IRM - Earnings call transcript Q1 2019 | Iron Mountain Incorporated

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Operator

Good morning, and welcome to the Iron Mountain First Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Greer Aviv, Senior Vice President of Investor Relations. Please go ahead.

Greer Aviv

Thank you, Kate. our XXXX to conference welcome and first earnings quarter call. Hello, along will controlled on in site to slides user refer webcast. our a today's that Relations available The are we to link remarks today's Investor with prepared

presentation. information financial press and outlook performance. of to are and call, notably, will release, XXXX who release subject performance contain our Bill can earnings supplemental Brown, All the the President Meaney, about to and financial Iron the financial could presentation our You in to Stuart slide call, who and statements, today's today's by year. followed Q&A. our financial the and supplemental plans; Please strategic this language operating major to CEO, refer most statements for Page slide and supplemental earnings Today's forward-looking under full open for our uncertainties. presentations. ironmountain.com additional Mountain's forward-looking risks Referring cover outlook and On After we'll on earnings the discussion on information our to factors for annual Safe will at our X report risk forward-looking that Harbor statements. remainder presentation, CFO, we'll report, the financial Form quarter presentation, the results remarks, towards will of us/investors/events the find call progress up discuss those now our press first the information actual XX-K our call hear differ and from and prepared a of from cause

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

William Meaney

thank you time for Thank to join you, the us. Greer, taking and all

against plan. our The of progress by XXXX was strategic first continued quarter marked

Tempering our highlighted in storage Some to by performance was growth expectations however, our out announced remain underperformance achieving MakeSpace in a storage in a durable and currency adjusted confident consumer business. basis, and We line be storage our from of approximately this areas, this the in by progress continued recorded as expectations Continuing targets volumes whilst revenue QX. - revenue data in organic grew our year X% earnings JV center with storage expectations, with highlights total we quarter consistent we our volume exposure million. guidance little $XX increasing the build constant emphasize, to growth budget included: organic very the ahead in X.X% our materials, growth new business, should of from against detail, in global area the for saw bit records the revenue part with recently increasing February. the of our in in our you continued solid X.X% of EBITDA summary traditional storage on more progress of full record revenues issued the

for service the revenue outlook performance Our volume total on ahead strong year. revenue our to due Separately, we management expectations revenue slightly expect with track remain and softer despite to of was revenue, and quarter. or labor by expectations EBITDA secured higher-than-anticipated million experienced underperforming our to shred X% our $XX we are or cost, contributor adjusted our was in temporary for biggest This single destruction the which the business. our

Let this results color me the more quarter. give you earnings a to led what bit

deliver labor year attempt unanticipated in resulted the which reduce an expectations of primarily head March. overall underperformance level, in the necessary remains with of costs. occurring our did X the performance targeted in Our on our the Shred count shred to reduction month business during higher in our that the first we not overtime increased months track achieve with to

operations beginning of in support is overhead investment team. driving we our Our team global globally. tasked operating made This guidance from driven year part confidence year the in cost is both in delivering at improvement the in with full in the

After year including continue of and and expect around innovation we some increases we the rest unfavorable the as target identification approximately ultimately as initially see towards these XXXX. we of their opportunities, cost will quarter are comparability. standpoint, performance a overhead planned. of you'll in the growth in improvements half to expect implies it provide year-over-year in future this as a initiatives continue than in strategic year. corporate the our drive both From an performance, to and our in the EBITDA for for rate exit will performance stronger in the development. of cost fund $XX second organic earnings to continue these of other in already lead impacting leading believe number first new a of investors. These out end will for should improvement number and revenue that to X% operational a investments Moreover, well of product items the both in a adjusting invest we exit the investment more our continued As cost of detail million we of expectation with growth implementation, dividends XXXX to and result adjusted marked to more track areas growth improved Stuart improvement which rate areas X.X% the on of

in the platform at Iron ago, - awarded be could partner artificial continued Next, Google of of with machine learning the our intelligence X one our partnership recent and Our seen weeks its Mountain example Google with this year. progress Google. and example insight recent

information the area proud so are in realm award in We of receiving an of management. this important

Let well reporting, our the supplement. earnings can be volume volume quarterly as quarter which in me seen our to as to in performance changes now turn

reflect solutions the and we only into volume, currently Storage better records how Valet arts beyond properly significant to took fresh of represents Tape, Consumer where the businesses analysts has a visibility we a fine value-added our approximately We and streamline information providing As shareholders the our manage including at believe our related as last we performance. portfolio our are X% business volume to our storage physical mentioned quarter, represent to we insured entertainment above Stuart and disclosures areas forward. look our our evaluate well and possible revised these of recording and Businesses amount of storage non-box Adjacent comprehensive to services. growth have opportunity of and going storage storage Whilst provide

Turning for solid for it to actual results a volume measures, volume By was our QX. quarter all growth.

with cubic from management feet quarter points of to Moreover, ago cubic the feet due we respectively quarters QX XX of let lower to to Western or of we of year-over-year. trend America million our and basis increase the basis the of of XXX international XXX organic year-over-year million This organically. focus recent million in volume a QX destructions during me X increased organic, a and delivering the our first decline other XXX growth, storage year million first In growth continue growth. cubic XX organically Europe cubic cubic records basis points. continued North globally, see from flat to volume business. deliver X% year-over-year. X%, First, and improvement the points feet with quarter, $X.X traditional million growth on down slight feet consistent $XX record delivered from to of a levels organic volume Breaking further, a worldwide is consistent

included volume and volume form the our a services will occupancy, provide entertainment this reporting of or businesses routinely square storage breakdown in per of Adjacent foot and year, not reporting arts new stored primarily we fine our but reporting. also achieved Starting Businesses, have and consumer, these when businesses. these revenue to volume we in Turning

this delivered X our the by the You XX% contribution of A to storage can expansion the the of reporting our recent growth businesses see net million for years, space. as build businesses the strong last continue excited approximately for venture valet accelerating is consumer while opportunity growth from cubic leverage arm MakeSpace's combines relatively expertise. partnership through that the as Moreover, volume with we organizations X Mountain these serve feet MakeSpace. and volume the have in scale markets. example these company. see in good that potential growth in is illustrated the We're growth technology small the overall operational Iron of over market in has further these opportunity accelerate acquisition Mountain. of customer with strong our representing areas consumer to the in market Iron logistics we new capabilities of logistics our into world-class MakeSpace the new and brand to about position and end front scales consumer a and both the to expand strongest platform This storage a ambition

make data in we progress Finally, steady to business. center continue our

little a about in already You our XXX in capacity total versus leases growth. expanded of a a the revenue, center total out of build is signed see than this or third data quarter, for Whilst EBITDA megawatts megawatts. X almost is megawatts annual a we new it on QX X.X will today, more X% contributing of over

Before revenue and in Emerging the as over center. growth business the that from records Stuart, handing well confident increased underlying reiterate growth of of momentum to the in our I including information we the health call remain characterized and wish data business management portfolio Markets by to our the as

over the improved I guidance the into year full With cost line that, impact exit we with slightly in going disappointed we're by Stuart. an rate to quarter, turn our While the expected to this see call with and XXXX. continue will

Stuart Brown

joining your X and us summarizes of overall start our initiatives cost Bill, with financial results. to information year. including you, expand I'll the quarter's thank results. the to the the the around and for Thank taking issues for first additional you're discuss results, around of deliver remainder on off you all XXXX presentation details QX Slide performance, and margins quarter our the control expectations

service compared increased quarter revenue an Storage X% basis, revenue, on Service supported prior grew by The center, XX.X%, first on about in data X.X% storage results we're and pleased growth I'll million, currency accounting. lease a margin points have and XX Organic part businesses issues organic quarter a constant discussed and year Organic emerging due to by records markets grew revenue for impact quarters. approach in the North by cost actions for point arts XX performance. the we're basis grew driven less box revenue organic volume the with a globally constant fine in X.X% growth, on first change rental lower as a currency billion, well in which more the from points increased in declined currency revenue acceleration recycled mentioned, our revenue Bill of the in in As destructions Bill organic to changes. basis X.X% to profit management our project basis basis. management quarter, as by year. in or the $XX by the a operational anticipated prices $X.X than better growth and revenue revenue first the to last good quarter we volume and America, lower quarter lower excluding prior X.X% gross bit from increased XX in for reflecting which moment. undertaking X.X% the Total paper.

$XX.X with basis contracting Our adjusted to EBITDA declined year-over-year XX.X%. million X.X% the points margins million, XXX to or $XXX

adjusted declined of the Excluding currency $X.X EBITDA or impact million changes, X.X%.

the higher Mountain revenue in sales contraction In a investments or digital reflects costs, SG&A Iron excluding XXX of information as in with discussed, almost already percentage and year-ago. partnership addition and to million SG&A The $XX security Google. costs, the our growing significant platform from acquisition cost the like basis the including insight of points reflects offerings IT-related increase margin

in operational was data reflect strategic of support center initiatives also with and added the acquisitions. a increase year's global and this G&A last Most SG&A invested and anticipated reflects in group future. We new

per reflecting EBITDA quarter adjusted million ago. year the $X.XX EPS was slightly prior adjusted higher share expense cash decline, interest a in year, to Turning the per was a metrics, $XXX down to AFFO from approximately from compared increased and for the share, million, other taxes $X.XX quarter down ago. year $XX the

at organic revenue Looking growth on X. Slide

recent organic volume improved organic You revenue levels quarter, quarter, mainly in the due than contribution revenue for moderation international, revenue highs from X.X% slightly see Organic XXXX, seen segment, fewer management the you we similar revenue volume. were underlying in churn X.X% last from growth business moderated declined day phoenix can working in seen quarter. project in growth saw last X.X% organic to the Churn in with in Phoenix, a to service from for normalized developed came at the out the X% quarter growth supplemental, the the in moveouts, X.X%, Organic better continued markets IO slowdown paper revenues, X% QX in for was to see revenue In X.X% rental revenue. organic X.X% performance. revenue for storage, was In due increased center this about for a destruction and acquired healthy service developed lower QX. other of service prices the storage that when called markets data the delivered a the in when growth can and mainly and the Adjusted year. levels organic quarter. revenue one about XXXX, we of we quarter, which quarter which anticipated in have around reflecting

of when rate As Bill in the to towards shell XX leasing megawatts the our Jersey, powered IO. Aggregated for New was acquired mentioned, which vacant related in well XX kilowatt quarter and year. center space we're we target leasing trending megawatts the X.X data of included per

revenue in an well, quarter. on growing Adjacent XX% the also Our with basis performed organic Businesses

about the reflecting cost XX healthy is offset basis Data and lease a declines the churn, EvoSwitch was first support new consulting standards. Europe, as business, Netherlands making for of be first international from In XX healthy because studios. North cost in to remain Iron margins facilities the last changes despite discussed, of segment in galleries about basis, the operates the driven in a the data continue SG&A. volumes continues year-over-year services, and the as largely while XX On margin have by lower including scale, our margin management details accounting new margin management and by adoption accounting XX lower and the the the XX.X% lease Revenue North quarter. In segments. were of declined to XXX margins helping Western contracted improvements increase and points we're margins segment, which RIM this of and basis now see impact the at from points, America we basis our shredding Slide in above in EBITDA margins, demand which products quarter, built, some America investments higher adjusted of performance Mountain. points margin The previously we basis were impact were a by With France. declined adjusted up anticipated. XX%. process Global average Other a quarter museums points reflecting Center X impacted total Phoenix EBITDA impact business margins point in very the which mentioned, international margins the quarter, basis temporary to May, acquisition

Turning to Slide XX.

EBITDA that X.Xx, year-end can QX lease leverage You see adjusted to our at due softer ratio primarily was the adjusted modestly higher the performance. than

as first subsequent We We've expect million decline adjusted are recycling the expectations center and the guided end and quarter. via spent increase around of for half additional year generating back end to X.Xx Frankfurt on sales, and the the in the of development. facility. We're records to of last capital with that close our the $XX year, for to track of program evaluating into proceeds levers EBITDA U.K. we our to to proceeds year we than the remainder the recycling to capital of venture a more capital the over capital real risk estate number and fund consolidate third-party net million new as joint of data $XX quarter,

in improve XXXX outlook, take success to to for and I set discussing and outline a the to us up want year this plan margins Before moment beyond.

nature in expense into was been place details in the initiatives. dozen on and utilization. is labor X XXXX. improving transportation going and result X being initiatives and cost in continuing to routing over the reduce vendor to taken should fleet both in operating of Other the supply we've costs. further of First, transportation but example QX, steps reduce time all costs higher-than-previously-anticipated initiatives, one include Without consolidation in there's This year and fate back

expanding of at training. discussed, productivity revenue improve standards This engineered focused Second, to as of tools, and the last includes with additional team the we a areas created previously cost year management. transportation margins end service of labor, support labor improvement, in standardization well centralization use as to as global operations identify the your globally and of management transportation

of second expect in fees, into cost establish the half first third-party to see our XXXX. and beginning includes in The of the half benefits the some professional we the and year and team XXXX results to

the we regard end confident recycled to rates. guidance. uncertainty in The remain the Turning quarter paper and February operating on reaffirming in lower provided declining guidance that your effect to We're expected can our range from due call that and to despite achieve with little performance quarter headwinds wider of prices. second exchange QX we remains a first residual the

be total to in organic revenue XXXX, organic X% expect growth range growth X.X% revenue to a storage continue the X.X%. in X.XX% to including to of We of

We growth paper we are single cycling the in in continue service to quarter flattish digits, prices. expect service against be though organic tire the destruction low will as revenue revenue higher second much

given the While guidance, we towards cost of the our the we rest color some of quarter, quarterly the end not issues further to generally on provide experienced year. provide for wanted expectations first the

of We actions, will quarter continue expect until already which are labor into secure to second higher cost sales. the of the destruction underway, our again some costs improving

described with improvement cost We some onetime expect operational also initiatives, associated I the earlier.

quarter. and cost sequentially quarter initiatives second SG&A to XXX EBITDA through. expect as to in increase improve of points result, improvements from XXX should per half to quarter adjusted margins the second a basis XXX cost Margins However, points basis the XXX should as the decline first through then flow the we XXXX

trends. earnings to and a improved In contribution performance to health remain from the we provide last and revenue committed guidance summary, noted, QX management reflects volume the shows underlying full-year Bill strong As on call. our

high-growth scale. implementing we're confident from are Businesses that shelling achieve long-term data results in Then, center encouraging platform our the efforts the gain the actions move margins the progress markets good to to the see We're improve Adjacent as to in operator, us allow greater targets. we'll to our continue We in Q&A. extend to

Operator

Instructions]. [Operator

is The from Evercore. Sheila of McGrath first question

Sheila McGrath

Yes.

adjusted what was, percent are quarter, other at I'm Just as is SG&A just Or XX.X%. drivers for as labor? attributable how much increase? on wondering a it the you of acknowledge, of revenue elevated that to

William Meaney

increase No. get on. I mean the going - is things majority a few you of

we've a IO Acquisition getting increase and in January of overhead from in late year, you're last First - in basis, consulting operations increase because some the also the overall, all, as EvoSwitch in as then that. drivers. increase dollar of year-over-year cost are that And those cost. And getting some X operate we biggest of then team, with which cost well team you're of

And global cost themselves the we earlier so when first pay you that to into benefits them more sort this the things as as will We're stood year for right? the half as pay quarter in first operations said And year. the those as about of about team the they themselves the we in second you've get and year think for got continued year. the really cost to as half of out, trying than taking we're switch think and of these it in we up, within

just going the would of into some We the given that those to go sort year ahead up put are in later and we operational QX. and things issues spread forward have accelerates

Sheila McGrath

wonder business? on traditional storage I the business how we And Okay. margin the in then it? at Iron - MakeSpace that Will following with to Great. Mountain are business view traditional's just trucks? integrating you you just it your How setting compare how that Mountain? And Iron up acquisition.

William Meaney

good a Sheila. question, it's No,

So all, at shareholders a JV. we're of by significant first minority

JV up So rather it as integrating than MakeSpace. a set

perfect for the relationship. us, So

also material that exclusive up soaring. means services. the back a or in picking back the trucks the shareholder large the services drivers the So and besides our of in and facilities being In the our provider material delivering company, we're minority and

the venture, effectively relationships. that the exclusive gets consumer So service joint we're provider with which us in space to BXB a

of cost of still have a and we're brand get proven marketing And to and acquisition very we of with So only a themselves, MakeSpace, business-to-business space. very their understanding effective consumer the benefit customers. not approach, efficient but they've the

and other So handling that we're consumer with and their spit area. frankly relationship. self-storage standpoint, companies From both bring struggled expertise pretty the that excited particular them quite have this and logistics the we about is

So leverage we're core able estate strength. also to our our real really as what footprint. And use

because much United help the we're to they're because quicker So States excited expand States. already United them able the we're pretty in across

So it's them. we've carve we that able think with relationship very synergistic been actually to out

Sheila McGrath

venture in store the the will - facilities? your So

William Meaney

exactly. Yes, Exactly.

Operator

from is Nate Berenberg. question of next The Crossett

Nathan Crossett

partners the saw presentation you're I that the JV for project. seeking Frankfurt on DC

to European especially that of might So I then provide the just on with? a types demand you maybe some And looking your we're look flap is overall partner to wondering what was that center like? And you could maybe curious follow hear comments data strong, if the are areas? just pretty that, color providers the market to maybe in as on heading on

William Meaney

Nathan, last it So we up was Stuart called ventures how we me up generally and about select the talking joint why think question considering about then for and start Frankfort. with specifically that we're

remain So on the I we center data right. European markets. bullish you're mean

in So London and a with footprint, we're in acquisition both able really strong we've floor with space Amsterdam. EvoSwitch the in pleased out the to the been in terms establish

now So happy that. with land we're with in Frankfurt. the really And

both top London, robust the well continues see across as considered the see know, wholesale growth - growth there as you Europe are market. as the Paris market So markets in Amsterdam and and we to Franklin, retail

really so I up at little we're here. rate. own So outsourcing. picking pace what's bit they But think good into far U.S. in a behind happening of they're pleased definitely we're But a probably came really their - terms the where

Stuart Brown

the Is because Yes, would evaluating, Frankfurt? development with existing. Why many it's on to in we've yes, would center at put out of work and looking be in type other the there REIT. if you business structure some be conflicts other our probably Arizona, the be there's be markets that the venture capital too really in data would looking something look the got frankly, and Frankfurt of joint of for typical we're at fairly to lots Amsterdam

And venture, wouldn't the we're be with own will And to the early Iron evaluate easy we are. carve So Mountain phases of Frankfurt existing any into demands joint out that. in conflicts properties. its is

markets can for wanted of looking partner Frankfurt invest to as consider who us and in we're other outside be will that with So open to long-term that then we well.

Nathan Crossett

Okay. any private. JV? Or public there is is eye best there the There you public can And helpful. any any... the give potential That's or on preference of

William Meaney

that's a be likely could pension-type long-term most investments, going out. build long money as looking these we for be of these for It's type it of in this to are time some it

Nathan Crossett

And on AFFO Okay. just do Google kind partnership. impact but of on know of That's helpful. terms to another in or should want how helpful it's would very question us then a any of bottom early on that. we color And kind you think that to I about numbers? line meaningful having be expect days,

William Meaney

give out. more XXXX. sure - as this that a guidance we've the any standing we watch expectations in what revenue be and This your for We'll expectation year, into with get we should our be cost get you our for will will

proof we're concepts call mentioned I that. that we're last might've excited the think industries, the really range of a the that and dozen results in we've getting I from across is over done about of

add-on see digital business. this So our what we a as natural standing to

are low call, it grows double-digit single, more as high because formats. documents. actually to accelerate that we when globally, physical into to $XXX opportunity scanning get turning that digital what just, digitize people historically looking this of about worth I documents see physical growth organic benefit growth. taking or So We at million they do and would digital And actually

our is give but growth think days, low the do is about the really tool we that. encourage we're early business single-digit, - in them we double-digit that it's high this accelerating digitalization and to have So this more we that way think as

Operator

Tong The is of next George from Goldman Sachs. question

George Tong

up appears your X.X% take might X.X%. about And X.X% sales expect have to while down an pig volume picked quarter you X.X% of what you talk Can developed discretion from inflection? to from drive potentially to when where from to this to X.X% existing and X.X% at new stabilize? markets you from also customers quarter down last from these Looking initiatives trends or New

William Meaney

- think, and George, depends say at America I if just is what quarter-to-quarter, it North America Europe. whether North Yes, which looking and I would and year-over-year you're looking you're or on

So that of some range within the movements expect. of we important whatever what our highlighting the you're call vice

it see result don't see than any change. the last as that a better X But reporting quarter in obviously, we we we're were they change quarters. are So major major reporting the this don't

look kind those at movements. actually, So if yes, given kind destructions total total I'm you to now at actually X.X%. market we said X.X% we're is X% trench can range. looking be of that would at And overall Any is at of - in volume

picking a So I it think you're kind at of market. specific

overall gone see You actually destructions quarter. have down this

If But operating whilst at we the we're we this X%, you X.X% range. see still think, think total look versus within business. that still to nice

up we the business. in So I think to or should going see it's inflection either point not be any down big

see as Emerging an steady we globally, change then I continue will she think have the pretty and of will as a Markets much bigger that make it mix where we is goes is to of course this part improvement.

It think, reporting a drives. is including, see these it you to will now if started has will, other never we've occupancy the you've areas much impact? actually what So the thing how we if volume the long-term you make of shown being that that you on that our been volumes that do really we've

two been her the non-records own or last in for entertainment and we've last on doing So business Well, consumer. over on the if years, quarters. a a services look over the consumer of be a specifically art business now the years that would now non-records number years so you of at two number

themselves that about company. million growth we've years, which of cubic two - amongst increased about feet see a generated is those X seen the that as cubic of As last you'll then the over XX% cubic

look of So how terms it continues small for over inflection improvement terms the bit will terms become of at to go is terms emerging are the you a those of, steady it the overall, looking in if part points, as in you markets of could in record growth, that things see But total, much you're of but consolidated if with business, mix. time. changing you you in bigger the little of a as see has

George Tong

Very helpful.

Your and billion $X.XX those EBIT targets neutral? especially most include in billion to to the of given $X.X you margins relatively are to target $X.XX see billion. targets? $X.XX EBITDA where heading, recent XXXX reaching And FX Jude revenue discuss billion the margins progress And

Stuart Brown

talking looking George, we as margins about sort progression margin of expect you're off go. sort for where the to of we're year start

'XX. to had give pretty first QX XXX dollar guidance So so of you point revenue. billion gave for at then that we I'll a margin some right? quarter we little I you implies in exit comments If from expenses, And a $X through about quarter, - terms, basis We're in the if talked about you look - think improvement And the unusual rate good right? QX, over right? about

up if you as year. with will So that. both that from improvement continue the to well biggest about going for the QX move you think we but to drive implies that that, And the one about dollars normally EBITDA be million. That of initiatives management big QX cost as for buckets $XX get as revenue buckets

year about correct this You've affections to call. in that talk they're always the get taking

areas. from the and from benefit around some benefits SG&A procurements global we and really the QX. before of labor will other You get you lower from which about that's of to cost get talked switches team service as the QX And

businesses. both the North as So well benefit that as America will international

pretty going well for the [indiscernible] longer into XXXX we've term. I us sets up the So provided think

Operator

is The JPMorgan. question Andrew Steinerman from of next

Andrew Steinerman

the confidence the organic into to X.X% for moves imagine growth as in organic acceleration The quarter growth that X.X%. It's and the through I was the still Andrew. year gives revenue is What year? management revenue guide X.X% some first

Stuart Brown

mean if I driver and obviously on from flow you and storage is that's is Stuart. a - biggest cash gross the is profit this right track. Andrew, the

As areas service pipeline revenue the half. some of areas QX the particularly had other that paper terms drive some governance the some growth But revenue other second down. and come information project in including the in of the will you recycled the be service in and of of talk about growth as going service QX in little a than slower QX, we the foreshadow year-ago, bit the actually prices will in

confident that for service growth So the total. remain implied and the what means we quite in service -

William Meaney

have it, Andrew, we And if confidence. built think is that our about you actually

because than so see the confidence revenue a even months we going year. about we are front. in just pretty about we the month stronger or were quarter X good feel pipeline into And Our is ago where forward, was we can it revenue the

Operator

question next Andy of The is from Robert Baird. W. Wittmann

Andrew Wittmann

dollar Stuart, your does strengthens you guidance? into a little here factors since the guys last that I how just was reported, fact wondering bit

Stuart Brown

a little used so our in constant our it's we this It ahead around have before EBITDA goes guidance built Yes, than past year, through - year on the currency. and we changed dollar I was had sort sort our mean range this bit, that years. when them we historically basically guidance wider few our of process guidance of over guidance

where guidance. the FX account you So lower I quarter And I any year-over-year think basically broad right the a look if the think today, the guidance currency bit million, middle range EBITDA built impact of at in end taking actually down first was potential and towards is our EBITDA of upper the into that movement. and into $XX you the was of

Andrew Wittmann

million So the about the the year last headwind the talked it's it of way line, $XX for you $XX [indiscernible] be on EBITDA that million-or-so of year. balance million million $XX you $XX million quarter, $XX a saw to or Is think so another same for - the was going thing? you think guys saying to I

Stuart Brown

Yes, that's right. about

Andrew Wittmann

Okay.

your of - incremental noticed offset was then million but an $XX that I recycling. on kind here there's Frankfort and schedule was from that out CAD think of capital by on $XX just Just on called that million your

sense that, to those you're to some going that that whether identified assets that brick be around market get out confidence on the have still to going given of figure that's recycling in to translate? wanted Just how of I kind the

William Meaney

seem got demands Yes. $XX North package America, now I real on of that. call million of in We've secondary and the would sort good of in Midwest a markets market that estate more it, right markets,

got ready so one And go up we've have goes. and the additional to package first

that more around real doesn't investment line around Frankfurt will the bigger us estate of the purchase. then for be partnership for So as make question recycling the to question sense

to and going a of around Now demand with feel with some make there's time that. we into leasing us, terms lot for gone make just But there JV out questions the sense.

Andrew Wittmann

have is So million by if partner. yourself is there that all that's without to number do were that in a $XX - it you by you assume to fair now

could $XX So actually be found not that somebody? million, if you

William Meaney

Yes, If from get capital partner found somebody, and we correct, correct. that away. right we can land [indiscernible] back in it

Operator

of Bank The America. next question of from is Funk Michael

Michael Funk

if quick wouldn't I have you mind. two ones,

of of around I'd last be manager showed the incremental a in investments margin think about And your on get XX for into needed XXXX. million then so about beyond JV equity the how Slide your at recycling of sorry, you may I discretionary correct your factors not maybe to than accessing So looking about issued now. comment that too level year And I'm the headwind in sources in are question, markets? I I tailwind $XXX and other capital. - half XX capital love your second capital thinking quarter what revenue less may be you haven't commentary commentary of If from is the you the how far on and program, being capital it second equity equity half, leverage was where you want commentary? potentially progression comfort so talked the half about last your second right now? that, then is your and a with just think

William Meaney

Okay.

let in seeing to little what and able with will - access about more bit of the snapshot Stuart terms And talk give markets in start management and then debt a revenue also overall. how just a think how those. he's the I'll we're well we So me about debt you

actually Generally, little So front in benefit in it's then and on what quarter, builds management in management year. the pricing built through towards from it first the back XX% the are customers year you are revenue is. revenue around just side, come go through the quarter, intimated bit as renewals the the we to the reviews of see done contract we a with first the done way of the end the

well will. the second between QX the the if So of than QX half year is half year, somewhere comes you last half and and more of the in

bit quarter we year. we little reasonable And year from expect about only get to around last XX% last pricing. is year which progress first to coming of international better benefit start some online in markets, and do the This starting only did a So the we pricing than see the that. because we're

you a around management. to given little of quarter access we're first in terms we debt know price. fear good give just give stayed that now. uncomfortable are the So debt feel Stuart we you with snapshot the Is on specifics not can generally bit revenue the performance in to about a and the more markets we we Overall, debt with where the right very then

the buys data So grade, we investment actually price end upper investment usually of were not at grade sure. an

So we good feel about relatively that.

in Slide at kind say If again think our that of we're peers, the And folks demonstrates are. you a much reap us that leverage slide, relative look spot I we where to XX to to those pretty on have debt.

X.X roughly are covenants the where are the continue turns we de-lever would X.X, reason over and our time and daylight leverage to for issue why between covenants and to we So X say us over time states. want is wherever like to our our we

more dry themselves. give powder events opportunistic for may that present to Just

because So in will opportunistically. we we thing to we deliver feel is more only the a like don't are rush to create deliver

de-lever we And is, - that wouldn't for continue of grow you really we our So and cash anything do we feel time. dividend generation business that. the and given to de-lever comfortable over the just to

or issuance, that have any your now look NAV share Now that is sitting. in is not? to not right time the sense of we actually be of company. at at say, equity to And an opinion this it the make best doing the like And terms price we we investors, is look we does issue given equity

and So is investment. look terms what's best also find at generates why being a building And partnership data thing looking then that in the we generated business. kind right at when us forget at now, a we which from the we way have some said, but have - almost mature $X.X to is, billion of data center core look And and look center to lot that. separates data of hence Frankford. you a to of capital-intensive is growing the at in centers to in of markets in equity the the the I company, that of say an that of at our north the as cash. we're best NAV peers it lot you before fair takes of at we EBITDA don't your reason business, our And center headed That is Stuart look data and that capital over business most we're of

that a growing is like a large alongside quickly centers. So very what EBITDA million-plus we have to say payee very we strong $XXX business bank data of

thing into only about guided we data actually time, only putting that deleverage massive also million center do have our is dividend, of growth year we $XXX not the source natural the fuels slowly that but not So a can this funding a we're over delivery, not that in-house allows doing us to business.

we that put - that comes fortunate strain. - fair relationships the we talk business, in of would we're EBITDA a we the if mature and another be were that to it But obviously, EBITDA, is try but that But will we markets? of to $XXX that I So billion areas Stuart, specifically have $X.X million amount able $XXX with million want data you cash. that most about we're mean, debt to harvest or may a

Stuart Brown

Yes.

just overall quickly. go me Let - to just be

business. debt cash flow the get of investor stand that for durable an point, much so we credit from comes the out As

though close that way. the Because incremental are right, time not the to Bill We rating call. as if It the the right? we building talked that even and as the earnings you is capital. historically center it's platform. at mentioned, agency data about for investments We'll actually have need growth, investment price treatise So out last same EBITDA over grade, in deliver look around

a we've had lot out. done but of a it to acquisitions, have the So great as least platform, didn't we've capacity

developed. build out So to we have and

the think understand, agency million that I needs. the capital investors well. the So of what's And understand rating as $XXX that's really driving

it as the source to One at, that confident to grows hey, continue Bill, leases of only data the thing up, increase. other looking I'll the platform add is at what's We we're that? way quite and center So look will when to value debt.

and back invested our higher the are the of have We you you is look place will the want are sale industry these see really good. at the love an some where you if recycle transactions lease rates estate now at do at who in look our real if where ATM capital an that right people chosen you cap of on look to and to and and ATM industry credit, the really credit We've today, some again states. rates

are we there. going So

Operator

[Operator Rosenbaum next of question Stifel. Instructions]. Shlomo is from The

Shlomo Rosenbaum

can labor again Stuart, you just through the in the walk me cost U.S.

time existing You hired that that Can not have right. order me it didn't work walk to additional works? people you but how the timing ones, with the out over through in ground just exactly the on

Stuart Brown

seen intentions, the in great around detail rates. here of we - of normally lot the chew particularly we than some demand, overtime. steps America No, with you I'll rates, a liver were wage had more give a would more last bit markets we With little And would. all is wage in right And we year drivers. the workers warehouse took raise and North

is will you So sort also up. productivity going your people little a to for you're you these to so of we'll is offset When thing have a assume. take of rates and which time hire period get as lower up trainings, that suffer natural while by stacking

for is and were manage people, the after I training attrition able because well the think happened to that weren't retain good managing productivity what we is very overstaffed news change did but we sort period. too been January actually done around for is of really ends field. the of And up strong a in bin the - month overtime. of it's sort month much drivers with The people tips, therefore,

have those show didn't the that issue improvements, And manifest March been there, productivity when should so in up. really itself

a overall sort of we So and overall, revenue much decline our were expected of was a expected major the issue actually Paper business as when in to this shortfall it shred down declined. labor look trade. be rate were a as of the to, didn't you little Iron the well. we on cause in down It as Mountain, percentage as prices actually of below bit

prices lower. March really paper little the quarter get move You was bit and down in

So productivity. piece is sort that the labor the good The of a overall was news but business majority quickly. as was of correction course that pretty shred

Shlomo Rosenbaum

over this margin though it then points? of Europe? basis labor down different issues Or as there And as is Okay. using was kind there than completely XXX Western same over the with well

William Meaney

greatly impacted project different we and we as as that pipeline manage and - lost the similar should labor of have have actions had it. We well productivity labor revenue was the QX. on the Do around correctable were we and issue it's well. contingent good on regrettable a you Yes, in but well, there some some did taking project projects. server-side the some Again, add as in you good QX revenue was down

Shlomo Rosenbaum

color. discussion that quarter? there prices number EBITDA it Can - So is by not surprised is? And just and we surprise. does catch to by all, what quarter versus this on that and percentage seem good gauge of or there's like in kind quarter of ago of terms Okay. give paper EBITDA is mean us investors of could be a paper That's I the then you way stuff last it a year Or that? first and

William Meaney

volatile. prices Yes, paper I think the are

the a was million, that around comes overall the about shred revenue for third in million year. you from XXXX $XXX recycling. of If take step back sale paper a business, of And a revenue

flow through And but so in XXX%, flows at XX% at probably majority doesn't EBITDA. of It that close through it what's a through. the that give you

that where the volatility. you get So of sort

those you the year. can Again, If peaked to last prices last the paper it numbers in year. second really take be worried quarter

So QX year. this stable for a was tailwind QX we actually actually are us

us. be will too You a headwind for

what idea an businesses. the of you scope gives that the So the of magnitude

Shlomo Rosenbaum

sneak in Okay. sounds if just good. more. That' And one could I

of like volume us Just we is how you or organic this volume? volume broadly? way to think customer million the Or through volume How much much amount like about quarter? there there your for $XX more to a is - does acquisitions contribute them per a those, $XX dollars million triangulate Is to can we those? add x million that relationship, of when and you add how make

Stuart Brown

that In things includes businesses. also be shred number which or other in acquisitions, like service could

And pay of acquisitions X really of million lines, through at which buying go businesses. contracts. if you we through because and a look included that annualized up else, the we're customer question of basis about customer pace really commission sort sort commissions pick look week how If and we typically per million be it We're an and the to of acquisitions, somebody really, the normal customer contacts. businesses assets, always out wouldn't wasn't the alternative it not organically acquiring cubic year It's we've on X to not historically it. sort about to buying is

so of is coin. sort And the other that the of side

Operator

The from Ford Karin MUFG next is question Securities. of

Karin Ford

in in up XX% the there a entire increase sounds you cost across storage expenses, I It in the wanted course to labor also in like and go large Are seeing increase as line, back year-over-year think anything to in that saw was including business expense topic one-time X% that operating March line? SG&A again. or was the a there shred well. pressures I you but the

Stuart Brown

other the the sides No, in the of lease piece story the have change year-over-year. accounting

we no Nothing expect. that standing to we pressures labor out. to global of of impact sort as sort out that well. see So call that There's that

William Meaney

more you color if no, on one piece Karin, of Yes, kind take, of that.

them that or lot these business, one them approaching was getting not so we things happen $XX If a time. catch $X.X unexpecting, a thing about happens these time things this March, we from million the of manage take to generally from we $X.X billion the quarter, there's This you time the into recover. $XX not on billion in early then start to to just can two these you is time business. talked in time was and piece EBITDA million

kind So of one thing. that

quarter. we SG&A, The itself the want first Because said to pay have execute other was get product if in planned improvement terms for in before, you Stuart of as the continuous increased actually to is. in year, to

up the see generally QX into a certain QX. degree cost ramp you of this the a when like frontload So programs in of

benefits. that So

okay, up the to is in go that given means at business result them But the of that into the good the as actually $XX size up this And QX thing run. you're the it stronger is hardest group end, you to harder when some not up. keyed we set able they of means the the months which programs Now make that is say, because set the into even not going X in expectation week exit and when margin we they've on XXXX. QX, in which let's million, EBITDA go rate our

Stuart Brown

Okay.

things to the you core from do on the facilities obviously, the acquisition, forgot percentage as on revenue. the I business cost, of higher of mention impact have got of other sort which and the as storage a part a the EvoSwitch year-over-year well, One has of

of the So margin the that just is storage. one drivers gross

Karin Ford

a like seems you it on confidence actually quick three the gives segues can basis points kind of the answers What a you out. next quarters? That my in your just it. turnaround which Got XXX basically swing, - complexity expense given of initiatives you laid margin into question, the that side, achieve

William Meaney

to the because overtime overhead we that for do first complex learning in thing do of We over over pretty - a It's as my labor is Right I make shred, replacing to - are a while been it know that But where place efficiently, the tell time a not now, our large actually we you I that There it was appreciate that time the - if so takes didn't - us not with have all, properly. management. is I'm overtime use full lesson you I that that. time The line - don't going manage but people out. actually is that to bottom it's many very we you board it's don't complex have really that then have edifies sure manage you often. this do issue run see. job times and hiring

able to So very reverse very, that we're that quickly.

we've that been and on it. identify put able people now to So

first consultants actually number think said, help of in projects. Stuart and the the I brought SG&A, that global in all, out into is, terms a of area initiate and upstream we the build upstream, those of to as

So cost - out. come was planned in are that and those to come

the our the of of start other straightforward. terms QX global have So practices that's areas best the and of global on to And pretty in actually already what initiating was done some get ops transportation. some then, and just area team and in it identified

we in the have actually positions any much having globally and productivity feeling we not our being demanded as a good given And to about quickly So racks is in world out of transportation into able thing our we're pretty manage pretty open by we or just day the around those heavily open transportation. that canceling or bring cost openings our fleet. area some

actually it not speeding think area. And remarks, issue we've other procurement. procurement Operating North So we've global a a area, pretty ago including his and we years We've done believe our coming And chunk was few or focused the JB that's Chief in - in in mention in a the and one big is now's of That I job coming our did exercise. a now expanded procurement, primarily as given, from improvement procurement. don't good Officer, which agility America. with

I'll would fairly fairly I'm stage. hanging sure tell the get make my at sure come. years we're Board straight, the still, now, fruit So I low to will straightforward. complex. But in it's it I'll that say, right

Karin Ford

you up just three estimate you center data going data years? to XX% what us think the the finish Can rent mark-to-market center give I'll is next expiring And you on Great. question. have of an with the over

William Meaney

those we again, we and both adjusted pretty - IO basis. we acquisitions, them acquisition markets. two through standpoint, EvoSwitch, a on right, think, the market to I of the GAAP found we on GAAP And did basically overall, close from

mark-to-market the So a expect we turnover. big on don't

Stuart Brown

space. the good relatively data we're Karin, new the about, Yes, in I center is think

years. or your was lot the So last of think a lot of behind question, X the I a I over think compression it there X was - question price

that But is other We our an we business. important new relatively look And contract in the think still relatively the exposure we to small. the expect. based Our still the at in returns higher that than where segment the clearing We historical have now expand to adjusted during underlie and to to pressing continue pretty was on prices should are where at ways mark-to-market to that's for grow expected us our hang pressures. on business when acquisition. think sales to much is look price rather than that and priced hyperscale based out the is now trying leveling it's models our

Operator

McVeigh next Kevin from Crédit is Suisse. from The question

Kevin McVeigh

I came X.X%. anything Billing there terms revenue? the growth or in is in Stuart, at mean organic of

if over and that there right, think you get of I the factor. How comp of and then year over think that the XXXX? difficult. anything comes that easiest kind Is balance in have it and grow the more should the come comps of it's we helps about

Stuart Brown

for that million that think the right, get Kevin, we're of this is week customers little mean Stuart. again, volume, on From cubic you a month. of growth every But perspective a lumpiness. year-over-year, storing the I XXX paying bit

stand margin about On view really talked of the seasonal in the numbers are you on small. point

from So customers. we - new existing as we we've than I feel got expected, in sales about And for as both year. think bit as the problem little well Bill destruction new the better mentioned good that from to have

pretty so we're her outlook. right much And along with

Kevin McVeigh

Got we the where you're At based plan - you range coming you would into become it? this to the are kind wider given the on it. have do end range or the And lower with point to higher FX. a of your quarter point on of in rent think

Stuart Brown

it both leave hand at I'll or I dependent, think FX Rangers and the that. upper

Operator

call. the digital be The And replay after today's this [Operator question-and-answer our call. the one conference hour This approximately available concludes Instructions]. of conclusion conference session. of will

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Iron Mountain (IRM) 25 Apr 192019 Q1 Earnings call transcript