46 slides from Iron Mountain Incorporated (delaware)'s earnings presentation, Nov 1, 2016
Slide 1: Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws and is subject to the safe-harbor created by such Act.
Slide 2: Table of Contents
Section I - Company Profile and Strategic Plan 4 - 5 Section II - Earnings Overview, Financial Highlights and Guidance 6 - 11 Section III - Operating Metrics 12 - 16 Section IV - Balance Sheets, Statements of Operations and Reconciliations 17 - 26 Section V - Storage Net Operating Income and Service
Slide 3: Iron Mountain company profile
Iron Mountain is a global leader in enterprise storage with a high-return, real estate-based business model, yielding annualized revenue of over $3.7 billion. The company provides storage and information management services to a high-quality, diversified customer base across numerous industries and
Slide 4: Plan for Growth
OUR DEVELOPED MARKETS Maintain continued Growth in Box and Tape Volume PLAN FOR GROWTH EMERGING MARKETS Expand Presence and Leverage Scale Emerging Markets to Represent 20% of Revenues by 2020 on a 2014 C$ basis ADJACENT BUSINESSES Adjacent Businesses to Represent 5% of Revenues by 2020 Added 3.6mm
Slide 5: Third Quarter Highlights
Third Quarter Highlights • • On track with long-term and short-term financial and operating goals In support of our strategic plan, during the third quarter of 2016, we: Maintained strong customer retention and generated positive internal storage rental and volume growth in developed markets, Expand
Slide 6: Third quarter earnings overview
• Adjusted EPS for the third quarter was $0.27 per diluted share, compared with $0.31 per diluted share in 2015. Adjusted EPS for the third quarter reflects a structural tax rate of 18.6%, compared with a structural tax rate of 16.5% in 2015. In addition, Adjusted EPS was impacted by increased depre
Slide 7: Financial highlights
(1) See slide 28 for Storage Net Operating Income reconciliation. (2) In Q4 2015, we revised the reconciliation of FFO (NAREIT), FFO (Normalized) and AFFO to reconcile these Non-GAAP measures to consolidated net income, rather than net income attributable to Iron Mountain. We have revised the Q3 201
Slide 8: Progress on Cost Synergies Associated with Recall
Total Run-Rate Gross Synergies from Actions Taken in 2016 ($mm) $100 To be Actioned October-December 2016 Actioned YTD Sep 30 2016 >85% of Gross Syner Actioned in 2017 Expected Synergies Total Expected Run-Rate Benefit Actions FY 2016 In Year Benefit of Actions to be Taken in 2017 Total Expected Gro
Slide 9: Financial Performance Outlook
Financial Performance Outlook(2) $MM (except per share items) AFFO $610 - $650 $610 - $650 Business and Customer Acquisitions $140 - $180 $140 - $180 Bridge to Full Ye ar Adjus te d OIBDA Guidance Recall Contribution $107 - $122 Total Adjus te d OIBDA Guidance $1,075 - $1,110 (1) Iron Mountain does
Slide 10: Financial Performance Outlook
Financial Performance Outlook $MM (except per share items) FFO (Normalized) $555 - $620 AFFO $675 - $735 (1) Iron Mountain does not provide a reconciliation of non-GAAP measures that it discusses as part of its annual guidance or long term outlook because certain significant information required for
Slide 11: Revenue growth rates
Revenue Re ve nue Grow th Rate s Revenue Revenue Storage Rental Service Storage Rental Service 17.4% 38.8% 61.2% 82.6% Section X Section IX Section VIII Section VII Section VI Section V Section IV Section III Section II Section I www.ironmountain.comSelected metric definitions are available in the A
Slide 12: Volume growth by region
North America Western Europe Other International 29.2% 25.5% 61.9% Q4-14A Q1-15A Q2-15A Q3-15A Q4-15A Q1-16A Q2-16A Q3-16A 11.8% 11.6% 0.5% 0.8% 0.3% 25.5% 61.9% Q4-14A Q1-15A Q2-15A Q3-15A Q4-15A Q1-16A Q2-16A Q3-16A New Sales (2) Business Acquisitions New Volume from Existing Customers Destruction
Slide 13: Volume and operating metrics
49.3% 12.5% 3.9%(1) 3.1% 3.0% 0.7% 25.5% 61.9% Q4-14A Q1-15A Q2-15A Q3-15A Q4-15A Q1-16A Q2-16A Q3-16A 86.9% 87.0%(1) 14.6% 6.0% 25.5% 61.9% Q4-14A Q1-15A Q2-15A Q3-15A Q4-15A Q1-16A Q2-16A Q3-16A (1) (2) (3) Variances from prior quarters reporting due to system enhancements and transfer of Norway f
Slide 14: Q3 Results by segment
Q3 Results (1) % Grow th - - = = NA Re cords and Inform ation M anage m e nt Service 171,998 201,928 17.4% (0.0)% 17.4% 18.2% (0.8)% Adjusted OIBDA 175,331 199,559 NA Data M anage m e nt Service 33,438 34,865 4.3% 0.7% 3.6% 14.8% (11.3)% Adjusted OIBDA 50,268 59,714 We s te rn Europe an(2) Service 3
Slide 15: Consolidated Balance Sheets
ASSETS Current Assets: 12/31/2015 9/30/2016 Accounts Receivable, Net 564,401 700,238 Total Current Assets 857,912 1,467,341 Property, Plant and Equipment 4,744,236 5,574,805 Property, Plant and Equipment, Net 2,497,158 3,166,528 Goodw ill 2,360,978 3,861,810 Total Other Assets, Net 2,995,517 5,271,0
Slide 16: Statements of Operations
(1) Includes $4.5mm and $4.8mm of Recall Costs in Q3 2016 and YTD 2016, respectively. (2) Includes $14.7mm and $29.7mm of Recall Costs in Q3 2015 and Q3 2016, respectively. Also, includes $20.3mm and $98.1mm of Recall Costs in YTD 2015 and YTD 2016, respectively. Section X Section IX Section VIII Se
Slide 17: Adjusted OIBDA reconciliation
(1) (2) (3) Net of tax provision of $0.3mm and $0.6mm for Q3 2016 and YTD 2016, respectively. Net of tax provision of $0.1mm for each of Q3 2016 and YTD 2016. Net of tax provision of $0.2mm for each of Q3 2015 and YTD 2015. Includes realized and unrealized FX (gains) losses. Section X Section IX Sec
Slide 18: Adjusted EPS reconciliation
(1) The difference between our effective tax rate and our structural tax rate (or adjusted effective tax rate) for the three and nine months ended September 30, 2015 and 2016, respectively, is primarily due to (i) the reconciling items above, which impact our reported income (loss) from continuing o
Slide 19: FFO and AFFO reconciliation
(1) (2) Net of tax provision of $0.1mm for each of Q3 2016 and YTD 2016. Net of tax provision of $0.2mm for each of Q3 2015 and YTD 2015. In Q4 2015, we revised the reconciliation of FFO (NAREIT), FFO (Normalized) and AFFO to reconcile these non-GAAP measures to consolidated net income, rather than
Slide 20: Quarterly Revenue Growth Bridge
26% R$ Growth 27% C$ Growth $11 Q3 2015 Revenue - Reported $ FX Impact at Q3 2016 FX Rates Q3 2015 Revenue at Q3 2016 FX Rates IRM and REC Revenue Growth Q3 2016 Revenue - Reported $ Section X Section IX Section VIII Section VII Section VI Section V Section IV Section III Section II Section I www.ir
Slide 21: Quarterly Normalized Adjusted OIBDA Bridge
29% Reported R$ Growth 26% C$ Normalized Growth Q3 2015 Adjusted OIBDA - Reported $ FX Impact at Q3 2016 FX Rates Transformation Restructuring Charge Q3 2015 AdjustedTransformation Recall Gross Synergies REC and IRM Q3 2016 Adjusted OIBDA - Reported $ OIBDA at Q3 2016 FX Rates - Normalized Benefits
Slide 22: Quarterly Normalized Adjusted EPS Bridge
$(0.04) / (14)% Reported Decline $(0.01) / (6)% Normalized Decline Q3 2015 Adjusted EPS Impact of Higher Share Count Transformation Restructuring Charge Q3 2015 Adjusted EPS - Normalized Transformation Benefits, Recall Gross Synergies and Business Growth Increase in Interest Expense and D&A Structur
Slide 23: Quarterly FFO (Normalized) Bridge
$(0.11) / (20)% Reported Decline $0.00 / 1% Growth Adjusted for Share Count <$0.01 Q3 2015 FFO Per Share - Reported $ Impact of Higher Share Count Q3 2015 FFO Per Share - Normalizing Share Count Growth Offset by Increased Cash Taxes Q3 2016 FFO Per Share - Reported $ Section X Section IX Section VII
Slide 24: Storage net operating income
(1) Includes Data Center, Fine Art Storage, Consumer Storage, Intellectual Property Management, Digital Storage, Fulfillment Services, Document Management Services, Entertainment Services and other ancillary services. Includes Rent Expense, Building Maintenance, Property Taxes, Utilities and Insuran
Slide 25: Service business results
(1) Includes Fulfillment Services, Document Management Services, Intellectual Property Management, Data Center, Consulting, Entertainment Services, Fine Art Storage, Consumer Storage and other ancillary services. Includes Building Maintenance, Property Taxes, Utilities, Facility Rent and Insurance c
Slide 26: Gross Book Value of Real Estate Assets
Real Estate Assets Land $248,697 Leasehold Improvements 482,619 Construction In Progress 49,474 Service Operations Buildings & Building Improvements 37,492 Racking 158,943 Total Se rvice Gros s Book Value $249,081 Non-Real Estate Assets Total PP&E Gross Book Value $5,574,805 (1) Includes warehouse e
Slide 27: Facility Lease Expirations
Facility Lease Expirations (% of total square feet subject to lease) 2016 (2) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Thereafter 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Thereafter Weighted Average Remaining Lease Obligations (no exercise of extension options): 5.8 years Weig
Slide 28: Top ten markets owned
(000s, except for number of buildings) Top Ten Markets Owned, United States Sq. Feet Owned Boston 1,428 Chicago 1,282 Houston 917 Baltimore / Washington 777 Philadelphia 676 Top Ten Markets Owned, International Sq. Feet Owned Paris, France 807 Buenos Aires, Argentina 470 Toronto, Canada 414 Edinburg
Slide 29: Square footage and NOI per racked square foot
Square Footage by Region North Am e rica Latin Am e rica As ia Pacific Europe Total Annualized Revenue from Rental Activities and Storage NOI per Racked Square Foot(2) Re ve nue NOI North Am e rica Data Protection $ per Sq Ft $355.77 $321.52 Latin Am e rica $34.09 $28.01 (1) (2) (3) Includes loading
Slide 30: Installed racking and building capacity
+29.1% +3.4% 693 700 90 80 70 60 +2.1% 600 537 500 400 100 6 44 10 0 5 1 2 0 Europe (4) Europe (4) North America Latin America Asia Pacific Total IRM North America Latin America Asia Pacific Total IRM Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 118 900 120 110 800 700 100 90 80 600 500 20 10 83 100 0 0
Slide 31: Customer base and quality metrics
North America Q3 2016 Trailing Twelve Months Revenue by Vertical Energy Business Services Life Sciences Iron Mountain provides storage and information management services to more than 220,000 customers in 45 countries around the world. This high quality, diversified customer base comprising numerous
Slide 32: Debt Schedule
Debt Maturity Schedule ($MM) (2) $1,531 Fixed Rate Debt at 9/30/16 Floating Rate Debt at 9/30/16 $652 (3) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Thereafter Fixed vs. Floating Rate Debt at 9/30/16(4) 31% Fixed Rate Debt Floating Rate Debt 69% (1) (2) (3) (4) Accounts Receivable securi
Slide 33: Debt and capitalization
Senior Unsecured Senior Unsecured Senior Subordinated Senior Unsecured Senior Unsecured Senior Unsecured Senior Unsecured Senior Unsecured Type of Note Denomination CAD USD USD GBP USD USD USD CAD Exchange Rate at 9/30/2016 0.7609 1.0000 1.0000 1.2970 1.0000 1.0000 1.0000 0.7609 Yield (on Issue Date
Slide 34: Capital Expenditures and Investments
(1) (2) (3) (4) (5) (6) Includes $14.8mm and $61.3mm for data centers in Q3 2016 and YTD 2016, respectively. Includes Land, Buildings, Improvements, and Racking Structures. FFO (Normalized) is adjusted for these items, among others, to arrive at AFFO. Includes Recall integration related capex added
Slide 35: Real Estate Investment Activity
Investments(1) Real Estate Investment Activity NOI/CuFt or DPU(3) Stabilization Pe riod Racking Installations(2) Europe 58,411 5,091 41,234 17,021 $1.73 Asia Pacif ic 14,749 1,520 7,654 4,846 $1.13 NOI/CuFt or DPU(3) Stabilization Pe riod Building Development Projects(4) Europe 3,264 - 3,053 368 22
Slide 36: Components of Value
North Am e rica Records Management $942,735 Other 68,393 Latin Am e rica 143,698 Total Storge NOI $1,881,906 Service Adjusted OIBDAR(2) $231,553 Total Service Adjusted OIBDAR $251,728 Cash, Cash Equivalents & Other Tangible Assets(4) $1,467,341 Customer Acquisition Consideration $18,712 Debt, Gross
Slide 37: Non-GAAP Measures
Non-GAAP Measures Non-GAAP measures are supplemental metrics designed to enhance our disclosure and to provide additional information that we believe to be important for investors to consider when evaluating our financial performance. These non-GAAP measures should be considered in addition to, but
Slide 38: Non-GAAP Measures (continued)
Non-GAAP Measures (continued) Adjusted Operating Income Before Depreciation, Amortization, Intangible Impairments, and REIT Costs, or Adjusted OIBDA (continued) We believe Adjusted OIBDA and Adjusted OIBDA Margin provide our current and potential investors with relevant and useful information regard
Slide 39: Non-GAAP Measures (continued)
Non-GAAP Measures (continued) Service Adjusted OIBDAR Service Adjusted OIBDA as defined above, excluding rent expense associated with the service business. This is provided to enable valuation of Service Adjusted OIBDA irrespective of whether the company’s properties are leased or owned. Related ren
Slide 40: Definitions (continued)
Definitions (continued) Corporate and Other – Our Corporate and Other Business segment primarily consists of our data center and fine art storage businesses in the United States, the primary product offerings of our Adjacent Businesses operating segment, as well as costs related to executive and sta
Slide 41: Definitions (continued)
Definitions (continued) Capital Expenditures and Investments – Our business requires capital expenditures to support our expected storage rental revenue and service revenue growth and ongoing operations, new products and services and increased profitability. The majority of our capital goes to suppo
Slide 42: Definitions (continued)
Definitions (continued) Capital Expenditures and Investments (continued) Components of Overhead Allocated Overhead – Includes overhead expenses directly associated with storage and service business operations allocated as follows: Field Operation Costs – Allocated to storage and service operations b
Slide 43: Definitions (continued)
Definitions (continued) Internal Revenue Growth – Our internal revenue growth rate, which is a non-GAAP measure, represents the weighted average year-over-year growth rate of our revenues excluding the impacts of business acquisitions, divestitures and foreign currency exchange rate fluctuations. Th
Slide 44: Definitions (continued)
Definitions (continued) Service Profit and Margin – The Gross Profit and Margin attributable to the worldwide service business. Calculated as follows: Services Adj. OIBDA + Allocated Overhead Expenses + Termination and Permanent Withdrawal Fees = Service Profit ($) / Total Service Revenues (includin
Slide 45: Definitions (continued)
Definitions (continued) Transformation Initiative – During the third quarter of 2015, we implemented a plan that calls for certain organizational realignments to reduce our overhead costs, particularly in our developed markets, in order to optimize our selling, general and administrative cost struct
Slide 46: Definitions (continued)
IRON MOUNTAIN’ bead Definitions (continued) ‘Transformation Initiative — During the third quarter of 2016, we implemented plan that calls for certain organizational realignments to reduce our ‘overhead costs, particularly in our developed markets, in order to optimize our selling, general and admini