Iron Mountain Incorporated (delaware) · NYSE:IRM
Iron Mountain Incorporated (delaware) — Iron Mountain — Investor Presentation (June 2014)
23 slides from Iron Mountain Incorporated (delaware)'s investor presentation, Jun 26, 2014
Slide 1: REIT Conversion to Enhance Stockholder Returns
REIT Conversion to Enhance Stockholder Returns June 26, 2014
Slide 2: Safe Harbor Language and Reconciliation of Non-GAAP Measures
Safe Harbor Language and Reconciliation of Non-GAAP Measures 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
Slide 3: Diversified Global Business
Diversified Global Business $3B annual revenues >155,000 customers Serving 95% of Fortune 1000 67MM SF of real estate in >1,000 facilities Compelling Customer Value Proposition Reduce costs and risks of storing and protecting information assets Broadest range of footprint and services Most trusted b
Slide 4: Storage Rental Stream is Key Economic Driver
Large & growing 59% of revenues ($1.8B) 4% constant dollar growth GDP correlated & inflation hedged Diversified customer base No customer >2% of total revenues Low customer turnover (<2% per annum) Strong value proposition with related services Long average life of a box in storage (~15 yrs)1 Storag
Slide 5: Strategy to Extend Durability of Business
Strategy to Extend Durability of Business Speed and Agility Simplification, Process Automation and Efficiency Developed Markets Drive Profitable Revenue Growth; Grow Tape and Cube Volume Strategic Plan Emerging Markets Expand and Leverage Emerging Businesses Identify, Incubate, Scale or Scrap Organi
Slide 6: Low-volatility, Moderate Growth with Attractive Yield Driving Total Shareholder Returns
Low-volatility, Moderate Growth with Attractive Yield Driving Total Shareholder Returns - projected to be between 8% to 9% 2013 excludes restructuring charges ROIC 9.7% 9% - 10% Avg. Inv. Capital ~$5.5B ~$6.3B ($MM) +4% CAGR
Slide 7: REIT Conversion Highlights
REIT Conversion Highlights Began operating in manner consistent with REIT effective 1/1/2014 REIT structure aligns with operating strategy Capital allocation as a REIT to include real estate acquisitions Significant stockholder benefits from REIT structure Next Steps as a REIT and Updated 2014 Guida
Slide 8: REIT Conversion On Track for 2014
REIT Conversion On Track for 2014 2014 reflects projected REIT dividend and assumes midpoint of the range
Slide 9: REIT Structure Aligns with Operating Strategy
Able to execute strategy within REIT framework Significant global real estate footprint – over 1,000 facilities in 67MM square feet worldwide Successfully structured the business to deliver services and aligned international businesses within structure REIT Structure Aligns with Operating Strategy
Slide 10: Storage Rental Revenue is Stable Throughout Cycles
Storage Rental Revenue is Stable Throughout Cycles Source: Benchmark data provided by Green Street Advisors IRM average internal storage rental revenue growth
Slide 11: "Enterprise Storage" Compares Favorably
“Enterprise Storage” Compares Favorably Iron Mountain Self-Storage Industrial North America annual rental revenue/SF $27.00 $13.80 $5.50 Tenant Improvements/SF N/A N/A $1.96 CapEx(1) ~7% 5.3% 12% Average lease term Large customers: 3 Yrs. Small customers: 1 Yr. Month-to-Month ~4-6 Yrs. Customer rete
Slide 12: High-Return Storage Rental Businesses Creates Significant Value
Illustrative North America RM Storage Annual Economics(1) (per square foot, except for ROIC) Investment Customer acquisition $ 42 Building and outfitting 54 Racking structures 54 Total investment $ 150 Storage Rental Income Storage rental revenue $ 27 Direct operating costs (3) Allocated field overh
Slide 13: Real Estate Acquisition a Potential Use of Capital
Acquisition opportunity of $700MM to $1B over 10-year timeframe Solid investment return potential Reduces borrowing costs over time Supports REIT Asset Test Higher real estate residual value Real Estate Acquisition a Potential Use of Capital Potential $2.5B - $3.0B Purchase Universe
Slide 14: Target Range Stockholder Payouts, REIT Costs & Distributions Have Temporarily Increased Leverage
Target Range Stockholder Payouts, REIT Costs & Distributions Have Temporarily Increased Leverage $MM 2010 - 11 2012 2013 2014 E Total Share Repurchases $1,097 $38 --- --- $1,135 Quarterly Dividends $211 $179 $207 $400 - $420 $997 - $1,017 Special Div./Dist. --- $140 --- $120 - $140 $260 - $280 Total
Slide 15: What's Next with the REIT?
File registration statement with SEC Special meeting to approve typical REIT ownership limitations Regular dividend of $400MM - $420MM Remaining Special Distribution of ~$600MM - $700MM to be distributed by year end 20% cash / 80% stock likely What’s Next with the REIT? Cash Stock Total Regular Divi
Slide 16: Updated 2014 Guidance
Adjusted to reflect planned conversion to a REIT in 2014 Includes 0% - 2% internal revenue growth Excludes approximately $6 million of charges related to the company’s organizational realignment and includes on-going REIT compliance costs of approximately $15 million Assumes 193 million shares outst
Slide 17: Appendix
Appendix A rox MounTAIN
Slide 18: REIT Conversion Costs In Line with Expectations
REIT Conversion Costs In Line with Expectations $MM FY 2012 FY 2013 Q1 2013 Q1 2014 Remainder of 2014 Outlook Total Operating Expense $34 $83 $25 $8 $20 -- $30 $145 - $155 Capital Expense $13 $23 $6 $2 $2 -- $7 $40 - $45 Total $47 $106 $31 $10 $22 -- $37 $185 - $200 Tax Payment Related to D&A Recapt
Slide 19: 2014 Adjusted OIBDA to Net Income (REIT basis)
2014 Adjusted OIBDA to Net Income (REIT basis) Excludes approximately $30 costs associated with the company’s REIT conversion (“REIT Costs”) Based on an estimated 193 million shares outstanding. ($MM, except per share data) FY 2014 Outlook Adjusted OIBDA $915 - $945 Less: Depreciation & amortization
Slide 20: REIT Supported By Strong Cash Flow
REIT Supported By Strong Cash Flow FFO 2014 Pro forma Estimate* Net income attributable to Iron Mountain (pro forma) $ 250 Real estate depreciation 180 (Gain) Loss on disposal/write-down of PP&E ---- FFO (NAREIT) $ 430 REIT Costs 30 Normalized FFO (Iron Mountain) $ 460 AFFO 2014 Pro forma Estimate*
Slide 21: Iron Mountain valuation and REIT comparables
Iron Mountain valuation and REIT comparables Price/2014E FFO Normalized Price/2015E FFO Normalized Price/2014E AFFO Price/2015E AFFO 9.0x 11.3x Industrial Self Storage Non-Traditional Industrial Self Storage Non-Traditional Industrial Self Storage Non-Traditional Industrial Self Storage Non-Traditio
Slide 22: Global Real Estate Portfolio
Global Real Estate Portfolio Note: numbers may not foot due to rounding As of 3/31/14 Buildings Sq. Ft. Buildings Sq. Ft. Buildings Sq. Ft. North America 182 19,395 504 30,970 686 50,365 Europe 49 2,412 208 7,427 257 9,839 Latin America 39 1,915 51 2,855 90 4,770 Asia Pacific 2 51 69 2,199 71 2,250
Slide 23: Definitions
Definitions Funds From Operations, or FFO, and FFO (Normalized) FFO is a non-GAAP financial measure commonly used in the REIT industry. FFO is defined by the National Association of Real Estate Investment Trusts (NAREIT) and us as net income excluding gains and losses on the sale or write-down of re