IRM - Earnings call transcript Q2 2019 | Iron Mountain Incorporated

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Operator

Good morning, and welcome to the Iron Mountain Second Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

I would now like to turn the conference over to Greer Aviv, Senior Vice President of Investor Relations. ahead. go Please

Greer Aviv

are Good the XXXX Kate. that welcome our full link information. prepared to will website financial Investor Thank with supplemental press along conference morning, release, call. quarter a remarks today’s in earnings referring today’s slides on The second our be Relations webcast, you, to to and available earnings user we the controlled and

performance will and Meaney, Bill towards On our today’s financial of discuss Mountain’s remainder and followed second CEO, hear results the the quarter our will plans; call, strategic Iron who Brown, CFO, progress President our from and Stuart cover for year. we’ll by outlook who additional

the prepared the our slide open up call, operating remarks, information Referring presentation lines and our supplemental now XXXX contain for we’ll performance. notably, today’s X most presentation, forward-looking statements, financial earnings Q&A. After and of financial will outlook for to Slide

are press Form from on risk results Please and could subject a Harbor that uncertainties. language Annual to this and call All the of differ discussion actual report, for Safe cause factors financial those on Report earnings to forward-looking in supplemental forward-looking our our statements. release, our statements the risks today’s XX-K slide to major refer presentation,

when In included are in a measures we measures addition, use results by several information. Reg G the presenting and as financial our non-GAAP reconciliations financial required to these supplemental

begin? With would please that, you Bill,

Bill Meaney

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

our improved outlook. We’re revenue across line operational very growth the businesses execution our with in previous pleased and with durable the continued

of X.X% total included of Some growth and revenue X.X%. the of growth the quarter of storage highlights total storage organic

basis management identifying good progress new increased organic opportunity global business. records We our volume in storage continue to points whilst in make XX

centers organic delivering Good the momentum and improved across growth. strong operational data organization efficiencies driving

start expectation with off full megawatts. have leased strong with in signed lease in to is Moreover, a QX getting through megawatts year X the megawatts XX quarter XX a Northern of Virginia. our second line We X-megawatt to

the driven quarter, a basis revenue increase an with our Starting I will by was review offset on service increased lower on growth of to partly which a revenue currency This recycled reflecting total operating performance paper revenue, in $X.X growth lower billion. almost X% touch X% in storage in few year-over-year financial pricing, a and minutes. constant

basis cost we during the which basis is The end were XXX call adjusted guided corrected in expansion points margin high XXX onetime the the in evident in basis the experienced margin issues we our some to of expansion of fully point QX EBITDA XXX last sequential above to points quarter, cost. despite

when saw initial range expected As is have release provided and we press are in there halfway has FX we the variability guidance. rates guidance this our than you tightened through morning, year less we given from been our our we

us We EBITDA increase between the focused external now X% X% a ranges. on revenue up within between guidance finish position. year to basis to half expect X% strong the some our to remain and executing setting with increase XXXX headwinds and successfully good to year-over-year a in initial remaining anticipated on We a enter in and second year-over-year currency constant adjusted X% despite

from X.X% storage in we the QX segment, stable in up organic year-to-date, with international also and other and Western adjacent America. center, second to Europe revenue see the growth continued quarter continued data performance, for businesses reflecting to back North good organic X.X% growth the Turning growth performance strong

lower our organic of North is trending management recycled year-to-date America revenue Total the quarter was expectations. prices. roughly Revenue negative growth flat for service to particularly X% ahead and in paper due

paper of be the from on last our paper. price noted, we record the on maintain service ago. as pricing headwinds year-over-year a revenue than a the given cycle was we manage to it of remainder the this remain taken X% business, year should amount million headwind our have of to less from year $XX to over of to overall million headwind profit. $XX The expect million profit $XXX is for a enough are a business what actions It We goals, for this however, less basis XXXX and sale little than for revenue of X% the more us in albeit than the

management businesses, see storage part business more than and reflecting other. and Volume growth alternative feet or consumer to to during XX% high past the in volume the of continued XX points our demand for of roughly increasing cubic we basis by trend XX adjacent months in driven cubic sales net and feet million strong storage season. categories XXX,XXX X growth touch consumer good other And performance, the consumer storage grew Turning including and sequentially new and added over both representing worldwide records peak lower business, organically we destruction. record

organic sales by QX consistent from growth the global an XX a A management business international points. at declined increasing and records increase of destructions. and We clip, continues about to continued performance in commercial new grow modestly Developed slight specifically, X.X% organic a encouraged other our of lower driven More pipeline. basis volume volume see X.X% by by to solid the segments faster in Markets improvement

our year. healthy good team support Digital of our very Solutions. by wins providing a a customer’s of our double-digit Digital a a in deliver and we IGDS Governance that number QX expected is or business, point, this with To to Digital number at to evolving Information growth pipeline strong Solutions Shifting to continue needs this Solution revenue

for Iron IGDS team, perform Dynamics under work Technology of General nearly In agreement initiative Information conjunction agency. with government part Mountain from a a digital a is sub transformation a Federal will $XX contract was awarded million our

insight the with of a good momentum auto with deal Iron As it services products solution, large Iron document Mountain adding we and powered platform for value is for we a more which Digital by Solutions. financial relates manage to Mountain to our portfolio continue see this process even Google, a signed partnership services innovative customer to and of workflow to loans. solution our QX, In comprehensive existing

of secure documents, authenticity infrastructure with and the this the We customer storage to regards collateral. In decided alternatives the select scanning portfolio. the Cloud offerings our quarter addition of certifies extracts to associated verifies loan providing and evaluate to loans data, signatures supporting and Iron this and insight with within validates

terms partner shift We right has for Solutions our This who can led solutions based in our such for to Digital cost. moment. approach model discuss partnership and in this store which solution technology a generally and approach our Cloud on the object Iron Stuart hybrid evaluation will developed results we what best-in-class a in as a quarter, a resulting some internally for us we in with drag on reported of of onetime

to business center with build as in earlier, out Finally, data build the leasing of our platform. mentioned conjunction our momentum continues

Northern As deployment great the deal. campus later significant of expected to mentioned earlier signed I to and add center which should data congratulate year. a this in in commence execution It’s accomplishment team Virginia, a successful ecosystem. early is our the X-megawatt this July, value we want for to

annual just with by leases, XX new megawatts megawatts. leasing the X of lease high expansion including Looking sight megawatts at line clear of and center end activity leased XX QX, of target Northern we to megawatts demand. new mentioned, the enterprise Year-to-date, XX to Virginia driven in in primarily of signed have our achieving we data

us team. Furthermore, customer sales enterprises our when focused the with infrastructure. realize by quarter on retail we’ve we our building synergies Cross to generated opportunities help this to XX% of cloud business activity of continue will relationships the center our non-data private data strengths growth. center like winning Consistent as the first sales demonstrate pipeline, approximately large leasing selling continue

across As expansion to with for at new deliver to August in the track QX. Phoenix and additional the three markets scheduled be international campus to megawatts relates first development on phase of grand are opening it of our XX, an activity, we capacity X capacity the scheduled delivered

business QX in that to summary, strong demonstrates growth, us long-term our in model. revenue was and In improvement to continued invest of volume Mountain the to enabling Iron continue support durability a areas storage growth organic new with global quarter

momentum our by solve services and solutions continue synergies are encouraged in business further new we customers center our see helping are data expand to our digital and the drive challenges. and across Whilst We business. that platform we’ll business the

I over to call the turn that, Stuart. will With

Stuart Brown

you, for Bill. to discuss Thank second joining all us you results. Thank our quarter XXXX

quarter Bill pleased second with $X.X As of revenues increased performance our revenue stronger the with Total dollar. we X.X% or impact of excluding mentioned, billion. nearly are X.X% the

growth X.X% Our in currency storage in our basis, in rental a service businesses. and emerging increased X.X% by Total part center, adjacent data constant markets revenue increased currencies. revenue driven on constant

organic storage continuing management X.X% see storage Developed growth reflecting growth you X, volume in QX, contributions came growth. accelerated Markets from specifically, quarter, and As X.X% in to revenue reflecting results on for revenue can trends. organic volume More management the revenue total and global rental from at revenue Slide

organic we consistency our we commercial storage the and year commercial our growth international the X.X%. X.X%. storage revenue of and durability margin of destructions, underscores strength was now continued full Year-to-date, X.X% pipeline revenue and modest expect in storage with other growth storage the of high achieved segment, records and organic to In X.X% teams. of This strong business a revenue decrease healthy organic growth

last paper revenue, parts in X% two large of record however, were ago. declined prices, year about year mills to and service as XX% prices a in offline oversupply average, an the for This quarter over mainly driven swing second X.X% North currently were leading Organic paper of cycle and that we by QX the America pulp lower recycling. below highs five-year growth in reflects in in which paper

low to assumed at current and about EBITDA impact million these the stay and prices is our outlook. Assuming $XX adjusted levels, year-over-year in revenue

be total to organic and Given range for of in and be XX revenue the expect now service destruction down in organic flat revenue, growth full a this X.X% to year therefore revenue we to points growth basis service XXXX. to X% lower

are to anticipated, service reported that problems, our managing deeper many lower customer to our and important solve provide remember we assets. than and customer’s designed support services and of storage our was analyzing digital promote core relationships business, physical revenue increasingly both While

and services nicely evaluate our grow of we continue lines grow time. growing enhance and new to and are revenue Our them to business test digital over

as as our we for capital acquisitions our existing local are sales of from Lastly, on generate of business. to their best our we relates commissions teams, paying competitor relationships, some with and customer organic customer not a from integrate pay dissimilar returns it to growth, which contracts revenue

X.X% revenue growth, the over can given competitive their investments to part organic is We perspective, of range lumpy. returns investment low from as total acquisitions storage contributed sales core markets. timing a give million. the about our annual past to enabled the basis they growth the strategy, similarity particularly bit $XX three years, takeaways, growth. of but in These include have million have To part our organic as risk, the points $XX developed well high are XX of Year-to-date, be

the revenue vary turning the data will more of megawatts center the and we data The we’ll momentum. expansion to delivered of center X% signed around our normal Now growth X%, portfolio was over in up during data pleased this leases. QX. time business, QX leasing but center X.X very with and and given new Churn tick again business a progress organic quarter in our size are

we customers of leases of of income exchange remainder to term. two Additionally, with in agreed markets rental one our our their during modified for the in higher shorten

capacity turn in us up positive in our the megawatt for enabling this X a mentioned. deployment Bill data of will quarter win center strong generate that first was elevated to XXXX, Virginia, Northern business a this has While freed the

on to acquisitions X, higher as increased by part caused support $X Slide the significant million technology SG&A ago. a a grew costs team, related acquisition well was as global of about by and This see excluding can in compensation expense. year our in you investment expense consolidation primarily As from operations

EBITDA $XXX adjusted million X% $XX to year-over-year Our declined or million.

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

building our As were $X approximately there EBITDA related – the Bill one-time These during infrastructure adjusted that a mentioned, damage that million were items to remainder Cloud Iron for quarter. $XX to quarter. there by the related occurred charge included some charges and million impacted several the in

estate well $XXX million AFFO higher by ago. $XXX million quarterly taxes, as stronger to offset the non-real somewhat reflects partly decreased was in year dollar compared and as lower cash This changes expense quarter a other impacting interest EBITDA, second in investments. a adjusted

cost North the The details margin resumed as by in America expansion QX. adjusted quarter, X the Slide margin year-over-year the addressed segment. RIM EBITDA in business experienced performance we issues

Excluding reduced in about ago, the expanded change segment by compared the margin to basis basis in in points. margins XX lease accounting, XX a points this which segment EBITDA year

Western well continued contracted as some In healthy that lower temporary improvements. process reflecting support declines volumes basis driven margin points, QX helping management margins Revenue mix. data and XX as the offset is product for margins. costs to to higher America by North professional The Europe, be of fees facility declines management

relationships basis new points continuous despite our of until the lower we Some are lease in adoption at scale from can margins points margins international of recent acquisitions synergize. up of accounting XX fully the region Other customer increased in the basis the XX geographies reflecting were of and quarter, impact the initiatives. standard, operating improvement the

in In the global reflecting that margins at May, impact margins the EBITDA center Netherlands and and segment, the were Phoenix in second the EvoSwitch last the partly QX. which in in acquisition adjusted data of lower XX.X% operates quarter, occurred average churn

prior our seen As period an we in had results. of restatement you our release, have have immaterial

to tax and activity performed authorities business, in and taxes which specific on Bonded as acquired by we in related business our the part received to from services. Netherlands a custom During we the business assessment of entertainment customs of value-added notification XXXX quarter,

today. we As be our our filed to seen result, made in which later be XX-Q an a statements, immaterial period have can financial restatement prior of

see other REITs Slide line remains that and was flat adjusted you can Turning QX. leverage X, lease ratio to with with our in

to We for and investment the ratio And real explore half are our for our the generate from year data center second million Frankfurt in estate we on of we year. JV partner options to proceeds plans a leverage development. track this therefore, continued of sale decline the plus capital of expect our recycling with $XXX

rating by recent by momentum REIT encouraged at seen have we’re the the coverage Also, the agencies. teams we

on we mentioned our to from our storage diversification S&P from strength outlook outlook to As the stable with flows of our QX, in revised cash based and model core Similarly, business in Moody’s revised our business. negative. June stable strong

attractive and with we the risk. remains to low Our returns balance and solid very invest business grow sheet continue at

supplemental. you or in appendix Turning can our details underlying and to outlook, the QX find the in assumptions

made these continue the EBITDA the guidance adjusted have half share and underway, the Given with – year. for ranges investments adjusted guidance AFFO QX in also to operational coupled and given we’ve higher reflect been improve EBITDA initiatives back through depreciation. and efficiencies improvements implemented to the earnings the ramp EPS per adjusted additional for of should to revised

We’ve also updated our allocation. expectations around capital

the to higher activity, pipeline. outlook leasing we data but the acquisitions now investments have to of million year, deals the about expected business Given $XX closings expect increase our in for timing center be this in of reduced due

$XXX As a result, from previously. we are reducing our expectation for $XXX M&A capital million to million

and storage consistent In summary, healthy our QX revenue performance business. reflects from

headwind, the While mitigate its on to is price steps paper profitability. impact environment taking a we’ve been

and from Our in improvement our are improve we to actions are half. performance QX in further levels in evidenced results back the margin confident

business pipeline about We and in teams delivering. are remain and excited leasing growth revenue with our center pleased are data the and solid sustainable activity our

the over Q&A. for up opening for line call comments turn Bill With that, I’ll back before some the additional to

Bill Meaney

Stuart. Thanks,

a our questions, your business the to of call the the long-term quarterly the I you supported up business. which step open detail management from by and is in durability wanted we remind back records Before model, to take

assets an one biggest which customer As provide deep of relationships, us the have extremely organization, access Fortune of to XXXX. long and we XXX the is lasting

synergies platform, IT relationships particularly assets These enterprise leverage to allows and relationships across infrastructure of reliable for identify establishing customers drive trusted a services. private our secure center decades on trust storage us and our earned opportunities customers, amongst a looking value-added Having in delivering and guardian significant cross-selling built of best growing in cloud environment. data these and are the reputation of class to

our our strong and and cash customer to is that two our to growth, invest record markets Mountain meet future financial very to management and needs. Iron us allow underpin second significant developed markets which us durable innovative strong continue to emerging enabling relationships. allowed center footprint our possesses deliver business, our in scale to consistently and flow, key asset organic support These will is overall grow solutions A customer’s assets strategy continued data fund

consistent and The AFFO of our resulting plus returns above EBITDA data growth business through generate core sustainability growth flowing support capital. organic growth target achieving the of will cost business and center X% our to the of in adjusted

our remain value shareholders, whilst providing allocation for very capital will balancing to solutions in investments create will disciplined decisions, We our that more customers.

please With to the open Q&A. call that up operator,

Operator

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

Sheila McGrath

like optimization from Yes, excess any and could labor wondering to year. margin you you looks at good second have you Bill, morning. impact margins. out impacted guidance half the I progressing some better you second how righted expect did ship if just than on It update play improvements you change how in they’re of the if quarter. quarter, your the us have was for that cost initiatives, the in first

Bill Meaney

Thanks, Sheila.

the were So guidance EBITDA will course shape. over the margin we updated sight of year, words, sequential margin finish feel strong we to as there is our guidance up continuing that do, ramp will be in about what In up the be half you in of we of the the pleased a year have the noted of able the yes, tightening see improvement. line we year. range to second we but the were that above really and stepped actually other by We’ve in the good of we terms

change the the that than labor structurally So more offset than on we the that in things more first that offset QX quarter. the improvements made – missed in

but setup will ramp. in really feel for half, good be the we a of terms So the there second

Sheila McGrath

like where liquidity given just on shares to I capital the great. levels. the data you centers, on buy in the right either clearly And your giving your back premium the to create markets of these at picture so thoughts credit Okay, shares for partner not some are, on yields view bigger bringing wanted just dividend now

Bill Meaney

in buy we Well, give a on how we But deploy We think allocation or a I dividend shareholders share going appreciate, that and from buyback. to think money talk look that – the through that’s of from about we’re we’re probably a the how where capital money is to not about call. invest board. I and includes you at back everything everything standpoint we terms the back whether

really But become But always your at is everything at some when So we looked good options of range look We pretty it. value. full allocation dividend now. growing the right yields, shares solutions and – point data center not of the think on we capital seeing at the we’re table like of growth. – business traditional that I out we’re business our digital in new have the business our decisions we emerging terms in also the some and markets our building in

does And I’m that feel dividend we’re reinsert some company always our a itself in the point reflects a yield as lack the price that eventually at for gravity of optimist. and appreciation share probably up. I goes if doing what itself correcting that,

Sheila McGrath

Okay, great. Thank you.

Operator

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

Nate Crossett

morning, that guys. on wanted follow-up improvement just I Hi, margin to question. thanks. Good

on the by basis XXX call, year end. into points got ramp I you think kind of last the

So I know still you said but in through XXX or end, is that take it’s going to give year ramp that place.

Stuart Brown

look that’s normalized QX this talked the ramp adjusting for Stuart. million the $XX that about if we $XXX Yes, Nate, at think million. normalized EBITDA implied, if that it, is the to think you EBITDA sort right, was in at way that look Hey I of QX margin about the you

backing growth by second but $X,XXX range. into that what or the X.XX%, EBITDA $X,XXX plus just half in X.XX% the and to growth on of is of EBITDA guidance So

about million normalize a ramp $XX So per in to quarter. million $XX that’s QX

just from quarter, think $XX million about quarter. the improve the first And first you even we

QX. get the should and management QX you ramp we right. in benefits the of the more of call, pricing got in that last we margins, and we the move see as through So quarter year, about continue to takes it talked our We’ve and EBITDA place most takes in place actually revenue

particularly that on other through pricing. of which the We’ve global operations year the really Bill of labor So on areas. by to improve the fleet Latin team, initiatives continues touched utilization we as benefit productivity, like number meet margin underway you the focused continuous to move on and America things improvement And in get support guidance. initiatives led got focus the service then

Nate Crossett

much I then organic And on thanks. how Okay, number. effects just growth comments your the that customer appreciate number, acquisitions on

take by is and X.X% just the be I you or… basis want real X.X% same-store so points, subtract that And to metric a clear XX true if that estate you standards

Stuart Brown

estate to which business I is. industry customers, don’t building that can think REIT compare nature They does we real remember records building by on basis, NOI is our real you because of – you’ve the store it to the care got it estate building our a and information. don’t standards,

think So it’s a warehouse. building by building about office I building basis, not an a for or

not the sort So of that’s organic why its growth. same-store growth and

Nate Crossett

that Okay. question color I’d And some of pressures. little lease. there’s curious then Virginia is how very have the last competitive that on get because guys Northern pricing to NoVa on just a more deal, won saying be other one been you the and

won that. be so And I’d how on you curious just

Bill Meaney

Yes.

traditional And I see requirements, the are capacity And of is think our of continued think because the selling, have from two focus fact partly we have last heavily of XX% on mentioned of getting our I’d business. that government quarters ahead the I in very side select the generation other side high and the where financial regulated – about customers healthcare. it’s mainly of that our look, we down which consistent services, brand, deployed. the lead been cross those to we

I focus. mean, but our that’s in kind all that our not those are categories, customers of

we a in market Northern your continue, data of lot point. at look Virginia, totally Northern the we I globally. capacity is center There’s So Virginia. largest It take

for that But we pipeline good Northern about to have feel good the a now. really think focus pretty We right So there’s it’s a pipeline. lot of build I lot Virginia a absorption. also of the

Nate Crossett

guys. Thanks, Okay.

Operator

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

Eric Luebchow

pricing competitors the on some thanks know to been and returns of Hi, kind taking there. for lease. wanted your the from that Northern I just follow-up compressed of we’ve have Virginia heard question. I

curious of balance some you’re look just of duration larger and if for return, data lower these of kind how scale these you kind scale I’m or a as sign centers? underwriting leases but longer particularly larger leases, contract you So at that

Bill Meaney

a good It’s question, Eric.

me the ways. question ask let two So different

bit normal I’m quite had actually of about Virginia at we retail when kind leasing or Northern those rates activity retail So of contracts leases. a talking we QX in the and in sector see or

the On hyperscale a that megawatts X specific lease. is

So model. we’re cash seeing we cash which to is business of built kind X% the our on where X% returns,

that when in come those So lower when through, rate, globally, it’s that we you it’s seeing will, just cash start Northern returns very you’ll customer. consistent, see expect we a that of not hyperscale but up we sign with at think but a cash Virginia, kinds – on

You’re obviously getting bigger deployments.

when we Virginia. we – at campus, think they as of maximize on said, the actually returns – size the overall in previously on I or returns the So optimize Northern a that the look on as the calls campus think you returns

kind those returns XX% do that those cash site leases megawatts less of and X% the But would that. have the say is Northern consistent XX% out it’s of Virginia are with the pricing the in of between in and types cash market is the returns We do to built on I to customers. that X when expect to with for somewhere to X% with on fully

Eric Luebchow

above recycle of your talk to impacts leverage year your then given in could $XXX into And for helpful. your Okay, this million, more previously. center outlook real how versus you you for me, that more estate took $XX guidance? data development $XXX about that thanks. CapEx million then next you one That’s potentially curious the ability your And and have industrial that – plus up portfolio million just year

Stuart Brown

Yes. Thanks, Eric.

quarters, said leverage the end adjusted over of of we the we’ve last landing As around the X.X at ourselves of lease times see couple year.

things. If the come three look right. goings it at from benefited where to sort of at end down was We’ve of really QX, you it’s how from

the First is of right. trailing EBITDA increasing The on all, XX-month basis. leverage calculated year-over-year,

of the got industrial to in market the sale and second a underway. properties recycling leaseback Second, about capital property, now portfolio a start We’ve we’re marketing.

our very real confident just million lot industrial feel there of plus in could was for out estate. guidance demand So into We that the $XXX more do currently. a is there built

We’re and trying way. be prudent to the the portfolio of sort right prudent

The covenants have we way on the get a trailing third call because in Because credit signed. for been get properties, data credit work credit, is leasing. that out as our XX-month we basis, center facility to leases thing development the our it’s

because the it upfront, credit that also to EBITDA So leases, those get XX get so the develop put out to you you’ve X.X capital so of related to all times. around months helps

Eric Luebchow

Okay, helpful. Thank That’s great. you.

Operator

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

Blake Johnson

in on international? you new else emerging seeing great? in Thanks Good supported looks morning. was for impacted anything This growth international is other markets my George. specific be discuss Blake you Are taking other Can would for increasing that the demand or by in storage in and organic volume question. volume It like quarter. growth sales that trends sales new

Bill Meaney

pipeline Yes, it’s very look not it’s obviously is what – with Good think confidence would globally we but still because if management morning, just markets, commercial forward look the into that. further at that’s to I in quarters. records going say I business we Blake. – emerging our in for for I overall, – we our Thanks healthy, think give our

So just the next pipeline generally, across I the have we good months. commercial say would pretty XX months to a XX globe, over

opportunity. if in unvended markets, what continue that, for like I instance, emerging very call markets India on on see to Specifically we still where large, there’s a it’s usually

XX there’s customer Historically, This we was India of their want in that feet. think is mentioned a there previously, house, cubic specific million India. a have I business. it part a just in might in I customer single over was all

million million about think you customer So a in if total, North there’s which XX single in feet America, cubic India over has cubic that XXX feet is in house.

type pipeline gives just these of sight to we’re we have you that at some of in our future line scale demand that So of the the building of markets.

So we continue what we’re to encouraged by building. be quite

Blake Johnson

on these the you team Thank of initiatives transportation initiatives your you discussed for cost Can progress and had including the global year? expectations for that. previously of the are what deficiencies. Great. remainder discuss Also operations specific you

Stuart Brown

again, guidance. got the into management we the focused the that in improve improvements of yes, But America Blake, some results to at talk When it’s want productivity, we about we’ve North labor think transportation. North of both particularly fleet in we’ve and initiatives we look our in some side, Yes, employed records labor take data going we’ve on Latin America. number as initiatives. business efficiency to where of I on a our efficiencies America labor specific there built got management the standards here in business

efficiencies the just across to we America, traditionally America, use them we example, projects. where train people can separately, of a in North project Latin and in cross give you of we’re team Some each staffed sort better we specific

We’re same will Latin in which America margins well. in putting service Latin America, help initiative as that place

there going a So of things are on. number

– we’ve part from initiative keep different our think if operations cost of support there’s I got the taking of to continuous up each – team, on as we working north improvement worth well global I initiative. well total mean that XX they’re things

breed a and across the organization. think knowledge of faster ideas is faster cross I having global really implement them

Blake Johnson

helpful. Thank very Great, you.

Operator

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

Andrew Steinerman

Good morning.

backlog? X.X% that a organic from range you the over it’s are bullet higher relative factors the up confidence lower quarter you up was Maybe What management, to it Just the facts now important us take take revenue at Looking are what growth the revenue XX, X.X% it to important improved your give give most Is range? the what X.X%. and sense higher range? Slide raised most of quarter. X.XX% ago, destruction, to last a one, storage to factors

Bill Meaney

Andrew, good morning.

answered much three of It’s almost question four. You me. your for the pretty

of first think ranges. you about we commercial at all, So pipeline, when we’re the it, move looking these if

what and of So in customer. can – how the pipeline in in we terms we the the terms they the really liked are that to look at long pipeline stage speak of

So aspect. that’s one

ticked are slightly. Destructions down

So destructions up. they last think I year up, were were

at more say I year. call they’ve this back So normal if levels. but year they you come to last as look from wouldn’t down down they’re would what I trending unusually,

pricing [indiscernible] initiatives were that America, actually where joy we’re pretty And more we’re second well. bit a the that’s out we be in the especially thing pricing So seems aspect. other we’ve those getting little to customers to our getting, sticking is, initiatives rolled from North

then and a I will So it’s in to of at more the – pipeline. ahead kind then And looking going specifically revenue looking at especially call North management, destruction combination commercial levels norms back where America. of

Andrew Steinerman

give And confidence that, like us stick? you could feel a you going Right. just are that’s and normalizing to reason gives now why what distractions

Bill Meaney

cubic feet. Well, movements, movements, of small talking on right. sizable all, relatively but you’re of these just have XXX about first you impact, if business a they million Because are small

of response. was lot cleanup, of destroying it it going themselves a But to probably, some a compliance year of we our change So think crisp differences. the documentation GDPR into bring rather of that into last combination compliance. I than their people of I – can times all have our customers but time, a their speak bit hypothesis. think make last all customers are big the were bring little and many into year, We to The trying and in own

get the legal then we released holes industry. financial got did aspect that the in And service other is some

the alone, this It’s a two bit probably it. we’re our getting of So customers think attracted feedback best I at from those things point.

our year. usual would more, kind call at I of can and So what that trend of you the levels kind bleeding through see will that year, pre-last expectations this

Andrew Steinerman

Thank you.

Operator

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

Shlomo Rosenbaum

charges exactly thank are bit it, What much. feel that. a do a said, little off something I you as regular just us of Is a you pricing there a that is, straight into there the joy you could you you little you over sense delve is give in getting Can sustainable If North think basis? more on there. it you it America, as could contracts? – just put more through in described Bill, thing very Hi, that

Bill Meaney

Okay. Shlomo. Good morning,

So the the the of aspects, watching I the think the second year. actions I half versus of about come is the mean, first of pricing our kind of in is one two-thirds two story year half

ones larger last this in different year that is frankly, uptick. customers, Obviously, your volume dimensions. you management, shy we It in and than feel quite have we any started year. largest of right, is elasticity. So specifically you’re rolling there that what’s revenue out normal is But it because always the if –

to or customers. able have couple we’re confidence midsize as revenue I think more to North and were as a that to come given we larger us the by America, our discipline years team pricing same management of last the customers specifically rollout kind of

gone And able as been customers with actually that we’ve that first seen that. half mid-size was achieve built on to we and a confidence into year, year, the in this of the have we’ve

is I words, lot service that mentioned confidence charge our price that folks a before right the of we’re change internally. they this, think for it the can on So I’ve other In management lot delivering. giving the pricing, of

Shlomo Rosenbaum

Okay. you management the the Slide – could in supplemental an if in then And just Developed X, Markets. records

sequentially. volumes to like there’s going that the XQ, from be trend declining tend So on were a where

You be up there? is trying even handle Why down get then stabilizing? bucked continuing moderating. Just on trend XQ, its that going and I’m in are a is get what’s just if seem again to sense a trending trend to we in the XQ. the down as downwards. ticked Or to of destruction trying

Bill Meaney

if more stabilized I into if the down. Yes, specifically, the, in mean, detail, terms to the if goes QX, in you to, on I is think you moderation that going markets, down a you’re developed you’re the sales up that it’s new of at look basis, a of kind chart go trend. and XX over look say, but at of month I’d referring

going we forward, our we projections and look we if when at So that pipeline. commercial at giving the look look at

be think, by we it a than developed – offset So be more will so the more is neutral, I – it said, think will markets side revenue be slight downward tick will it on I management. as of negative

the the kind up day, that at projections So asking is, look with the down. forward and total organic of We of comfortable into feel end at is organic we sales, delivering what storage that revenue we’re built in terms really our our sales. and the But that. it of looking to pipeline. you’re kind then We going your at think we that in of range, volume be commercial that it’s question

Shlomo Rosenbaum

just Okay. for which in? feet when India, big That roll is million If that What actually sneak that an like already – XX that customer kind one, sounds in – in could deal, of to supposed in is pretty I business. rolling now? cubic last a when

Bill Meaney

two have. million. I it whole between And wish half. we not actually XX They’re more it the of outsourcing was they than they us. that got everything Actually, split

So we got the bulk of it.

So they didn’t XX outsource whole million. the

will over flow Indian starting they operation. that’s our and into I already think time to

Shlomo Rosenbaum

Okay, great. Thanks.

Operator

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

Andy Wittmann

customer these known taking on comments acquisition my customer you last your otherwise look $XX guess, in I appreciated for understand guys. I about the this, about it I $XX as Stuart, the as you’re guys track for million, on of want more. of acquisitions. to the I thanks this for year at move spent industry a question relationships, little and Okay, year pickup bit types business. I guess, relationship million

this mentioned and What in $XX commission them. I clearly the You driving out you there’s compare look year, mean, mean, basis some is that, pay costs a or sales basis either anyway, cost, normalized between you growth. two you a it’s million way. per the if delta so as on I box

why expensive help it’s commission, understand of volume. You like, a more sales don’t little that does more? But said how XX compare? that you but a basis bit It than us points seems

Stuart Brown

Yes.

this it’s the actually that probably the sort be And very developed mostly that million and well. this of at right? developed not and complicated, business on markets. mostly as a spend, year, in I I around think I includes, year $XX think boxes, we’ve average, to So would expect

little it’s it shred the of as well. bit of business Some in

So because a the to comparing bring it of typically, salesperson, different different it year in bring million the customers in it spread between, When it’s will cost And tuck-in. between of at if in get bring today you as before, two. cubic through a we sort or salesperson we million or in costs. you to competitors, X upon typically feet when depending X the you costs, get gets you’re a some said the number

So it. right have portion pay, you’ve got of is to the sales a you’re but you commissioning

can If that withdrawal it’s customer competitor, reimbursing the at a be substantial. often the which pretty they’ve to for pay got for competitor, right, fees their you’re permanent

a And [indiscernible] so typically paying we to revenue. you compare are around times three that

the really and moving difference, a And that good. margin, one don’t of much efficiency it the and and get flow actually but volume efficiently. you integrated get at synergized, through of you’re benefit doing that’s so you’re fully a about time You XX% it once benefits

XX%. costs. So with a you’ve a is years payback cash cash of integration got giving four of on less Which than you return

to is to our organic that it of We other transparent organic is about it we but our it. is growth it like sales organic We as investors, and it way goal provide be information competitive part about part because our capital well. spend or the of takeaway. a view some So as as and think

Andy Wittmann

Okay. helpful. That’s super

So for relationships. in there, heard I actually million that expecting you’re $XX customer

where So sorry if there, misquote I I’m said in you XX. my question its I

million, the mentioned implies Is not – customer the right between million are in from the $XX withdrawal inducements, your that’s the difference which there and So it? the that out way is that those fees. think basically $XX come you million, about $XXX to

Stuart Brown

correct. Yes, that’s

Andy Wittmann

wanted you help. for what That’s Thank cool. I understand. to Okay, your

Operator

from Bank ahead. America question go Pereiro Securities. Marlane from next of comes The Please

Marlane Pereiro

getting incremental year and just by X.X taking of you Hi. investments the you times $XXX question. a million leverage can for end? regarding, talk I had capital around about Thank funding for question my quick to

Stuart Brown

Yes, I recycling I the end, you There’s on remember, it. the against couple still this. think growth, is on I to I’ve year the EBITDA of change from mean, and borrow to that to to leverage. capital from as reduce touched right. different touched both ways leverage thing allows that look That at and Marlene, year

borrow reduce million per mid So $XXX we can levels. still organically times are see and the at EBITDA if where five at you million a radically year, leverage $XXX from growth our five

So you same the can at needs. time and fund do both capital those

Marlane Pereiro

Great.

get that communicated expect to leverage So down area. last you do to X.X just you that as roughly quarter to expect clear, kind of to be

Stuart Brown

which Yes, well. that as my is opening – remarks repeated in I

Marlane Pereiro

thank Great, Yes. you.

Operator

Kevin The from Instructions] of McVeigh go next Suisse. question ahead. Please [Operator Credit is

Kevin McVeigh

Hello?

Bill Meaney

Yes.

Kevin McVeigh

where of you that understand Nice of Stuart. hear we the for we the the margin Can headwinds me? Hey, in paper that you how came and job the quarter. Bill as the kind on spot over price us what had as think help And sequentials, then what use balance you weren’t or much about should modeled. year? the Can

Stuart Brown

because Yes. number Kevin. been question, about there’s appreciate questions the a it. I of

paper declining. would with, prices start assumed be off guidance me already Let our that initial

assume ton price paper million on and a about ton from per our equates $XX ton guidance, So per $XX to $X initial that basis, we would about prices EBITDA. XXXX decline per of

and about remarks, down So okay, if If that’s impact prices stay year year-over-year, per and million, assumptions inherited current on at right. so $XX I from to you about current ago, did is That ton what’s ton touched $XX levels a now his as right. our well. Bill say, per paper $XX

so We headwind things it versus guidance, maybe sorted market remember as million when just $XX guidance. at go you do quality it to think the have office relative to And sell. higher our for about a saying we Other price index. we about that’s people papers, to if people really into and sell high what in well,

Kevin McVeigh

recovery? I was help put what kind the were in that I the were improvement and that cost place it of like the unexpected boost Stuart, just of then it And to helpful. know kind first sequential then margin some quarter, That’s there helped mean, balance labor, in kind of over year? see What the the that the we’ll that. able of you around things was

Stuart Brown

booked we lot recover, confidence came first the had quarter. labor fact terms the in we call, about Remember, with out we a as came that ability recovered in – And we was that of in in headwinds despite the the to out issue of could have first in we we talked of our the quarter million was that late quarter, $XX of quarter well. the again, that

of in right. and to touched teams a get us programs world, on get in for opportunities the those every got we’ve really the now of and again, terms do, I ones lot management a to Bill the day. the both margins on There’s who takeout, we lot out delivering our think to from work efficient have of of there work an cost from operations move And revenue execution, place, there’s we the around company more levers in credit,

Kevin McVeigh

any can bonuses it maybe, like I that Got lower was thoughts was or examples on guess, it. of… was you to drivers But give it maybe just kind us some

Stuart Brown

not. Absolutely

of We’re are the the not there our every customers our mountain of is taking of serving here out who – out this backs day.

year-over-year year. efficiencies, of the around is just again as revenue is you actually through you through, some and most come And them sales our in If see of half costs transportation of percentage well as of down. a efficiencies the other flow look, then can labor back labor in There some price areas. the other of

Kevin McVeigh

Got to, okay. Thank you.

Operator

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Iron Mountain (IRM) 1 Aug 192019 Q2 Earnings call transcript