Iron Mountain Incorporated (delaware) · NYSE:IRM
Iron Mountain Incorporated (delaware) — Iron Mountain — Q3 2018 Earnings Presentation
47 slides from Iron Mountain Incorporated (delaware)'s earnings presentation, Oct 25, 2018
Slide 1: Supplemental Financial Information Third Quarter 2018
Supplemental Financial Information Third Quarter 2018 Unaudited www.ironmountain.com
Slide 2: 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 3: Table of Contents
Table of Contents Section I - Company Profile 4 Section II - Financial Highlights and Guidance 5 - 6 Section III - Operating Metrics 7 - 11 Section IV - Balance Sheets, Statements of Operations and Reconciliations 12 - 17 Section V - Storage Net Operating Income and EBITDA, and Service Business EBIT
Slide 4: Company Profile
Company Profile Iron Mountain is a global leader in enterprise storage with a high-return, Countries Served real estate-based business model, yielding annualized revenue of approximately $4.2 billion. The company provides storage and I information management services to a high-quality, diversified c
Slide 5: Financial Highlights
Financial Highlights Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change I Storage Rental $601,091 $656,973 9.3% $1,763,609 $1,963,561 11.3% Service 364,570 404,018 10.8% 1,090,734 1,200,711 10.1% Section Total Revenues $965,661 $1,060,991 9.9% $2,854,343 $3,164,272 10.9% II Gross Profit $547,334 $6
Slide 6: 2018 Guidance Summary
2018 Guidance Summary(1) Financial Performance Outlook $MM (except per share items) I R$ 2018 C$ 2018 Section C$ Change YOY Guidance Guidance (2) II Revenue $4,200 - $4,260 $4,270 - $4,330 9% - 11% Section Adjusted EBITDA $1,425 - $1,455 $1,445 - $1,475 13% - 15% Adjusted EPS $1.05 - $1.15 $1.05 - $
Slide 7: Year-over-Year Revenue Growth
Year-over-Year Revenue Growth Q3 2018 YTD 2018 Storage Rental Service Total Storage Rental Service Total I Revenue Growth Rates Revenue Revenue Revenue Revenue Revenue Revenue Section Reported 9.3% 10.8% 9.9% 11.3% 10.1% 10.9% (1) Less: Impact of FX Rate Changes and Adjustments (3.2)% (0.7)% (2.2)%
Slide 8: Records Management Volume Growth
Records Management Volume Growth Total Iron Mountain (689 CuFt MM) Internal Volume Growth % Percentage of Total Cubic Volume at 9/30/18 1.7% 1.9% 1.4% 1.3% 1.1% 0.6% 0.2% (0.1)% North America Other International I 26.3% Western Europe Section 25.0% 24.6% 23.1% 13.8% II 2.4% Section 1.4% 1.7% 1.5% 1.
Slide 9: Records Management Volume Growth
Records Management Volume Growth Percentage of Total Cubic Volume Western Europe (95 CuFt MM) at 9/30/18 49.2% I 48.4% Section 11.7% 45.5% 45.7% II 13.8% 9.2% 3.6% Section 5.7% 2.0% 1.7% 4.9% 1.1% 0.5% 0.4% III 4.3% 4.0% 3.9% 3.5% 3.1% 3.2% Section 6.3% 6.9% 26.4% 5.1% 4.7% 4.6% 4.4% 4.3% 4.1% 59.8%
Slide 10: Quarterly Operating Performance
Quarterly Operating Performance(1) Q3 Results % Growth Impact of FX Rate Impact of I Constant Internal Q3 2017 Q3 2018 Reported Changes and = Acquisitions and = Section - Currency - Growth By Reporting Segment Adjustments (1) Dispositions II NA Records and Information Management Business Section Sto
Slide 11: Year-to-Date Operating Performance
Year-to-Date Operating Performance(1) Year-to-Date Results % Growth Impact of FX Rate Impact of I Constant Internal YTD 2017 YTD 2018 Reported Changes and = Acquisitions and = Section - Currency - Growth By Reporting Segment Adjustments Dispositions NA Records and Information Management Business II
Slide 12: Consolidated Balance Sheets
Consolidated Balance Sheets ASSETS 12/31/2017 9/30/2018 Current Assets: I Cash and Cash Equivalents $925,699 $197,676 Section Accounts Receivable, Net 835,742 847,452 Other Current Assets 188,874 170,847 Total Current Assets 1,950,315 1,215,975 II Section Property, Plant and Equipment: Property, Pla
Slide 13: Consolidated Statements of Operations
Consolidated Statements of Operations Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change Revenues: Storage Rental $601,091 $656,973 9.3% $1,763,609 $1,963,561 11.3% I Service 364,570 404,018 10.8% 1,090,734 1,200,711 10.1% Section Total Revenues $965,661 $1,060,991 9.9% $2,854,343 $3,164,272 10.9%
Slide 14: Reconciliation of Income from Continuing Operations to Adjusted EBITDA
Reconciliation of Income from Continuing Operations to Adjusted EBITDA Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change I Income from Continuing Operations $25,382 $78,628 n/a $167,374 $218,145 30.3% Section Add / (Deduct): Interest Expense, Net 88,989 103,841 16.7% 265,010 303,574 14.6% Provisio
Slide 15: Reconciliation of Reported EPS to Adjusted EPS
Reconciliation of Reported Earnings per Share to Adjusted Earnings per Share Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change I Reported EPS - Fully Diluted from Continuing Operations $ 0.10 $ 0.27 n/a $ 0.62 $ 0.76 22.6% Section Add (Deduct): Income (Loss) Attributable to Noncontrolling Interest
Slide 16: Reconciliation of Net Income to FFO & AFFO
Reconciliation of Net Income to FFO & AFFO Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change Net Income $24,324 $67,023 n/a $163,953 $205,718 25.5% I Add / (Deduct): Section Real Estate Depreciation 64,533 75,432 193,402 221,822 (Gain) Loss on Sale of Real Estate, Net of Tax 638 (1,348) (925) (1,3
Slide 17: Reconciliation of Cash Flow from Operations to AFFO
Reconciliation of Cash Flow from Operations to AFFO Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change I Cash Flow from from Operating Activities-Continuing Operations 200,251 231,732 15.7% 522,290 625,538 19.8% Section Adjust for: Tax on Gain from Disposition of Real Estate 640 - n/a 640 - n/a Tax
Slide 18: Storage and Service Reconciliation
Storage and Service Reconciliation(1) Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change I Total Storage Revenue $601,091 $656,973 9.3% $1,763,609 $1,963,561 11.3% Section Add: Permanent Withdraw al Fees 6,408 7,364 14.9% 17,701 19,380 9.5% Adjusted Storage Revenue $607,499 $664,337 9.4% $1,781,310
Slide 19: Storage Net Operating Income (NOI)
Storage Net Operating Income (NOI)(1) Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change Revenue from Storage Rental Activities I Section Records Management $473,449 $472,280 (0.2)% $1,386,794 $1,429,030 3.0% Data Protection 90,537 87,668 (3.2)% 266,247 267,591 0.5% II Data Center 7,773 60,039 n/a
Slide 20: Service Business Detail
Service Business Detail(1) Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change Service Operations Revenue by Product Line I Records Management $165,355 $180,015 8.9% $496,930 $542,941 9.3% Section Data Protection 41,054 38,318 (6.7)% 123,111 120,705 (2.0)% Shredding 92,957 107,126 15.2% 281,116 314,
Slide 21: Gross Book Value of Real Estate Assets
Gross Book Value of Real Estate Assets As of 9/30/2018 Real Estate Assets I Section Storage Operations Land $393,925 Buildings & Building Improvements 2,856,244 II Leasehold Improvements 626,414 Section Racking 1,792,805 Construction In Progress 106,457 Total Storage Gross Book Value $5,775,845 III
Slide 22: Lease Obligations
Lease Obligations(1) Facility Lease Expirations I (% of total square feet subject to lease) Section 9/30/2018 Assuming Exercise of All Extension Options II Section III Section IV Section V Section 54.7% VI Section VII Section 6.5% 5.1% 5.8% 4.2% 4.1% 4.0% 3.8% 3.4% 3.1% VIII 2.5% 2.7% Section 2018(2
Slide 23: Global Real Estate Portfolio
Global Real Estate Portfolio(1) (000s, except for number of buildings) As of 6/30/2018 Ow ned Facilities Leased Facilities Total Top Ten Markets Owned, United States Sq. Feet Owned I Buildings Sq. Ft. Buildings Sq. Ft. Buildings Sq. Ft. Northern New Jersey 2,851 Section North America 207 23,426 537
Slide 24: Revenue from Rental Activities and Storage NOI per Racked Square Foot
Revenue from Rental Activities and Storage NOI per Racked Square Foot Square Footage by Region As of September 30, 2018 I North Latin Section America Europe (1) America Asia Total Records Management Racked Space 39,723 11,160 5,330 5,679 61,891 II Data Protection Racked Space 713 150 60 63 986 Secti
Slide 25: Portfolio Utilization
Portfolio Utilization Records Management Storage Portfolio (CuFt MM) Data Protection Storage Portfolio (DPUs MM) As of 9/30/2018 As of 9/30/2018(2) I Section YoY Growth in Units Stored(1) +2.2% II +2.6% 693 Section 700 677 100 87 90 600 80 -3.5% -1.5% III 66 64 500 Section 60 425 418 +5.0% 40 +25.5%
Slide 26: Customer Data
Customer Data North America Q3 2018 Trailing Twelve Months Records Management Revenue by Vertical Our top 20 records management customers have historically Energy I Business Services Section represented approximately 6% of consolidated revenues. Life Sciences Customer retention is consistently high
Slide 27: Data Center Customer and Portfolio Metrics
Data Center Customer and Portfolio Metrics(1) ($ in 000) Annualized Revenue and Lease Expirations Customer Lease Expiration, As of September 30, 2018 Q3 2018 Annualized I Number of Annualized Percentage of Revenue NOI Leasable MW Leasable Sq Ft Section Total MW Percentage of Year Leases TCV Rent TCV
Slide 28: Debt Schedule
Debt Schedule Total Borrowings Maturity Schedule ($MM) I Section II $1,819 Section III Section (3) $1,007 $946 $1,000 $876 $825 IV Section $546 (2) (1) $435 $299 V Section $12 $57 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thereafter VI Section (4) VII Fixed vs. Floating Rate Debt at 9/30/18
Slide 29: Capitalization
Capitalization Senior Subordinated and Senior Unsecured Notes (as of 9/30/2018) Senior Senior Senior Senior Senior Senior Senior Senior Senior Type of Note Subordinated Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured I Issuance Date 8/7/12 8/13/13 5/27/16 5/27/16 9/15
Slide 30: Capital Expenditures and Investments
Capital Expenditures and Investments Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change Capital Expenditures (1) I Real Estate: Section Investment(2) $36,588 $35,753 (2.3)% $108,760 $109,246 0.4% Maintenance 16,086 17,003 5.7% 38,158 40,618 6.4% $52,674 $52,756 0.2% $146,918 $149,864 2.0% II Non-Re
Slide 31: Business and Customer Acquisitions
Business and Customer Acquisitions Q3 2017 Q3 2018 % Change YTD 2017 YTD 2018 % Change Business Acquisitions I Business Acquisitions Excluding Data Centers $120,086 $51,550 (57.1)% $179,851 $63,778 (64.5)% Change in Business Acquisition Accruals and Cash Acquired 35,819 (7,408) n/a 14,277 (29,292) n
Slide 32: Real Estate Investments
Real Estate Investments(1) Real Estate Investment Activity Consolidation Total Expected Investment in Cumulative Estimated Historical Average Average Stabilization I Region (4) Investment Q3 2018 Investment to Date CuFt / DPUs NOI/CuFt or DPU Period Section Racking Installations(2) North America $16
Slide 33: Acquisitions and Disposals
Acquisitions and Disposals(1) Purchase Expected Region Total Sq Ft I Price IRRs Section 2018 Building Acquisitions North America - - - II Europe(2) 19,393 279 17% Section Latin America - - - Asia - - - III Worldwide 19,393 279 17% Section IV Section V Section 2018 Data Centers, Business and Customer
Slide 34: Components of Value
Components of Value Q3 2018 Annualized Components NOI I Section North America Records Management $997,680 Data Protection 229,915 II Other 53,479 Section Europe (1) 354,087 Latin America 149,984 III Asia 191,804 Section Global Data Center 149,950 Total Portfolio Storage NOI 2,126,899 IV Section V Q3
Slide 35: 2017 Quarterly Results Based on New Reporting Segments
Appendix 2017 Quarterly Results Based on New Reporting Segments I Q1 2017 Q2 2017 Q3 2017 Q4 2017 Full Year 2017 Section By Reporting Segment NA Records and Information Management Business II Section Storage Rental $298,183 $305,168 $308,822 $309,322 $1,221,495 Service 209,414 204,429 204,745 210,26
Slide 36: Non-GAAP Measures and Definitions
Appendix Non-GAAP Measures and Definitions I Non-GAAP measures are supplemental metrics designed to enhance our disclosure and to provide additional information that we believe to be Section important for investors to consider when evaluating our financial performance. These non-GAAP measures should
Slide 37: Non-GAAP Measures and Definitions (continued)
Appendix Non-GAAP Measures and Definitions (continued) Adjusted Funds From Operations, or AFFO I Section AFFO is defined as FFO (Normalized) excluding non-cash rent expense or income, plus depreciation on non-real estate assets, amortization expense of customer relationship value (CRV), intake costs
Slide 38: Non-GAAP Measures and Definitions (continued)
Appendix Non-GAAP Measures and Definitions (continued) Service Adjusted EBITDAR I Section Service Adjusted EBITDA as defined above, excluding rent expense associated with the service business. This is provided to enable valuation of Service Adjusted EBITDA irrespective of whether the company’s prope
Slide 39: Other Definitions
Appendix Other 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 I phased racking installations over three years. For business acquisitions it is 12 to 24 months, depending on the size of the
Slide 40: Other Definitions (continued)
Appendix Other Definitions (continued) Other International Business – Our Other International Business segment provides records and information management services throughout I the remaining European countries in which we operate, Latin America, Asia and Africa. Our European operations included in t
Slide 41: Other Definitions: Capacity Measures
Appendix Other Definitions (continued) Capacity Measures (Excluding Data Center) I Section Building Capacity – The maximum number of cubic feet of records or standard DPUs that can be stored in a given facility. II Building Capacity Utilization – The number of cubic feet of records or standard DPUs
Slide 42: Other Definitions: Capital Expenditures and Investments
Appendix Other Definitions (continued) Capital Expenditures and Investments (continued) I Section Non-Real Estate: II Investment – Non-real estate assets that either (i) support the growth of our business, and/or increase our profitability, such as customer- Section inventory technology systems, and
Slide 43: Other Definitions: Components of Overhead
Appendix Other Definitions (continued) Components of Overhead I Allocated Overhead – Includes overhead expenses directly associated with storage and service business operations allocated as follows: Section Field Operation Costs – Allocated to storage and service operations based on percent of reven
Slide 44: Other Definitions: Data Center Business Definitions
Appendix Other Definitions (continued) Data Center Business Definitions (Continued) I Section TCV – “Total Contract Value” represents total revenue contracted for active contracts through the contract term, not including renewals or extensions, but including fixed power charges. II Total MW - Total
Slide 45: Other Definitions (continued)
Appendix Other Definitions (continued) Non-Cash Rent Expense – Calculated as rent expense less cash paid for rent. I Section Permanent Withdrawal Rate – Calculated by dividing the total number of cubic feet of records removed from inventory due to permanent withdrawals in a one-year period divided b
Slide 46: Other Definitions: Storage Net Operating Income
Appendix Other Definitions (continued) Storage Net Operating Income, or Storage NOI I Section Storage NOI is defined as revenue from rental activities (storage rental revenue, termination fees and permanent withdrawal fees) less storage rental costs. Storage rental costs include facility costs (excl
Slide 47: Other Definitions: Total Expected Investment
Appendix Other Definitions (continued) Total Expected Investment – Is defined as follows: I Section Total Expected Investment for Racking Installations – The sum of expected investments for all approved racking projects, reported on a constant dollar basis. II Section Total Expected Investment for B