entertainment the Center In while adjusted which business. in longer adjusted International as Other this EBITDA a were services Western segment, year cost the Data nicely,

the more XX% time as over to integrate IO margins this expect to range, move business. add closer acquisition mid-to-high the to we and scale We

quarter, Phoenix. the space, X.X as or Northern primarily in in Denver, of a megawatt kicked megawatts X leased Virginia expansion we new off Jersey, and expansion During we New

that was Turning the the XX, Data after first at transactions. our and to closed you slide quarter lease-adjusted ratio Credit can IO leverage see X.X having times Suisse as the Centers end expected, of

current ratio REITs, is Our REIT especially in line that than other sectors. comfortably more considering other when our is with business leverage many durable

remain year the our range to expect before reducing at adjusted for leverage end XXXX. this to about the in X times We of lease ratio

As seize in lower opportunities. we us Bill leverage flexibility the to ratio order to target adjusted lease more discussed, give

in can appropriate supplemental, borrowings cycle. in structure the to the business our of the As we see you is are where

As of XX, were XX% our March borrowings fixed rate.

our is rate borrowing to an well-laddered X.X%, is average maturity of years. average weighted and at down Our X.X

out B reference. details under for fixed the appendix new moved to rate call, our on regard swapped quarter, executed the your guidance remain Term just first to all-in years, to so for laid for a we of the comfortable we seven-year With and During outlook Loan X%. an we've half the U.S. we four February with

to of about intake revenue we capitalization from of expect the million impact benefit reflects As and new million, adjusted down this a guided annual $XX standard the reminder, commissions now recognition million the to $XX our by reflect from costs. We new the to guidance $XX previously. standard initial EBITDA to

value customer As cash depreciation associated the bring center $XXX for of data for amortization expense not around amortization This the additional expense the center will offsets deals, to in and real EPS flows plus with amortization total EBITDA. accounting increased a D&A increased year AFFO, this impact acquired change data in new acquisitions or does relationship the the estate of as reminder million. standard the increase the

we do will the you second by year-over-year a termination that guidance. for impacted EBITDA (sic) the XXXX storage, Adjusted growth on respect not the associated provide estate, guidance, and potentially the growth financing With from growth in be prior continue just impacted relatively sale fee we the the earned market with and write-off acquisition, internal quarterly year recycling against positively quarter full funding While growth one-time investments remind of the million that should as ATM depending in remainder cycling earn-out benefits reported, from to we with cash capital center from as of of an EBITDA. issuances, of [XXXX] debt, the quarter operations, revenue be data of $X first a from through expect to real plans, well consistent business steady combination conditions.

approximately and planning record a currently existing continued cash facilities $XX flow infill On sale proceeds are are from investments. the growth this from behind the year as growth expect Recall to generate in properties in us. new Greater to Midland's center, operations used with million consolidate related London, three we year costs full see a largely into we fund basis, to as of late We

relative growth flow As fund more operations, a cash will improve result, investments. providing to to from capital coverage dividend

performance to our on expectations. term Finally, I'd like touch longer

On storage we growth compound the annual As see XXXX of XX, growth a approaching reflects and of XX% AFFO we are the XXXX. quarter, you strength the leverage ratio to basis, and rental on AFFO revenue Overall, With share with which adjusted in our payout of XX%. dividend anticipate our our the ratio rate can unchanged. mid-XXs continue XXXX, we first framework an business. annual to durability and performance Xx very X% per almost be growth exceeding expectations around from to growth around EBITDA growth is X%, expect slide pleased in in

as our build. to Bill financial We we continue to over and on Centers, the excited for thereby favorable investment remain stock well-positioned business to core fueling believe create flow enhance call the closing for projections, we yield platform turn accelerating open to growth deliver and current that, growth Mountain we'll is growth Data in cash before our near value compelling and a via investment shareholder about growth With the our and remarks prospects. funding shareholders continue returns. expand to I'll we are time We're Our our over given long-term and represents Iron it up Q&A. I confident

William Leo Meaney

become a feel share stand increased established to And now all, our us Stuart. over investor with we With internal you, a that of X.X% Thank delivered of XX%, growth to or from amongst XX% the are like a have past firmly adjusted XX%, few business data to in comments, our best time. All over years, the this, I'd pleased we storage growth operator, just growth it to an center of figures first contributor AFFO turn EBITDA And five makes growth, questions. significant for standpoint. is out count.

Operator

Sheila question of from McGrath is The go first Evercore. ahead. Please

Sheila McGrath

morning. Good Yes. Hi.

down have in some volume might note, in just tougher You in storage the give first the you year. comparison. I'm you you related balance the given numbers. benefits volume for us on see domestically. some had quarter expect of a insights the on when the guide a wondering business if those federal could did wondering to of wins outlook the we And I'm think transactions your

William Leo Meaney

Sheila. All right. Good morning,

question. good a it's So

here Developed to that be guidance roughly or plus the we forward kind our minus think, Markets expect of from I is X.X%.

do. with to that we're like our predict going So but we to that's I decided trade-off quarter I'm that quarter, think, stay in going by what look to that's of And consistent to going kind not zone.

roughly revenue minus we're you of about we're other to math, standpoint, on a $X side, other revenue million If million contributing about like management it And do X% $X monkey the it's achieving price around headwind. a revenue you we're X.X% or of negative something from side. is the kind increase if on way, $XX think the this million achieving

that existing additional in share a So any in we're I'll trade customers. take mature for market especially time going where not

then that I taking $X making we're that tradeoff million if is side take out is the a trend volume costs you goes that straight on is we pricing associated on knowing And with that over or us on around the the the quite purposefully time, line. think it's And about So good million that $XX $X see probably the some risk we're costing out to probably million. to business. which bottom one X.X% a $X future. drag million into And continuing the the

quarters be the but some positive, quarters we right think Some trade. be it'll that's it'll negative,

think the I you is of Government. the unvended the to it out, on largest as is comes when unvended Federal it, some point upside the the of and area

government federal is as almost the market total North business. the size same our So of about American addressable the

a progress would in it's And to find the by it's we I Andrews. by And say, is say interest this that think making Government but the point. at support seeing not Federal But needle lot yet. to at Joint referenced on as I went to that, and more as Base just the a the We opening remarks I momentum it records gaining start management. it making federal agencies. outsource needle made, people impact opening a have today, thing moving do this my a risky down normal from interest thing, but just steady moving the of it's the improvement, some start I an not wouldn't I but and their will

Sheila McGrath

data you on the other Okay. how into about IO any place, And going, integration follow-up, programs as talk insights with on that customers? and your the or cross-selling putting is you're could expectations business, business a center your

William Leo Meaney

let I'm to me Mark at answer level, on more it going comment ask a So high Kidd actually to it then directly.

capital the going, couldn't it's especially of human personally I more terms the in from way integration. be So pleased

So that I a of we said capital the IO extremely portion touch be aim to human we from up when going acquisition pick think wood, expected we well. did retain the and, to to and large acquisition the seems

very So I'm pleased that. with

Mountain The before Mark have aspect, Mark I'll over which XX% we IO over will other that interesting gone think give Global – I terms centers data did from thing you our the see down then more companies. bit him to give that's directions. will – both of know, cross-selling good is and Iron acquisition, in with of up in customers and it revenue flavor, you turn and Mark as opportunity historical of of which in cross-sell the XXX as XXs XXXX in gives new because number picked are correct it's to you the I logos and That's a me, acquisition, a the Sheila, were your little a thing us which existing we've

them. to opportunity hear to see I do from on side, had definitely these with been services IO provider to hadn't customer was IO the of is areas, And first in and a that difference that services on a number record other serviced. the that salespeople of But that York established one even large a as a making sell our a of and New that thing companies we servicing, IO with buyer cross-sell. City, we couple terms financial with I long do the sales is yes, months with ago So institution in bigger their had absolutely a before we I of that both team guys. a getting the was share

is So Mark, you further comment to the want going. may how integration in terms of

Mark Kidd

well. progressing has integration been Absolutely, Bill. extraordinarily The

with relationships the mentioned beginning been very those teams Bill which and and of discussed impressed the overall to-date confident their act we human progress capital, on terms that those in we've very good in As previously made programs discussed. cost very the customers. identifying that numbers they had their We've we're with had that have to on we the

On from Difficulty] existing our the customers had (XX:XX:XX-XX:XX:XX). already [Technical side, we've commercial wins

William Leo Meaney

I unfortunately – think – I with team. out actually IO think Mark, Mark's hey, you're the

you think I probably in. Mark, room. conference dial the in need not he's So to

So why in we Sheila. to dialing on back try come can back you the bridge? Mark, don't it,

Mark Kidd

apologies. My

Sheila McGrath

Thank Okay. so much. you

William Leo Meaney

Sheila. Thanks,

Operator

Sachs. question Tong is from next The Goldman of ahead. George Please go

George Tong

Hi. Good morning. Thanks.

you to remain indicated your storage You markets. resources Can structure revenue elevated emerging growth in will adding more in believe on quarters optimizing certain and elaborate many you're management in how your from historical you pricing levels? the program overall pricing progress

William Leo Meaney

George. morning, question. it's Good good Yeah, Hi.

that So, there yeah, think commented continue. catch-up of and mix a last probably I quarter, I was

the to see we're results through. come now think I that starting

getting math growth. a said, do monkey I as the So developed we're of markets, revenue over points in if you little four

I see going would in delivering the I real think future. XXX basis continued, in increase, don't in to for basis inflation say, points other a over that. we're Developed Markets between And I and we're foreseeable of see price the the terms what words points XXX probably a basis that of maybe And little more points, hundred a the big end delivering in that We're I don't of a Market. increase. bit terms see couple real I'd of range. high at in probably slowdown in change call price Developed

of think kind points basis inflation, and now, I call we real think, price of I sustainable. is basis that catch-up have points I the to of kind lapped, over what XXX So, would XXX increase

emerging markets, of I it's in terms all think upside.

have it Emerging So we Markets, out. rolled

four I now XXXX, think, locations, to XXXX. out countries the during specific this but regions, for markets it's in I rolling four emerging four think say I to locations. in or When we're year focus four locations with

right. in at emerging the deliberate a will we're markets still we're optimizing because and Markets we is place share building the But where Emerging pace out. business, the not a start so, rolling it And growing

bit proceeding you will in deliberate those gains that expect more we with in little more still have and more that share So of because can targeted. traction but pace areas the emerging get we're markets, we a

George Tong

Got growth in direct resources requirements? drive you capital you're organic to Very then, longer-term margin broadly Data more centers profile alter inorganic your business. discuss helpful. planning Can and And how in it. to will the Center data and your raising expansion

William Leo Meaney

basis, right kind a you as range. to we you'll approaching now that even XX% said, And you XX%. Well, about change through, this Stuart is on margins if we think the in are already that expect be that see could of, to stabilized flowing see because said to mid-XX, the upper-XXs that year it a the

already Credit really us since see scaled FORTRUST platform. of made it's because step we've change a that the acquisition You and IO, Suisse can a given

for this you So much see XX%. that. be for instance, it'll And year, around already pretty

million $XXX revenue be about of and that million guided we've $XXX of EBITDA. So would

be of you of I have in say. roughly XXX roughly the should at a of XXX of in we of already terms total in if real the of see, acquisition about on what in that or to can capacity end we of family, have we shell IO, of terms Now megawatts we capacity have. or what roughly terms have the land this estate after built megawatts And speak, year so

doubling our doing acquisition. So there's without another – see business a current that build that you still almost it's a of can very can we actually

would I what be organic call would that So growth. more

we a United have to just be at REITs small have any because very much long the about XX REITs I just data center for the we the REITs we general of on as in of do continue far a we but most continue last the really them think global there to the of few not greenfield, outside just been what interesting in internally. like countries ones to that D&A say we – continue are And is as Suisse and see top external global monitor we're use think XX to and I for over of we to time. where but the we States, us, those our as a can of And more do look we this because Credit or half by half clear is a would deal markets, brownfield years, tuck-in. that expand, places the company,

through on and data of bottom drive Iron of a unique the the think actually internationally ability line it's top and has proposition in kind our So center the in scale line local – to unique cross-sell, about the synergies build that you countries, space. both is acquisitions, to ability some ability the find think to these actually if we right our that a Mountain

top it's it's I just it's has of not to attractiveness not expand certain to amount we cover when the domestically, us. looking XX talk So about to internationally a markets, think

George Tong

you. Thank it. Got

Operator

question ahead. of next JPMorgan. from is Please Steinerman The go Andrew

Michael Y. Cho

you provide Andrew. more around just is bit This EBITDA Can morning. Hi and margins remainder for My year Cho year, a margin Michael given margin terms the is just I question on expansion. guess little good color where were for and the or just quarter in margin or gross cadence the of full margins just of of SG&A expansion profit the first guidance?

Stuart B. Brown

Yeah.

that some you EBITDA flow The for margin we performance through. the expect expansion isn't we've do very to guided the strong. revenue quarter first strong, to If of look to year at sort as have obviously continue

in the expected more We quarter. first

of just got we will that a guidance gross right is with little that. EBITDA we the the into comfortable data storage get but margins track overall the built a standpoint, the business we've on, bit from margin feel point and overall the Again, impact profit from center with So quite on expansion touched you guidance.

Michael Y. Cho

just the efficiencies been of have Got and remind And us cost can how not yet? it. you Recall actioned much transformation

Stuart B. Brown

still really been is be year has everything as now, are things going all as on to being we're completed on hurdles some those later and had that actioned process Those so back the consolidation that's activity still those opportunities sort pieces particularly and in through, would And that regulatory largely what doing countries that year, will leases just office of there's up getting well this and all that. only a said this we Almost to be systems. real like and HR we actioned. lined we've out flow always some of the The finance. are is around consolidation there still then – estate started, thing couple have to have get actioned and be of

But the flow some Recall by of on. So the continue and the costs of be of vast the you're will majority seeing year. that done end through that'll

Michael Y. Cho

you. Thank Okay.

Operator

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

Shlomo H. Rosenbaum

you. just a just volume, the it golden much as a that is plus pricing Bill, to to won't do this just sometimes if seeing sustained terms see the kind to was go be to rest Thank now, right is understand of going the the what and the that's want asked I of what to lays as you the for volume be because concern a of to pricing question between but impacting eggs. clearly behavior I trying on result earlier volumes year. Hey, and investor is change the gives to change that like I Hi. like you're company And of and in that you're in not seems expectations back goose go the want that killing actions. is the investor confidence X% from X% we ask, negative in the downward that area, volumes trajectory it company

on little If could you a that bit? elaborate just

William Leo Meaney

good question, no, Shlomo. a Well, it's

So we just control let not extremely we're why that's great saying, and it. be – we to we with playing words In that thing elasticity call the management closely The self-inflicted. monitor is happen. just revenue you're do if what it that that we so pricing, other it's won't flip clear, I is can

customer not also So is relationships. careful and goose. we're very the to the thing to destroying me other going are about And kill this we is not

important X% increase. talking if So for customers we're not are bit price digital about for services. right, price talking you XX% what little about about us These is our it, over increase, also we're think a

information services storage business. biggest pipeline. pipeline biggest the people we're And in and primarily digital now governance So our our that is absolute with is is on physical right pipeline terms that in serving

to those damage we want So don't relationships.

what's elasticity its don't to just with impact when the the look We we them. at to on end-to-end sell elasticity look also for physical not look it's us just volume. So the at business, happening we on solutions

you very are it's we is great in control. the it point So our out, and cognizant as of thing

points to we So price increase even to basis I me, we're price in making basis think mentioned, But it can the these real comfortable with if our continue of of increase think basis kinds the pull feel back. that now to I real points think, XXX points it have real north that but if I I XXX we can far, increase, it's pushing do yeah, you're like of we're control. of right maintain we because very we'll XXX price caution too just I'm that you probably said

Shlomo H. Rosenbaum

minus if up? something like course up you is go go on else volumes happen XX you would those would there minus hey, we're will your business will see make seeing this between the XX, to in and pricing, you have happen that that of to or make go the it would just back pull would volumes up, that plus XX? volumes we'll Why said, What – you're expect down fluctuate

William Leo Meaney

of a right? don't it, talking not couple small it's as cubic size. you it, is affects out, we're pricing, about So part of what on business, very it's million It's so X.X% point – on a part forget things, volumes that foot talking about, relative XXX we're a

instance have on can quarter-by-quarter can might as that period the of been a a So that basis that And in numbers customer that have legal terms you large affect is on catch-up for some well. during doing of hold time. destruction

just not it's So pricing.

of some in will a contract from can are one sway are And which XXX,XXX than those the and that which the won contracts, to then this feet that facility government kind Those cubic get ebbs kind a flows. moved less So large numbers. we of the the contracts into of things the government referred I year.

zero to months. it's of that's probably more are think we'll to So or minus. going being over we side expect. the we the probably, be would frank, the We're zero I XX that positive on next XX negative than of what say plus have But side

Shlomo H. Rosenbaum

the And you and of kind be Is U.S. then government we to government been contract, for to just five think accelerating is of at back you're discussion seven be we've about that this open anticipating? just markets going this years. will going one to point to starting untapped you. hearing that's in something that the up Are to a this that the like actually is constant

William Leo Meaney

can't to closer think I the I been of consistent nation's the I've will think than I thing look, the anyway, years. absolutely so me. because I'm I because business to something say big throw capital say to like not be I committing do think going to want kind I don't XX do. you me always our Shlomo, no, say I business, you And at a But it to federal to live do, Well, used deliver only tell I back I'm to that about careful what thing – I you

can't take or to have a I my by how Federal two going still years off pay years and of that you is because but I guess, beyond when that, to the grade. that stand is I I now, year say to trying eight predict tell behaves X So and Government happen

I it the be believe happen So see more this And quickly, the I in in that. don't right. of logic, and doing mean no federal that that do federal right, think to makes I things I But the for just house. agencies understand and more government the interest sense

I'd be able you in if eight come that years can't to be tell to So back point from you. you within now, I for I'm would going to proof the I think word years eight true but my have what

Shlomo H. Rosenbaum

Perfect. Thank you.

Operator

The & next Baird Company. W. ahead. question is from of Justin Robert Hauke go Please

Justin P. Hauke

Good morning.

question. two-part So I have a

is clarify. to just one first The

correctly shift change overall of if the if any figure investment data million? to understand and a investment, I that million gave think want I there more of $XXX you the M&A just be heard I that you there's $XXX moving said growth to so might the the center side, towards that in that

William Leo Meaney

Yeah. question. It's good a

where we call the So our XX% Adjacent to is there of XX% end we're our EBITDA in go Data the comfortably to Justin, sales all said then, we the And And that the the and point, or right. to getting X%. thing our above actually are EBITDA. by mix would what sales main in we're already by on at back we – XX% just X.X% so it XXXX just which that slide, said think of segment, Businesses We're we're I XX% of the that XXXX. of this our way, of about to about hit going high-growth of Centers, quarter. is needed XXXX. organic already And growth that's first be And your

we're how to we're center point So and M&A, I'm markets emerging established, And bringing best that to earmarked is traditionally AFFO. objectives you're is $XXX financial firmly our million over we're get that all in consistent time, – capital model right looking said do – that say, we remain Stuart which on now saying true there, high at data and is the is decision from what's our our one with down deleveraging of is stated payout which then also you through, out segments saying growth you allocation went the here of that, to that for now bucket. ratio that

So of that's all part allocation our decision. capital

I bucket. I we're but look putting when now one change, a is that tell make what foreshadowing can't of So kind we're that was we you at going now in right that to EBITDA XX% those portfolio we investment organic growing consistent EBITDA, fueled decisions, X% driving with of by growth at look be XXXX, portfolio, roughly will it by a across which that businesses. fast

Justin P. Hauke

growth so make bucket it's incremental some just it, an That's it's I now, to sounds I what to as sure that like Got it thought, opposed all-encompassing investment. – wanted okay.

So is more low then year, the balance investments. the of half, obviously your CapEx the that half, first in you've seasonally just second in second makes the is got the guess okay always growth maintenance sense you and for have part the question I so of

that are the announced level, like this or is With the about through the that to financing this come asset sales quarter? the at how million leverage more you $XX it hold sounds incrementally remaining thinking to expected investments, ATM there beyond are you

Stuart B. Brown

the is these Credit right remember markets, to we're in One important assets. of thing yielding emerging assets it that's Suisse, be acquisitions are that buying or a lot

unproductive. it's not So

So it. the off EBITDA you're getting of

you So and cases. still most fund leverage-neutral can debt in be it with

in borrowings that to fund, continue in asset with and capital put Credit as more we've or place equity to done this that really sort sort – of with pipeline Suisse as call incremental to we've terms of a is debt. recycling. the cases development other partially growth, capital to with organic going and then year well be it funded as cases $XXX us you IO and in EBITDA with other which cases, what talked we those about expect in pipeline, sales of see from can some like million can the development you So But

William Leo Meaney

laid the and provided today question your answer to just so that out without and that any guidance we plan ATM. the Yeah, the we is ATM, on

Stuart B. Brown

Yeah. Right.

Justin P. Hauke

you. Thank okay. Great,

Operator

The MUFG is of Securities. go from next Please Karin question Ford ahead.

Ryan Cybart

Hi, is good for morning. This Cybart on Ryan Karin.

topic again. headlines regime under been tax new the of de-REITing the So the in has

that Avenue a interesting Third discounts. letter could companies for be in they're big trading option so to an with its argued investors at needs, de-REITing capital

Just thoughts your hoping you that. us can around update on

Stuart B. Brown

value. continues amount of to provide No. REIT structure tremendous I the mean, a

get lower business in core the you don't and cash REIT that comes North from at America, substantial regime, taxes the management even in that anticipate tax where record If get of earnings regime. look structure shred the we from changing benefits in on the side new continue And some the to the tax the flow we'll we it. the TRS on of with and the be paying particularly, benefit where from obviously side business new

William Leo Meaney

and we're you in which had why dividend margins in our think the In was we – so of a our period can cash talk you we you dividend, the from can the just income-oriented if standpoint return you look And grow it was wouldn't same just kind on – think go and business if grown share of we're can and time. we this you other because we that AFFO the shareholders. and a where up also, way grow this of is business about be at adjusted REIT? an the to walk just stock, this growing words, XX% quarter business, and basis our at Because an the

sense. flow we're cash business, of and the our but maybe of high high unique So margin because makes

Ryan Cybart

Okay, a platform? for great. any of wondering if center data had progress guys you senior leader just hiring And on the your

William Leo Meaney

for data We a in out right his center on had our time because sound now. platform didn't we He's senior a It with hard actually he the getting leader bridge. team may have actually. like Phoenix

leader. So is Kidd Mark our

he's have of no, a of hiring You're number we leaders a right leader on in business. his process center But data that in the team. our

Ryan Cybart

Thank right. All you. Thanks.

Operator

question ahead. next Please Eric Compton go The Morningstar. from is of

Eric Compton

X.X kind understand your right range net kind big for real me, reason. Thanks morning. X at for for my term comfortable quick that Good as I'm wondering suboptimal even getting your EBITDAR range, one optimal maybe just now debt just to is maybe to some to X.X, I you view around for below it least A closer of adjusted picture. you conceptually Hi. would and longer if of or if be like question. just that taking

longer Just curious thoughts your term on of kind there.

Stuart B. Brown

answer relative is, think that comfortable is leverage I where Yeah, we is our where today. we're covenants, our the are short to

capacity and on down to our the opportunities come dislocation get up, some to that's the take – sheet so in we the So balance post acquisition IO, either advantage could to X of market. acquisition that your of want to to point times leverage X.X an or to create

you And same you'd if theoretical cost do any down also so of sort and X.X up analysis, with sit capital that of of X. come type to

to that I think wouldn't maybe, there's below say does reason would be ever sense go you but So make unlikely. no today X.X, it sometimes it

at the the in capacity of find balance we'd sheet plenty I range. think

William Leo Meaney

it Yeah, about Stuart did you did terms think of you today, treasurer was if in said great the look at and and Stuart it issuance; that as Eric, recent it our – team job if his X%. is sub and a

get this or the debt the near get at investment holders. grade nature I even But they grade the as the the a investment really debt it many holders company. priced of times. holders So wish absolutely well as equity would as see

how where are typically at people it relative company now. it's REITs, C-corp, we So because And to the the through not at look you they it look graded a about that's if before.

REITs, covenants at to but headroom more comes to trying in Stuart it's right through our leverage line, get much down – reasons it's it that between through a to If about outlined. opportunistic you – it the not that look is we're actually

going which from why plan that's us are comfortable And we're delever over well we deliberate, very with we'll will we track feel naturally delevering XXXX deliver that there. to So are we then X to then time and range. on continue the

because way but need And do unstructured we're so do to it it going an not there's to. deliberately no in we'll

Eric Compton

Thanks. right. All

Stuart B. Brown

Thank you.

Operator

Rosenbaum ahead. a The Shlomo Stifel. go Please question next follow-up is of from

Shlomo H. Rosenbaum

you we volumes what of be historically some some to on for hear anymore Is be opportunity. in market as supposed and going of back me squeezing pointed about the acquisitions large capabilities there. the were Bill, in don't was there about thank made and past terms there should there it middle over under-tapped thinking And you've and of Recall or we for potential to Hey, always this in. anything there? note, much

William Leo Meaney

Yeah, and of terms share. you should update I exact the in

I the think last we're up I about think checked I time XX%. to

I we were we XX%. at this think journey, when started

you we've four So share the of added that in and – non-vertical. large versus can enterprise customers which kind the seeing versus that mix of are points start of even in verticals typically

on It's would restructuring nice done just because, market. bigger little we a sales enterprise terms Recall head share in of I So and is – enterprise we of would we is But right the the said making are the fast of in job. obviously middle and addressable to rightly of out, And I total market like. to probably our mentioned head the as is boost, sales XX% some the did just like, we XX% progress XX% the a sales, very before, XX% job have nice to And part not bit same. went you Recall as market market we XX% as as a sales got slower when, before, are it's focus I actually really former North on the absolute but we America. because teams team is I before he's the Recall, for it. really than I think I It's the point of than remember is from if north doing as since

So I going get guys, to our share. our keep saying fair to we are when

be but So progress to we're making more done.

Stuart B. Brown

is, smaller a are add based too sort is our in I'll mid-market lot where of North do pursuing in markets, these thing of you strategy businesses team right. which see other The a America

we've growing hub-and-spoke smaller base storing major and smaller out success moving front launching facilities growth, cities doing seen off still some but signs. on there And boxes it's creating cities of major So to be store good or outside a although positive whether facilities and small a to a revenue then and it some then in sort the both serve of customers where of really cities they're the system that. in

Shlomo H. Rosenbaum

just on it that focus the or there of is any capital there, kind market So anything change expecting of in you're light is of the middle and company? same company to with really in what's the is that focus over this going be data its within used in the center this

William Leo Meaney

actually fact people it's territories weren't getting minor just street hunting it's sales it's out, that and Stuart No, the And before. a into more in – getting It's authorized investments. more people. I partly, putting in geographical said, as they bunch people beating

slower also isn't have not especially look the business market of some of eye happening middle since than for gestation So already that is period as a overnight, I you're the vended, anyway our taking stickiness. would so like. But off actually we're It's our it. just

Shlomo H. Rosenbaum

you very Thank much. Okay.

William Leo Meaney

Yes.

Operator

McGrath from ahead. Sheila Evercore. of a is follow next go The question Please up

Sheila McGrath

Yes.

is surprisingly any the strong think we line And X.X% Service just Mark's that is, would How revenue he if in cross-selling, data follow-ups. that the quick worth be of two growth noting additional give center that? business should integration was insights thinks great. that at aberration? could then, Just on us an the second terms about and

William Leo Meaney

– $XXX another think, Okay. it's like There that Mark, dialed one-offs at there And very aberration, some the always we're back service. in our absolute million it's growing business, our here. not shot. think in pipeline so not to pleased services Kidd digits I We'll about if He's turn is internal go the Sheila, business information double it are. of governance probably that I Mark digital but the an huge, is give Stuart and of you which business. there has to of mentioned it on any are largest But And over back because revenue. today worth I before and lumpiness

which and negative couple the in the the you years, or that do do transport slower in said the management our to now digital feel than in of of think, shred I use of have information picking the me, north is growth side business governance side of zero, in and I slower I drag, on that the to if rather we services records other zero and equation side remember we're be the of been last core So transport business. our that data slack. feel up business is going

But and it's of digital don't comes So at guiding next relatively the I through. be services do the that the flat. going we're going territory to expect to year is think governance for an aberration. X.X%, Can remember say be this through full quarter keep we're I as in course information year that the positive the to I

Sheila McGrath

Thanks. Great.

William Leo Meaney

Oh, Oh, yes. sorry. I'm

Sheila McGrath

Mark.

William Leo Meaney

yeah. Mark,

Sorry. Mark?

Mark Kidd

Just confirming, can you hear me now?

William Leo Meaney

Yes.

Stuart B. Brown

we can. Yes,

Mark Kidd

Okay, great.

Yes, with been in apologize IO, and a I the human as the addition team Bill impressed we've very capital with very, before. data that at to the the great been business They've So for center the the on IO integration locations. mentioned, overall franchise.

deal. out advancing on them deliver originally sure and the kind elements been had so platform, activity also announced that of very with synergy And with we of we making the we've on commercial the the closely kind working building

this we with very between through on that we team, very IO initially and side, good the smaller which made a putting talked commercial So, cross-site majority about. portfolio the costs wins had year number of of side, as seen And those our legacy already progress on actions the activity on we've balance the brought other meaningful now across three of over the is into flow will a place across we've some on which uptick and have good the overall but we've which as Suisse both. the engagement Iron we customer larger the seen impact a that internationally. the pipeline team's And given had to plus country Mountain months deals, big last Credit Their well. is even has contribution Management portfolio that the with Data a

expect I do teams across and quota, the And excited and this so results We actual nicely. comp, think, from already. the integration pipeline building all both sales at closed are in aggregate, we've point things normal have full about that deals results you we see we force

Sheila McGrath

you. Okay. Thank

William Leo Meaney

Sheila. Thanks,

Operator

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Iron Mountain (IRM) 26 Apr 182018 Q1 Earnings call transcript