49 slides from Iron Mountain Incorporated (delaware)'s earnings presentation, Feb 25, 2016
Slide 1: Safe Harbor Statement
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
Slide 2: Table of Contents
Table of Contents Earnings Overview 4 Operational Highlights and Performanc e versus Strategic Plan 5 Financial Performance versus Strategic Plan 6 Company Profile 7 Financial Highlights 8 Year-over-Year Revenue Growth 9 Records Management Volume Growth 10 2015 Performanc e vs. Guidanc e 12 Guidance
Slide 3: Earnings Overview
Earnings Overview Iron Mountain Fourth Quarter and Full Year 2015 Financial Results Fourth Quarter and Full Year Highlights • • • • • • • Strong financial and operating performance aligns with 2020 strategic plan and exceeds expectations. Full-year constant dollar Total Revenue in line with guidance
Slide 4: Operational Highlights and Performance versus Strategic Plan
Operational Highlights and Performance versus Strategic Plan Solid storage rental grow th: • NA RIM internal growth of 0.2% for Q4 and 0.1% for the year - C$ growth of 1.0% for Q4 and 1.1% for the year • NA DM internal growth of 1.0% for Q4 and 4.2% for the year - C$ growth of 1.1% for Q4 and 4.4% f
Slide 5: Financial Performance versus Strategic Plan
Financial Performance versus Strategic Plan Total C$ Revenue Growth of 4% CAGR • Half of the growth organic/half to come from acquisitions Total C$ Revenue Growth of 2.1% for the quarter and year • Revenue growth below target due to lower acquistion activity given focus on proposed Recall transactio
Slide 6: Company Profile
Company Profile Iron Mountain is a global leader in enterprise storage with a high-return, real estate-based business model, yielding over $3 billion of revenues annually. The company provides storage and information management services to a high-quality, diversified customer base across numerous in
Slide 7: Financial Highlights
Financial Highlights (1) In 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 2014 reconciliation of FFO (NAREIT), FFO (Normalized)
Slide 8: Year-over-Year Revenue Growth
Year-over-Year Revenue Growth Revenue Re ve nue Grow th Rate s Revenue Revenue www.ironmountain.com Selected metric definitions are available in the Appendix 9 Storage Rental Service Total Reported (1.6)% (5.7)% (3.3)% Storage Rental Service Total Revenue Revenue Revenue (1.2)% (6.9)% (3.5)% Less: I
Slide 9: Records Management Volume Growth
Records Management Volume Growth Net Volume Growth Rate 7.6% 6.7% 0.7% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 3.8% 4.1% 0.5% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 (1) Customer acquisitions are now included in new sales as the nature of these transactions is similar to new customer
Slide 10: Records Management Volume Growth
Records Management Volume Growth Net Volume Growth Rate 6.2% 5.7% 5.4% 5.4% 3.9%(2) 3.0% 3.1% 0.7% 0.7% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 28.2% 9.6% 8.4%(2) 6.1% 2.4% 1.5% -3.0% -3.2% -3.3% -2.6% -2.7% -2.8% -3.2% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 (1) Customer acquisition
Slide 11: 2015 Performance vs. Guidance
2015 Performance vs. Guidance www.ironmountain.com Selected metric definitions are available in the Appendix 12 $M M (except per share item s) R$ Operating Performance C$ Revenue $3,000 - $3,060 $3,008 (3.5%) $3,050 - $3,110 $3,078 2.1% Adjusted OIBDA $905 - $930 $920 (0.6%) $925 - $945 $940 4.4% Ad
Slide 12: Guidance Summary
Guidance Summary Financial Performance Outlook Estimated Capital Allocation Business and Customer Acquisitions $140 - $180 (1) (2) (3) The 2016 C$ Budget Rate was set in January 2016; therefore, at this time, this guidance is equivalent to guidance reported at R$. YOY growth compared to 2015 constan
Slide 13: Quarterly Operating Performance
Quarterly Operating Performance Q4 Results (1) % Grow th - - = = NA Re cords and Inform ation M anage m e nt Service Revenue 177,068 174,287 (1.6)% (2.0)% 0.4% 1.2% (0.8)% Adjusted OIBDA 174,493 181,041 NA Data M anage m e nt Service Revenue 35,604 32,532 (8.6)% (0.8)% (7.7)% 0.2% (8.0)% Adjusted OI
Slide 14: Full Year Operating Performance
Full Year Operating Performance Full Ye ar Re s ults (1) % Grow th - - = = NA Re cords and Inform ation M anage m e nt Service Revenue 715,348 698,060 (2.4)% (1.8)% (0.6)% 1.1% (1.6)% Adjusted OIBDA 698,719 714,639 NA Data M anage m e nt Service Revenue 143,190 134,885 (5.8)% (0.9)% (4.9)% 0.2% (5.1
Slide 15: Consolidated Balance Sheets
Consolidated Balance Sheets ASSETS Current Assets: Restricted Cash 33,860 - Other Current Assets 153,661 165,130 Property, Plant and Equipment: Less: Accumulated Depreciation (2,117,978) (2,247,078) Other Assets, Net: Other Non-current Assets, Net(1): 631,036 634,539 Total Assets (1) $6,523,265 $6,3
Slide 16: Consolidated Statements of Operations
Consolidated Statements of Operations www.ironmountain.com Selected metric definitions are available in the Appendix 17 Revenues: Storage Rental $465,401 $457,764 (1.6)% $1,860,243 $1,837,897 (1.2)% Service 312,577 294,663 (5.7)% 1,257,450 1,170,079 (6.9)% Total Re ve nue s $777,978 $752,427 (3.3)%
Slide 17: Reconciliation of Operating Income to Adjusted OIBDA
Reconciliation of Operating Income to Adjusted OIBDA (1) Includes realized and unrealized FX (gains) losses. (2) Excludes realized and unrealized FX (gains) losses. www.ironmountain.com Selected metric definitions are available in the Appendix 18 Ne t Incom e (Los s ) Attributable to Iron M ountain
Slide 18: Reconciliation of Reported EPS to Adjusted EPS
Reconciliation of Reported Earnings per Share to Adjusted Earnings per Share(1) Adjus te d EPS - Fully Dilute d from Continuing Ope rations $ 0.25 $ 0.33 31.2% $ 1.36 $ 1.21 (11.0)% (1) Adjusted EPS for 2015 reflects a structural tax rate of 16.8%, while 2014 results have been restated to reflect a
Slide 19: Reconciliation of Net Income to FFO & AFFO
Reconciliation of Net Income to FFO & AFFO (1) Includes realized and unrealized FX (gains) losses. (2) Excludes realized and unrealized FX (gains) losses. (3) Includes repatriation, recapture (including amended return impact) and other current tax expenses; excludes normalized cash tax expense of ($
Slide 20: Reconciliation of Cash Flow from Operations to AFFO
Reconciliation of Cash Flow from Operations to AFFO (1) Working capital adjustments in Q4 and Full Year 2015 are driven primarily by the timing of payroll and incentive compensation accruals. (2) Includes impact of options where holders elect to receive shares net of tax withholding at vesting date.
Slide 21: Quarterly and Full Year Total Revenue Growth Bridge
Quarterly and Full Year Total Revenue Growth Bridge $MM Quarterly Total Revenue Growth Bridge Full Year Total Revenue Growth Bridge (3.3)% R$ Decline (3.5)% R$ Decline Q4 2014 Revenue - Reported $ FX Impact at Q4 2015 FX Rates Q4 2014 Revenue at Q4 2015 FX Rates YoY Growth Excluding FX Impact Q4 201
Slide 22: Quarterly Normalized Adjusted OIBDA Bridge
Quarterly Normalized Adjusted OIBDA Bridge $MM 14.1% Normalized C$ Growth 8.0% Reported R$ Growth $1 Q4 2014 Adj. OIBDA FX Impact at Q4 2015 FX Rates Normalized Q4 2014 Adj. OIBDA at Q4 2015 FX Rates Q4 2015 Adj. OIBDA - Reported Add Back: Restructuring Charges Related to Transformation Q4 2015 Norm
Slide 23: Full Year Normalized Adjusted OIBDA Bridge
Full Year Normalized Adjusted OIBDA Bridge $MM 5.1% Normalized C$ Growth (0.6)% Reported R$ Decline 2014 Adj. OIBDA FX Impact at 2015 FX Rates Add Back: 2014 Restructuring Charges Normalized 2014 Adj. OIBDA at 2015 FX Rates 2015 Adj. OIBDA - Reported Add Back: Restructuring Charges Related to Transf
Slide 24: Quarterly Normalized Adjusted EPS Bridge
Quarterly Normalized Adjusted EPS Bridge $0.08 – Reported Growth $0.09 – Normalized Growth Reported Q4 2014 Adj. EPS Impact of Additional Shares Outstanding Normalized Q4 2014 Adjusted EPS Reported Q4 2015 Adjusted EPS The $1mm charge in Q4 2015 associated with Transformation did not have a material
Slide 25: Full Year Normalized Adjusted EPS Bridge
Full Year Normalized Adjusted EPS Bridge ($0.15) – Reported Decline $0.02 – Normalized Growth Reported 2014 Adj. EPS Impact of Additional Shares Outstanding Add Back: 2014 Restructuring Charges(1) Normalized 2014 Adj. EPS Reported 2015 Adj. EPS Add: Restructuring Charges Related to Transformation(1)
Slide 26: Total Service Margin Bridge
Total Service Margin Bridge Service Gross Margin: Sequential Performance (130) bps – Reported Decline + 40 bps – Normalized Improvement Q3 2015 Service Gross Margin Less: Service Gross Margin Reallocation to Storage Q3 2015 Normalized Service Gross Margin Q4 2015 Service Gross Margin Q3 2015 Total S
Slide 27: Reported $ Storage Net Operating Income (NOI)
Reported $ Storage Net Operating Income (NOI) (1) Includes Data Center, Fine Art, Consumer Storage, Intellectual Property Management, Digital Storage, Fulfillment Services, Document Management Services, Entertainment Services and other ancillary services. (2) Includes Rent Expense, Building Maintena
Slide 28: Global Real Estate Portfolio
Global Real Estate Portfolio(1) Total % 24.4% 36.6% 75.6% 63.4% (1) Includes real estate held in joint ventures. (2) Adjustments to previous periods due to refinements to real estate basis and reclassification of multiple adjoining facilities into single buildings. (3) Out of the 60 leased building
Slide 29: Revenue from Rental Activities and Storage NOI per Racked Square Foot
Revenue from Rental Activities and Storage 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 Re ve nue NOI North Am e rica Data Protection $
Slide 30: Portfolio Utilization
Portfolio Utilization +2.5% +3.4% 543 79 530 550 500 450 400 80 76 +1.6% 70 61 60 60 +14.6% 10 10 5 50 0 1 0 North America Europe Latin America Asia Pacific Total IRM North America Europe Latin America Asia Pacific Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 643 650 600 550 500 450 120 110 100 90 80 115
Slide 31: Gross Book Value of Real Estate Assets
Gross Book Value of Real Estate Assets Real Estate Assets Land $211,024 Leasehold Improvements 411,997 Construction In Progress 44,466 Service Operations Buildings & Building Improvements 15,789 Racking 113,410 Total Se rvice Gros s Book Value $175,465 Non-Real Estate Assets Total PP&E Gross Book Va
Slide 32: Service Business Detail
Service Business Detail (1) Includes Fulfillment Services, Document Management Services, Intellectual Property Management, Data Center, Consulting, Entertainment Services, Fine Art, Consumer Storage and other ancillary services. (2) Includes Building Maintenance, Property Taxes, Utilities, Facility
Slide 33: Customer Data
Customer Data North America Q4 2015 Trailing Twelve Months Revenue by Vertical Energy Business Services Iron Mountain provides storage and information management services to more than 170,000 customers in 37 countries around the world. This high quality, diversified customer base comprising numerous
Slide 34: Debt Schedule
Debt Schedule Debt Maturity Schedule ($MM)(1) $1,065 $1,000 $1,000 Fixed Rate Debt at 12/31/15 Floating Rate Debt at 12/31/15 2016 2017 2018 2019 2020 2021 2022 2023 2024 Thereafter Fixed vs. Floating Rate Debt at 12/31/15(1) 28% Fixed Rate Debt Floating Rate Debt 72% (1) Excludes mortgages, capital
Slide 35: Capitalization
Capitalization Type of Note Senior Senior Subordinated Senior Senior Denomination CAD USD USD GBP USD Exchange Rate at 12/31/2015 0.7210 1.0000 1.0000 1.4804 1.0000 Yield (on Issue Date) 6.125% 6.000% 5.750% 6.125% 6.000% Current Call Price N/A N/A N/A N/A N/A Next Call Price 103.063 103.000 102.875
Slide 36: Lease Obligations
Lease Obligations(1) Facility Lease Expirations (% of total square feet subject to lease) 2016 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
Slide 37: Capital Expenditures and Investments
Capital Expenditures and Investments (1) Includes $11mm and $25mm for data center in Q4 2015 and Full Year 2015, respectively. Also includes $9mm and $16mm for land-related investments in Q4 2015 and Full Year 2015, respectively. (2) FFO (Normalized) is adjusted for these items, among others, to arr
Slide 38: Investments (at C$ Budgeted Fx Rates)
Investments (at C$ Budgeted Fx Rates) Real Estate Investment Activity NOI/CuFt or DPU(5) Stabilization Pe riod Racking Installations(1) Europe 33,989 5,263 29,477 10,857 $2.19 Asia Pacif ic(7) 6,824 1,316 6,581 2,511 $1.60 NOI/CuFt or DPU(5) Stabilization Pe riod Building Development Projects(2) Eur
Slide 39: Components of Value
Components of Value OI $ North Am e rica Records Management $856,340 Other 41,457 Europe 246,623 As ia Pacific 39,368 Not Ref lected in Current Annualized Storage NOI Annualized Service Adjusted OIBDAR(1) 196,905 Quarterly Building & Racking Investment, not ref lected in NOI 21,982 Less: Non-Control
Slide 40: Appendix Non-GAAP Measures
Appendix 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
Slide 41: Appendix Non-GAAP Measures (continued)
Appendix Non-GAAP Measures (continued) Adjusted Operating Income Before Depreciation, Amortization, Intangible Impairments, and REIT Costs, or Adjusted OIBDA (continued) Adjusted OIBDA does not include certain items that we believe are not indicative of our core operating results, specifically: (1)
Slide 42: Appendix Non-GAAP Measures (continued)
Appendix 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. Re
Slide 43: Appendix Definitions
Appendix Definitions Average Stabilization Period – For racking projects, the stabilization period is 8 to 12 months. For new buildings it is 24 to 36 months, assuming phased racking installations over three years. For business acquisitions it is 12 to 24 months, depending on the size of the transac
Slide 44: Appendix Definitions (continued)
Appendix 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 Business operating segment (which was formerly referred to as our
Slide 45: Appendix Definitions (continued)
Appendix Definitions (continued) Capacity Measures Building Capacity – The maximum number of cubic feet of records or standard DPUs that can be stored in a given facility. Building Capacity Utilization – The number of cubic feet of records or standard DPUs in storage divided by the Building Capacity
Slide 46: Appendix Definitions (continued)
Appendix Definitions (continued) Capital Expenditures and Investments (continued) Maintenance – Assets necessary to maintain ongoing business operations primarily related to the repair or replacement of customer-facing assets such as containers and shred bins, warehouse equipment, fixtures, computer
Slide 47: Appendix Definitions (continued)
Appendix Definitions (continued) Destruction Rate – Calculated by dividing the total number of cubic feet of records removed from inventory due to destructions in a one-year period divided by the total number of cubic feet of records in storage at the beginning of the period. DPUs – Data protection
Slide 48: Appendix Definitions (continued)
Appendix Definitions (continued) REIT Costs – Includes costs associated with our 2011 proxy contest, costs associated with the Company’s conversion to a REIT, excluding REIT compliance costs beginning January 1, 2014 which we expect to recur in future periods. REIT Countries – Countries where we ope
Slide 49: Appendix Definitions (continued)
IRON MOUNTAIN Appen Definitions (continued) REIT Costs — Includes costs associated with our 2011 proxy contest, costs associated with the Company's conversion to a REIT, excluding REIT ‘compliance costs beginning January 1, 2014 which we expect to recur in future periods. REIT Countries - Countries