IRM - Earnings call transcript Q2 2018 | Iron Mountain Incorporated

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Operator

Good morning, and welcome to the Iron Mountain Second Quarter 2018 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. to President conference of like Marsden, to would Vice Senior Investor now turn over the Melissa I Relations. Please go ahead.

Melissa Marsden

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plan later to to today's factors toward our as Form for filed statements. call, information who our that XXXX Iron expect results results. on subject this outlook forward-looking the slide cover financial highlights X-K, our which file Please discussion of today our available IR language cause those financial performance. progress CEO, also our President statements call, presentation, our the operating differ supplemental actual well we of statements, related are will documents hear as On Annual Brown, in today's call and on discuss and major earnings the to could all for from notably of to today's Bill forward-looking the and Report a to Harbor we'll which Safe All have forward-looking uncertainties. we CFO, Mountain and from strategic the supplemental risk by who XX-Q most release, risks first Meaney, and refer financial will press presentation financial is report, X and as one will presentation, now on followed Referring Additionally, site. contain Stuart the Page slide earnings Web

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William Meaney

Thank you, Melissa, and hello, everyone.

of quarter the and Mountain’s demonstrate of XXXX global durability We’re continued the pleased rental offerings revenue, some of of results plan. service that strategic financial against our operating relevance progress strong report to Iron our new and another storage

data Our to digitalization performance, our acquisition, termination data basis and the and revenue center market. EBITDA our on and well continued is internal for global X.X% shred growth internal development center of lease in continue further by quarter X.X% both strong XXX global as of the with year track durability EvoSwitch expansion our driven through X.X% the by the Page and revenue growth our we basis, in adjusted Globally, growth growth based business solid points EBITDA of early X.X% a storage year-to-date as special increase for on X dollar of total on platform growth outlined volume. including presentation, a expectations in quarter in internal storage business with growth revenue Amsterdam, projects of last XX% see internal illustrated constant X top in of year’s Strong fee. as after to in adjusting for margins, year-to-date full with

to developed quarter XX-month quarter. total storage to include In in emphasize driven developed management X.X% in X% net Records an at the we segments, despite our our trailing decrease we in on destruction internal driven market when Management, for American management segments, will as North In in operating Information Western is revenue internal hold. by markets volume rather yield on increasingly of legal see where volume volume which internal you growth income looking records part other focusing revenue was continue the more the release than foot. related a North by revenue international Data However, us markets, by and a American our X.X% and of uptick European Management yield growth to basis, organic achieved share due maximize per

New in supported we midmarket and stable penetration the existing quarter such from new as unvended focus prioritize to volume our customers globally by from federal U.S. volume segments of was customers the and on the continue government.

strategic X, progress execution to Turning make Slide the to continue plan. we on of our

emerging nurturing we recall, storage-related businesses investing in through will our services. durable into data continued you faster and As as our markets, as centers of as model adjacent entertainment extending such growing business markets expanding developed well art are and

in new record was and in opportunities to and identify to mainly solutions our in prices, destruction both driven in the growth a continue growth growth internal listen level service new of customers. The in quarter innovative to part to shred large significant due in of provide We by services second paper higher higher to customers revenue existing customers. and

a project American and their resellers. stored its than ensuring we North to files securely complete for retrieval. by applications days Paper are uploaded major also vending securely our up acceptable turnaround future is for systems for with documents securely destroyed. revenue. later of undertaking taking are bank example process lost policies and from growth according into We’re electronically party An a and seeing We ingestion accuracy bank three are third error found good of are is their rates digitization in solution The the challenged to for application this form a higher been and retention business. representing of who times file now stored tens are thousands proposed bank had

for hours to virtually in reduce errors keying. customer this has eliminate and down new accounts As XX to a able SLAs their result, been

the effective increasingly potential digital physical our and see go-to management business within for as digital projects partner information governance solutions by as similar and critical customers management excited hybrid our their We’re a us of needs. information for

Google partnership newly this. only announced Our reinforces with

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

leveraging regions. two we in quarter, closed our EMEA the these and During transactions in infrastructure on scale

faster we supports leadership and markets Our market enhanced these to deeper growing into margins drive expect higher. penetration

it leased €XXX EvoSwitch total earlier capacity center or expansion additional of EBITDA is which I capability a than of center providers the enhancing of Netherlands market The our region noted megawatts. as with colocation presence Paris the Amsterdam in Europe XXx million refer telecommunication we global of potential largest XXXX center the us center operates of capacity an during the region. Its in base data enterprises, customers, XX approximately multinational XXX% following to the acquisition campus closed data entry one attractive second EvoSwitch more early for supports Amsterdam megawatts in on this public data sector As providers in London, the and and Credit what service institutions. and into diversified megawatts Frankfurt, existing an I’ll FLAP XX cloud from facility XX has markets; adjusted XX connectivity Suisse. year data the the quarter, through of largest including Amsterdam in our a facilities is the purchase and London for giving existing of

campus ultimately be one the the fastest in with a IO capacity In addition, data U.S. early center the markets accommodate Phoenix, third at building and construction approximately in June with camp, The the building for new we two potential this in markets. broke XX the of megawatts ground will to absorption completion U.S.’s phases can quarter new on one megawatts XXX the Phoenix able When scheduled in XX first of growing capacity, of the delivering highest in XXXX of support current of megawatts. combined

this records on on we joint saw see for capital with $XXX data EBITDA of are our center third earlier track the enterprise the and will for we and of have opportunities. growth I’m to to with growth and parties that year development contribution for to acceleration the center and segments to minor characteristics adjusted their that business, referenced quarter the by from uncover partnership ensuring week the reported shifted data we of million outsourcing decision announcement acquisition. making have shortly. You full capital sure guidance whilst of center of revenue many this more from shifts and Stuart towards business portfolio solutions existing $XXX Starting these allow management you after than of worth September Driven to normalizing Google of I data improve our in opportunities EvoSwitch $XXX security. results from annualized results more acquisitions will some physical can attractive data million our privacy offer million insights, unlock of the revenue that of earlier. enhance digital new allocation in our our data customers

We may opportunities make believe base increasingly data of to value not accessible to can keeping we uncover customer vertical comprising our industry deep customers digital them the they artificial with XXXX new Google’s physical that data their mine Fortune ask the learning combination help capabilities together of how whilst from safe. revenue. customers machine intelligence missing are and XX% more their information than Our more useful so create and us expertise with and it help

partnership Although it potential are Google. excited this early with is by by days, represented the we

for storage are art, a on center all power are and types supporting are and our returns developing across we’re fine focus the great documents, how records, and also where part needs broad or Our SaaS offering expansion which Google as this we examples Cloud customers’ these adjacent align whilst data businesses in asset management physical information physical within the services also of tape, hybrid data Iron the with centers, physical and entertainment information backup yield. our investment new digital space and of in business And and digital ecosystem solutions. cloud formats other range of seeking partnership enhance maximizing the to other data with offerings such our

square our generated you if have this Slide of continued income operating fact, look on range foot the a to at basis grow across on net per we storage X, we’ve businesses. In

adjacent data over internal platform our on in shown margins consistent transactions recent growth other expansion revenue of expect faster drive business the X, growth Slide the with our As with businesses center and to time. improved and together we internal

our XXXX. a track progress deleveraging made of to to our end now on X% achieve in portfolio this is with growth the revenue and businesses, well consists is that’s increase adjusted EBITDA is which in want which of Moreover, have Stuart assume by share we markets, and mix remain mix balance on growth. Year-to-date, On are our data goal growth consistent sheet the and address before by revenue shortly. already our achieve reiterate of will per acquisitions which in fueled and targets payout given X.X% XXXX. data I that adjacent of a our to the business track annual progression center businesses XXXX. between delivering center internal the our ratio we by acquisitions, adjacent growth emerging Slide we X% Before XX% X, with approaching on dividends excess

given Before over increases call annual turning to we basis. addition nominal management storage programs the extending but real an the to ability dividend flow to these our high that of on increases we our not per I’d like business, our and share to in inflation-based just revenue achieved margin retain through the across ability growth pass And on Stuart, characteristics to portfolio, note price meaningful also deliver enhancing in terms. through significant

dividends be from top to is a are S&P within contribution balance sheet internal a margins, and continue unique We the XXX has supported ability that growing yielding by the long-term to great faster we line that and durable With growth to Stuart. turn growth, strong potential I’d call expanding and and cash company flow solid our acceleration growth and top the share continue like consistent portfolio. driving are over grow our ultimately in that factors in whilst the to delevering to over time. that, both supports per These

Stuart Brown

today. our excited Bill, Thank thank I’m us solid progress results objectives. continued against you, our and discuss that you for long-term and to demonstrate joining all near-term

time management scale margin and meaningful business and center adjacent value remain our expansion, data focused revenue businesses. on faster combined our and records same with We shareholders investments at we’re the growing deliver steady in adjacent for performance increased to Our growth through organic businesses. strong driving while other continues achieving strong current

a providing more me bit you by the walking quickly Let detail. through before start off highlights

the the which results presentation and outlook. annual and on You mostly of trending quarter X our X can year-to-date see both slides performance ahead show of

a on of the came storage driven growth. solid growing dollar the data by quarter, impact For revenue in acquisitions about basis, internal and XX% revenue at $X.X billion our center constant

to X.X% program storage was revenue for and line year’s guidance. global for year-to-date, This growth in fundamentals, internal from X% management net Our underlying storage solid quarter X.X% is our benefits fee the and adjusted which termination positive annual last volumes. our with X.X% revenue reflects

other accounting change the and of Internal growth recognition due shred standard; which X.X% however, Our grew on impact had Bill contribution in some any the is storage second revenue in to well our and impact has discussed, exclude half, internal as primarily and quarter reported from new revenue calculated the to as the first additional projects. revenue X.X% revenue mix. service service minor business, digitalization

Our labor our of efficiencies basis driven improved of about by and points year-over-year. revenue management XX gross program. in improved, profit by XX flow a primarily margin SG&A as quarter through also points the revenue basis the percentage

performance shares data qualified $X.XX our well up depreciation can of center our last outstanding towards prior end standard. excluding EBITDA transformation data of other on recall XX% in the our the higher from and initiatives, early a adjusted ago, initiative, EBITDA markets bit grew than center XXX When expanded year compared share, in million was a $XX for constant recorded basis XX.X%, the margin a a $XXX basis the of amortization for or REIT quarter result expanding the the quarter growth quarter the the the million points quarter approximately as offering growth recent of our center, synergies adjusted center items as Slide due the rates is was the our and year million with the X.X% benefits the almost the adoption with XXX and year little AFFO data for benefits revenue revenue data for impact our following $XXX the more international EPS our storage in internal and new structural see depreciation trending the fund internal developed recognition Also you on the tax than increased from over contribution dollar for flat for IO guidance of color the higher management centers. markets of fee business increased million to through year, acquisition $X acquisitions. first amortization in of flow annual as non-recurring associated reflecting on December to XX% subsidiary more to termination our margins Providing for quarter. reflected Our impact upper data from a management of partly basis points. and and Adjusted revenue guidance margins and the revenue our per rate increased was lease our XXXX. efforts of half, higher XX, to

the a business, of negative, than the X.X% This million internal quarter’s we increased internal markets in basis lower XX-month X.X% of In as for digitization over growth as reporting feet the cycle second segments, of steady trailing details on is to X.X% due revenue service earlier. continue other growth cubic we of revenue growth see growth X% quarter for mentioned XXX X%. a Developed other of growth of the to our storage. quarter strong a international, year’s the project center service storage slightly mainly revenue internal XX% strong in fee. Internal albeit and with developed termination In internal XXXX. adjusting about data a in quarter, markets after small early business volume the growth growth was for supplemental, in shred quarter off internal base are for more revenue the revenue lease almost on delivered last in base legacy which

segments. while the a all adjusting our data year’s scaling to almost down our In see early EBITDA fee in nicely growth termination reported last margin XX, basis with can for Turning business. Slide center expansion you segment, reflecting improved adjusted margins on of global the after slightly

expected Based customers we XXX% and at and this the the Year-to-date, with margins business. range relative We government. that Phoenix more leases high leasing move this federal time X.X tracking centers we primarily executed pleased enterprise are as data and with new leased to over recent considering megawatts to of on well of to mid add progress were our our fully pipeline, integrate center XX% scale we year have acquisitions we megawatts acquisition. to XX are our leasing to expect data closer

of at you after the was with transaction. second adjusted to quarter EvoSwitch Turning our the first ratio quarter closing leverage end lease XX, can X.Xx the the Slide and that see consistent

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

during our undrawn we and and Additionally, drawn of on the interest balances reducing refinanced XX quarter line second basis points the maturity. credit by extending

With can well appropriate an X.X% borrowings you average see an borrowing of our supported dollar is regard we estate this we and maturity supplemental, years. to June nature the our supplemental our laid with XX% of is relationships. We remain As and which outlook average constant in by of weighted was as February long-term on your believe customer our the structure real reference. materials fixed rate, is our portfolio our laddered out our XX, rate in X.X guidance, were for comfortable call,

versus modestly strengthening to have a headwind the rates back in million impact a of exchange will rates the of had year dollar expect result reported which year-to-date flow While about on a the to ago, at exchange positive to we current through in year results half EBITDA. revenue $XX

additional Just data Phoenix quarterly I’d proceeds the unchanged. in have capacity anticipate on that draw EvoSwitch, of to development to to to constant sale the have as a updated the we three the end properties and our recycling XX our and on half our of Slide do, presentation, since anticipated attention you as infill expect Amsterdam. guidance the capital our in last reminder of center the reflect call dollar well uses from acquisition we cash of which sources range. be as at expand London full seen to and first through that greater your a capital outlook year higher business AFFO the like year, however, is of efficiencies so We evaluate basis

Our has In to performance results capital strong fund us to and operating of keep performance our while quarter with second leverage summary, half. and we allowed flat business discipline pleased first EvoSwitch. are borrowing the

Our expansion progress for through is business. working our well, revenue encouraged management center strong shareholders margin very the with we the meaningful the driving platform. expanding for Further, initiative in steady from records management creating value and prospects and growth remain data

that, competitive call progress for the up it open healthy building strong our remarks on forward and look for elements with we We outlook. closing portfolio I’ll coming quarters. growth the a Q&A. you data to updating out a Bill well-rounded With over turn these We’re before on over to center

William Meaney

Thank some wish before up I just you, to Stuart. open to it comments make quick Q&A. we

First, we’re operating in financial revenue performance is combined with EBITDA growth and internal which this of around punctuated us growth service, the growth margins strong very and revenue pleased by storage the both strong internal first in expansion by internal the continued X% and the gave when EBITDA both half.

they information both partnership governance world. Google. digital and with them in physical real finding well to new look hybrid announced services with Our as is our as This in as are the results us financial digitization in our customers helping manage resonance a visible

Finally, questions. be a and With which to turn I’d to AFFO investment to continues operator digits dividend single growth. fueling high-yielding that, the a as over EBITDA we in continue continuing like it grow to standout to upper the mid

Operator

you. Thank

Instructions]. We This question Sachs. session. Tong from will now George comes begin [Operator the Goldman morning’s with question-and-answer first

George Tong

internal on migrate increases price your Hi. bit been the you North to pricing volume price Good implemented deeper American next to over I’d strategy several elaborate morning. Europe? your And of plans? how you what a like to Can in into increase Thanks. optimization. extent over progress versus the expect years dive little has

William Meaney

basis, get and the say, feel more a the And mark – but probably to the revenue you all growth implemented morning, it’s Still in from the from get for as growth been is how Europe of actually much XX how growth internal again a assets say maximize are price more add you’re America you say revenue What in can than a or that rather than volume drive can halfway fully when growth. internal is America as through over it in difference to but growth racking mature revenue North North between, Western coming the to in in it’s for see internal NOI try from more internal months on these driving to still volume. terms Europe math we Good sense time getting price. from to results. the that lot growth know I’d America. is we’re the getting we’re that internal in the monkey starting the of North see our is for George. markets you what I and you and on Europe that And yield slightly having just internal about the Okay. revenue done deployed whereas in we’re price getting would much and has volume and we’re of different revenue we’re

terms in Europe we’re where regional markets revenue are but you with because initiated in typically emerging Latin leave our going improvement don’t chips on just management Europe. deliver in we’re there those I market markets even pretty markets the at market say out comfortable So developed say, to to because established areas roll would with halfway we as bit centers building cautious to of there’s other look with excellence to Western there and four X%, we to markets much continue exceptions markets, little too some we still or in Europe we’re emerging the more a that those want pricing share. America just locations recently be have we’re price more program in markets America those than we be North we X.X% us can in centers internal But where four of now. to in and are management table. between, have expect price penetration a and centers probably revenue we of we – that continue few If very in into – actually the look But aggressive Eastern and somewhere at continue forward there

George Tong

as And going course one-time initiatives continue Yes, years? think get other be from view to implemented, your a the over back you words, several digits pricing in that benefits timeframe or expect pricing this to low you normalize when pricing it’s lever up that sustained sense. of to In to would do step the makes would as or single flow inflationary revenue or and timeline when down essentially what’s trends? of would to expect lift what’s the of the you through a you

William Meaney

Well, keep purely because markets. long we’re right environment high probably we in like X% a point to catch-up now kind are I X.X% the bit trending we think that. to to we X.X% X.X% the – was developed we think inflationary at that the think runway think that a I the do X%, of continue have in – X% we pretty can to little just that if but of we’re at current one looking There

customers, money So can as that we as providing them value of that terms just we’re for get the a feel they’re is fronts and us the see bit of because our a comfortable and we them. company coming pretty number between relationship can us of pricing a ahead inflation storage support in on optimizing the part to little especially of one that

doing even assisting what So part revenue of – from provide value we’re storage or getting documents we forward. because in them more those from documents see seeing more of insights actually they the they’re that on going the

type annual a X%, one-and-done markets of that can developed X.X% that we in price increase. we not continue So kind It’s drive to the thing comfortable. feel pretty

George Tong

whether the lot X.X%. the to going not quarter in expect Makes a accelerated you sense. then around it. one-time why were quarter benefits about or of to growth this growth And organic there talk services, forward? Can occurred reasons you might persist that that lastly Got any

William Meaney

good It’s point. a

to to think are on we’ve ongoing there There of like especially project, which established the called as where more really lumpy more the digitization the storage, part was especially Iron a is also a that out we is be why a initial right. projects a part side is reasons times recurring excited we’ve of that Google. Those look of with right. kind SaaS-type contracts recurring those it. about, be of part that then equation many more rely the That’s times contract go of which one partnership when the of into Cloud a would that digitization on it going so a piece. I of we’re do few digitization lumpy, But other there the the will

part is will has driven you’ll it both that – that the talked the some X% I also about that and that half there that the but first X% So back thing forth. referring blip of also we because notice plus on plus that’s to why you’re the be movement and

addition that, some quarter strong to a had partly on prices, very by have partly we we’ve also have In paper come documents did destroyed. hold that because fueled getting shred off legal that are

one-off off these legal a of have hit would obviously that of of documents we destruction come some customers. the other volume That’s a have not consider usual some I won hold. then because kind fuels And that so is the part So – occurrence. that new

documents one-off little these but roll, of up some a mainly also even see that and bit both these recurring will even down hold I are there digitization say So the legal around though movement shred of projects. as business these there’s you a projects more aspect would aspects for

George Tong

you. Thank helpful. Very

Operator

Thank question comes with Rosenbaum next Shlomo you. The Stifel. from

Shlomo Rosenbaum

Bill, question. Hi. gold going you taking go Good and for back I’m questions. to goose to my morning. Thank my

the that ensuring you’re we And the see You or the not or how into kind killing of in go now? laid going can with volumes expect saw back some volumes down? – hover of the you of volumes mentioned that geographies or kind to we Maybe down, coming and we’re minus just really around eggs cliff. the that go a the start are of we that that to volumes terms really little decline more? legal up X golden at you of revenue from plus going of come the are see towards a should just mature bit to that In looking – goose aspect pricing stepping in terms

William Meaney

question, fine. I good any to wouldn’t That’s ask Shlomo. a other expect It’s questions. you

Shlomo Rosenbaum

[Indiscernible] also the way. by

William Meaney

there think the so you So coming potential about time physical – so across doing slowdown if encouraged we’re not this stayed think one customers, said, I especially I out what existing But it and existing customers say less at I the this we and time elasticity customers. I last from always from steady although some you that volumes around The world. for so digital right. this do going watch I we and fair, one there that, we quarter. forward thing there – to from that pushing there’s no the we To kind the were to thing that price spoke was was specifically are encouraged is less as quarter is look goose, look, elasticity last hybrid is new probably be of broaden

– an impact So I there have a a may but don’t worse. of it’s don’t I there’s think bit – not been getting little

out. of I that’s flattening So kind think

slow we’re give we which is And the if to describing, of can big So we you’re markets that’s – a destructions, developed encouraging are context price quarter where trailing the legal little months that’s markets. continue we’ve developed around you, some may to difference I it been of right, just that, that trend put is thing that this through. at increases because that, think Knowing yes, mature see these see a just this that bit. down can so on really – you the kicked that in on holds terms more and that pushing The markets the we up. drive type was look XX

trailing on XX we continue acquisitions on internal and So that’s if that’s XX-month boxes look about to basis so year we just at developed steady, pretty basis in before a staying think really I million a good. markets, an get

drop see the which new we’ve before it watched don’t seen And we that what year after coming of Historically average XX which out. million So mainly in. is boxes both this uptick destruction off we around hold – on driven GFC. a go the about time, a and is now you’ve long starts legal

destruction million on it’s the or that on a boxes term million time some XX to during that think to we turns that base. to additional million take of wash time where And be period So X for uptick of through. going percentage out X

you minus if expect the or those kind same especially to see in of market last we come markets zero. government which things think leaves, the on all we’re provided also So still we’ve We time to going net-net a of federal how developed and plus as that that with that lumpy flat be some be where the to the said the guidance do still in. middle is I

have that the be to are We will quarters going positive. some on

the on to going quarters negative. are that We’re some have

have to forward me of XX going the you they that next it’s the quarters on be we side, looking that of If negative were XX going more than kind range. to positive ask think to side zero months over in the

the terms off. an So see drop in acceleration don’t of we

comfortable the And that so we’ve we feel very that able achieve. from even markets of to drive kind we growth continue internal developed the can revenue to been

Shlomo Rosenbaum

and zero ahead go to plus some we’re to see to next bit should XX going that see So even to We months? should the in going XX this point a that at get little are volumes or closer get improve? we

William Meaney

I next I in to after the we’ll but think that be we’ll the quarters positive be that negative we’re XX in think have think yes some XX I the side, to column. months going more

Shlomo Rosenbaum

this a one over years negative be we to trend? So the to next two should expect

William Meaney

in and some through negative our through the it’s kind that that say market then at areas which that, if negatively but but to say of levels the seeing are is staying I the would of basis would going wouldn’t the and of terms through we’re but I trend. holds think that of with kind I’m I’m in you kind government, I be same going quarter-by-quarter pipeline legal middle less say how our kind trending I if of these be before, say flowing kind through trends to looking building looked volume range. now penetrated right I the trend trends on kind the business of – same of same about of not looking we’re federal in is kind would of volume of a not

if the But we’re back be side to pipeline side, and levels as me that trends quarters yes. be probably the saying to on will looking the forward up be you’re go some do So normalized on negative of the do also there’s I at going destruction I think think see to going zero. to I positive

Shlomo Rosenbaum

the what kind understand you I that if is So on year-over-year volumes essentially that on comp saying of flat, a way is, the go you’re but Did negative you’re keep after basis correctly? decline? the not you that makes accelerating quarters a

William Meaney

correct. That’s

Shlomo Rosenbaum

to gone about five just at four that? other than on market, if over there like the and except bit down growth, should revenue talking lower something just And in the growth revenue little think each I’m on you how or Okay. have the going quarters. organic seems storage volumes, organic revenue growth the a not international, we Is about last there or look

William Meaney

if some year suppressed the like are X.X% think and that take that around if it if in terms do growth. out of right, on look monkey point normally of Well, X.X% you then terms volume, – were kind it around put price get X.X%. you if I And it a of that one-offs got revenue total, – math the your you I the we comes and There you just we’ve to developed do markets, you last comparison think kind comparison. in X%, in that getting of of from in let’s the kind you were take that a to X.X%,

an tracking So annual price X.X% basis we’re increase developed market. that in on still of in X%, the

trending that don’t again, acknowledging monkey math match in or trailing were actually monkey it the But comparison volumes that correct we’re year-over-year. see if still do QX kind on X.X%. the down. if year-over-year we kind – prices to that you of for on on some in you XX-month get revenues So X.X% of a last that, year But look There you made range. one-offs X%,

that expect trend. we to continue So to

Shlomo Rosenbaum

is data those offline RIM of I’m growth have one X.X% and at in that NA a to and to is Western then X.X% seeing in internal what storage going I’m Okay. just take Europe because management decel? X.X% each then and

Stuart Brown

add basis what quarter on and XX NA an some ago remember by RIM year points. big to benefits basis, number was and probably not a said, – but we’re one-time annualized over on a Just first there there Bill quarter were strong to second impacted about cycling the a

So actually for you you’re if you’re that of normalize you – wouldn’t sort see trend the seeing. same

Shlomo Rosenbaum

the then you of more. hand of businesses I other volatile projects on basis? bunch could up there – into on hand going thought down? bit got projects a recurring – a a it regular to there little George or some a will talk that and type the are these these really not maybe portion we’re about bit. services to projects end to will going encouraging, business Okay. are And Is they’re that that down, Is see portion just little more one businesses of strength being and and bring multiyear of items that go of that up the a more just up services

William Meaney

is and And when of revenue which Iron that Cloud. storage projects, just becomes the project can with trying lot we’re part aspects a other machine the kind electronic they’re and an a more information more It Cloud, a they project. but through with digital they documents. will since format learning that either into taking and it in to There’s not getting to to there’s SaaS two Iron or digital utilizing can physical what like especially the launched before is these that associated that ongoing is apply that highlight was Cloud. documents continue I to that recurring providing was aspect Iron aspect It’s then of putting that then be is Yes, there that we’ve always more lumpy.

Shlomo Rosenbaum

have should that for very have drops are year, that. projects like quarter now, next because that going quarter, if you even we ongoing down very had if So look it to several or tough a quarters these the at really we’ll the infer some right often then strong be you you next the comp of see of you or

William Meaney

I to quarters couple Iron we last say going as historically, see months. think of the next kind start of that I in we see in you’re lumpiness a to probably up, you’ve because you’re change few major that the similar wouldn’t just still so the Cloud going launched seen

Iron which recur So and Shlomo, we’re to part you to to some going get it’s base just data. to But other if We signed five-year need example. research continued I see comes years expect give company that But think just that the you’re of that market revenue access a going the is because it’s renew still main we think recurring as the starting next call to aspect at time the it. which We that for lumpiness. contract I an a you to which well. right, some from ramp for recurring. But few I take is I’ll that, look just recurring after Cloud projects that of is year-after-year-after-year, what recently quarters, have five going do to

Shlomo Rosenbaum

the Typically of management reallocation of focus going And seems data center well. – or the that keep go-forward from versus look acquisitions on a management. records I’m with have is it. through Got like on there basis as going to records this. capital capital It the then some off data the leave going just center, is helped as change Is volumes to kind allocated more up side? volume the the

Stuart Brown

I able You’ll on to the think to deliver continue see management we’ll growth side. – be more records

we’ve capital what years you the building side. before done in three to we’ve think storage advance – less building from discipline I on of in out we’re see two what a we’re racking advance standpoint is gotten sort

management much. to records able may as not growth. to We out the we’re building be keep continue So quite

that the able to take capital, So of to reallocate data some been center business. that we’ve

you’re that centers, strong from data expand existing have their And a with out customers earnings the of so take base EvoSwitch out. taking revenue, as ongoing we them strong

returns upper the we’ll assets preleasing mid-teens so those you’re good create developing a and really that’s value capital for strong get as business think from capital the we’ll seeing that at have in continue racking is there single low shareholders allocate most But is as longer going are continue to us returns the on the to mid to data got capital the obviously a center digits. return business continue rates that the cap I term to to development we side, to and get expansion The a from returns. You’re best opportunities. earnings

for a creates lot that of shareholders. So value

William Meaney

only add to Stuart, goes we’re yield on that management is that the on pricing in And to developed thing what would Shlomo, doing the it back I just what markets.

So internal for our if driven by almost revenue at at you America volume. years you look is growth North instance two North and was ago look America completely

that. support So adding racking to were we

basis. we’ve at getting that less see higher And it can add in is it that. additional on racking around records you grown on absolute without to management of doing a time do nearly We terms chart Now internal we’re than that in terms much almost have revenue racking. looking only actually North America thought not but growth grown of to racking a couple in but places racking no we’re foot business this NOI any additional we a that square we we have or growth introduced drive – also out and our to

spend So us money to that. reallocate before we mature markets we racking is allows also to able and out that on be where getting are had better yield of to much

Shlomo Rosenbaum

you much. so Thank

Operator

Thank next Sheila McGrath comes question from Evercore. you. with The

Sheila McGrath

Yes. Good morning.

customers? also on how You’ve was touch the centers data cross integration could data made Iron of larger to examples wondering center with selling personnel different line any acquisitions in is Mountain from going. several you the And storage business companies. of that I if

William Meaney

Thanks, Sheila. great It’s a question.

time, So that pleased people have really this – I we’re first the with think assets last the of we all pleased said pleased we’re but really we’re assets. really and I we’re with

engagement, that room with of offsite it bringing folks In fantastic. in brought went little of the And think that Mark our I customer them. EvoSwitch, about in expertise, I both team management an across and well time have of a fact, the days level terms that relationships he’s the XX is bit had in those spent ago Eric and the position for his was Europe for as IO strengthening with Kidd instance, was at

them sense their of constrained really feel of were getting were cetera. felt et just able sale, like the their at because that being fortunate bought and obviously as we Iron of I to get both were the number engagement, excitement ready because part people them of companies So capital Mountain acquisition the before they and for we a motivation

is excitement good really talent the got good. think we that and I really the So is

I think through I wouldn’t all where the on done we’re integration, we’re integration. on continuing to work say the

of far these along time the systems were operating but obviously some companies, integrating operating we still buy system. you still I pretty one every integration think were their have people because standardizing and they own that have

So across integrating that. we’re still

it cross In in selling, we’ve seen the yes, both terms of ways.

effectively we’ve the shelf of we customers as we’ve been has have Jersey, other a some these was Virginia serving into and we service the given that in of that, Iron the of Mountain of the Iron take all been sell. didn’t location financial the get So on of unable financial or Virginia data footprint their within with that business selling for side folks because can through more Mountain to have shelf result serving service that IO a terms where seen – relationship the center customers a New those global sales all they retention say being with more able customers. large to great also pretty we’ve almost And bank might to they we’ve able in in able folks much, been the And been have but they northern data have northern had even on center the before. space relationships northern expand were the already on some which of cross to facility which cases product instance, side the our acquisitions using of them

they sales seen management people relationships to and revenue on can footprint add that seen able geographical will, been just to actually records sell we’ve side we’ve new more building by also by the so synergies, we’ve So logos. you facilitate the then if getting some had And that expansion. we’ve our product

really seems it far be so to positive. So,

Sheila McGrath

for is and the Iron venture marketing Iron expect just Google moving offering to does Mountain great. how their hires the that the how part? tech to is Mountain programming Is And marketing? about, came more little it understand you who require Just this to unfold. then employee customer detail Okay, to bit with Google, new and a this just

William Meaney

about the Google excited We’re partnership.

I was better it’s right. But like. think Reese's me this. of know it chocolate were But depends I of who’s guess little you to we which things bit peanut kind butter. both the peanut it don’t at butter I these who’s looking with like I chocolate. on think the and the one so cup, that where I’ll stick So chocolate the I

and customers come have we can have We customers physical as continue this continue their digital their been lot our their world. historically to through of help them content, digital hybrid to how go And our because trust. transformation helping we’ve we work physical and in with we especially to on them they digitize and a us that

You were a natural person for to come them to.

a actual both – put can secure together at artificial an way the a that ingest the So results secure secure that we a and methodology. cyber facilitate in actually learning learning applied started efficiently machine looking then intellectual afterwards company to would but to we in and machine store intelligence be and an the that could or some machine from partner find it property because not of how learning, we it know tag data, help we’re

really months XX the but people brought revenue at number EMC not this We’ve looking new the of about over independently think where you areas started community. for a Russo, number we we know, technology space. a that streams tech this for area recruited She’s actually a So we for from drive as systematically XX, of team Fidelma had from just ago. hired can company.

XXX of At ask service, been – to has we’ve time you if Google what So same space. why at I offering. I XXXX BXB we look a and which a selling the and slightly as are but is actually And you we management relationship deep marketing this brought at of we kind trusting people records organization, have developed that in Google, reason kind have different two call levels. number us Google when truly a speak the with than of a Fortune attracted that Google. that with such were product looking to the think of is One have they is really

of have position other and thing that trusted we we have data. The is, is tons

the look have XXX at So million for if medical medical you instance, we records. records,

not be better This faster get to to to Now it’s try things going they and in come and say customers do with this. our want and us to do to our insight is compliant more their more decision a information. way

selling. So type to has who’s Iron yes, the is when States. intelligence actually applications opportunities, artificial know transparently these of just we around companies learning the that, we customer your if to says, customer as Mountain do is And have together footprint, apply selling for Google scale the strongest actually a want one you and not machine the global learning United of on in to machine something those the and question it? we to put coming

and days excited. launch early we’ll as really It’s say we it we’re So September. in

So at it we’ve proof were was of speaking also last done verticals speaking we in already couple about about concepts next and Google industry Google of a week it. and

Sheila McGrath

growth by ratio the Okay, one. which termination supplemental you great. in mentioned on that period? quick was center lease year-ago In that one data negative. there And the internal was last fee skewed a Was that

Stuart Brown

lease a $X exactly. they million. It Right, got acquired SimpliVity after fee a There last year. fee. paid termination termination was was about lease

Sheila McGrath

perfect. Thank Okay, you.

Stuart Brown

Thanks, Sheila.

Operator

Andrew Thank comes Steinerman you. with JPMorgan. next The question from

Andrew Steinerman

what the the forward efficiencies much initiatives in how drive cost recall Stuart, left areas? Hi, margins are transformation will two And and synergies? past these

Stuart Brown

of year. at ongoing sort sort point to margin and our our it look XX, XX little you outlook per bit a down guidance, an expansion you margin get sort When of of basis up and XX, call XXXX

that to continue those office back piece data in that as Obviously that the well. is expansion over efficiency and well also. will Bill get that’s a the customer initiatives margin talked business reinvest improvements service it solutions get of continued line, a of time we some of so improvements And that contributes – center will as improvements, obviously efficiency grows, about, some to higher from business customer revenue of And drop bottom reinvested. so will that to as so margin the management some

So standpoint that that will the mix up. wake just from

Andrew Steinerman

Right.

look how When of at just answered And but about the kind so and in on you think of those? buckets, the left two question second transformation initiative, Stuart much those you I part. part synergies, recall past the is first

Stuart Brown

got from million left. $XX about Yes, recall synergies of we’ve $X to million

Andrew Steinerman

Okay.

Stuart Brown

real we be coming the And trailing just that consolidation. of the estate the talked most largely takes set what because through around from of flowing that are would a about piece would while little benefits the it estate is consolidation real to be Most that is up.

Andrew Steinerman

Right. all is ongoing or transformation And that your then original --? initiatives,

Stuart Brown

Yes, we’ve inherent this that captured in as guidance well most that’s of already. year’s and

Andrew Steinerman

Perfect. you. Thank

Operator

Compton Thank you. And from the question Eric with next Morningstar. comes

Eric Compton

Good data I ones. quick two have One, for centers. taking morning. just Thanks on my questions.

revenue And mix just that, at of the too seeing the and of on I’m supply I’m lines? per Amsterdam – some square kind change of anything So that you’re pricing, a just is that a seeing center along to what I’m is the little color compared QX little then up there reading maybe more looking is or maybe some the of to kind bit market leasable something into take those I’m now foot in leasable wondering related much or trend megawatt adding demand trends to maybe data QX that? that and of and like function your per there.

William Meaney

number smaller we’re per looking has colo obviously it is pricing mix words, there issue. kilowatt. a other different on In a of hyperscale, much markets, retail at a different how and depends how Because much

own are all, global markets, by first have emphasizing In terms see those international XX – we the to the U.S. XX the of top definition top highest top their the on absorption in of in rate. and trend, markets we and XX continue

So very we pipeline. strong see continue demand to

see available campus, expansion announced year’s the next July based so we that noticed of that instance, XX do time. coming a deals of first in. with pipeline we the year, by megawatts the You for that commercial on We Phoenix being the about

So we absorption really remain segment especially these focused very in on. bullish which on high the markets center data we’re

Stuart Brown

when of just to the really EvoSwitch supplemental, back change during of majority quarter. is in you at that And layering that, come the the look the on

Eric Compton

Got you.

other I’ve helpful. parts lot my just segment, this reading corporate a is there notes that’s me there. if of one got I just the – I’m and in last of know the is But kind right. for Okay, maybe And XXX XXXX in on moving by goal

was the quarter, just from future I had far what segment? as acquisition believe last maybe so maybe updates there might rate growth in updated any – come I know where So I’m that just run we kind growth art curious, there as of and the an

William Meaney

similar. it’s we’ve because services segment the taken the or before be entertainment picking that is of You’re art, because offer entertainment which we’ve right the way put type is a and we’ve of general done the have customers together very services market up data whist had the and number highlighted services used that as are are part whether you art that – the with the to different year what we we art management to now, this the of and obviously actually the we go market

rates still So more getting single to upper mid corporate relatively we’re provide they But as do And in when some you we’ll see we put have we’ve go organic that. in small consistently. digits. because – it’s an growth tend look are the whole. we’re to to now actually seeing on we guidance at that synergies forward. basis And it the segment on But businesses, those that right also the can

Stuart Brown

acquired small well already. is that – that’s and in closed quarter remember on late art other is the museums business very had And the But late Artex going focused the was thing integration which was been was so that really impact. the to

Eric Compton

right, thanks, Got you. super All helpful.

Operator

Thank Instructions]. you. [Operator

question with Stifel. follow-up Rosenbaum a have Shlomo We from

Shlomo Rosenbaum

Bill, want in. I let me back you’d to if just see

William Meaney

I always let you in, Shlomo.

Shlomo Rosenbaum

just I’m acquisitions, kidding the still with hit in that Yes, just you. margins? terms I would you absent to data ask, plan of want center XXXX

William Meaney

to think of when a because now business center let’s and said, pipeline, portfolio that say us our give XXXX behind look, – running roughly given bulk add going time way data I stabilizes the can core data over would they may our between growth we have of business. be basis, tailwinds the on because being higher little that in not the data expect the it margins. centers a they’re more that’s the centers between That you we and a the but still fully growth close now development XX% margin. stabilized if margin Even we’re kind the XXXX But the bit expansion. that of is in

Stuart Brown

I’ll bought XXXX the only Shlomo, add, The at is after actually We we that time. update that increased did we thing the IO. plan margins

that. for we had an made adjustment So already

Shlomo Rosenbaum

back back and if to I just you that you are all say saying overall I’m business? back Analyst Andrew the little core you But a a plan. last had and what looked getting Are bit track guys asking, XXXX guys was with on could Day you the go I

Stuart Brown

We’ll management the – exceeding would probably revenue targets. look answer and probably been be that we’ve hitting those you program, benefits if we at the of trends rates the

William Meaney

can in now. results we’re printing Yes, that and the that see you

the data We’re lot stabilized actually – fully this not now. is and continuing grow a of EBITDA centers and to

the been able then recall, layer bit So is and a management. the the and it’s the of to transformation of but adding business you of general bulk health drive little the what benefit we’ve integration on through benefit revenue

would get margin year coming over center every bulk of the continues margin – XXXX beyond time once going to data more. business expansion, and you though the obviously to the the growth EBITDA go, back that’s So fuel the say to I just as even

Shlomo Rosenbaum

you. it. Got Thank

Operator

you. Thank

As questions any no time, like the there comments. to to present would at are I for closing management call more the turn

William Meaney

a Thank good you weekend, everyone. very Have much.

Operator

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Iron Mountain (IRM) 27 Jul 182018 Q2 Earnings call transcript