Iron Mountain Incorporated (delaware) · NYSE:IRM
Iron Mountain Incorporated (delaware) — Iron Mountain — Q1 2016 Earnings Presentation
44 slides from Iron Mountain Incorporated (delaware)'s earnings presentation, Apr 28, 2016
Slide 1: Safe Harbor Statement
Safe Harbor Statement 2 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-harb
Slide 2: Table of Contents
All figures except per share and facility counts in 000s unless noted All figures in reported dollars unless noted Figures may not foot due to rounding Table of Contents 3 Investor Relations Contacts: Faten Freiha, 617-535-8404 Director, Investor Relations faten.freiha@ironmountain.com Melissa Marsd
Slide 3: Earnings Overview: First Quarter 2016 Financial Results
Earnings Overview 4 Iron Mountain First Quarter 2016 Financial Results First Quarter Highlights Completed regulatory review of Recall acquisition in the U.S., Canada and Australia; acquisition to close on May 2, 2016 Strong financial and operating performance aligns with 2020 strategic plan Constant
Slide 4: Operational Highlights and Performance versus Strategic Plan
Operational Highlights and Performance versus Strategic Plan 5 Pillars Strategic Goals Q1 2016 Operational Performance and Highlights Consistent volume and solid storage rental growth: • NA RIM (i) internal volume growth of 0.2% (ii) internal growth of 0.2% (iii) C$ growth of 0.3% • NA DM Developed
Slide 5: Financial Performance versus Strategic Plan
Financial Performance versus Strategic Plan 6 Strategic Goals Q1 2016 Financial Performance Total C$ Revenue Growth of 4% CAGR Total C$ Revenue Growth of 3.8% for the quarter • Half of the growth organic/half to come from acquisitions • Revenue growth in line with 2020 Strategic Plan. Q1 acquisition
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 $3 billion of revenues annually. The company provides storage and information management services to a high-quality, diversified customer base across numerous in
Slide 7: Financial Highlights
Financial Highlights 8 (1) In Q4 2015, we revised the reconciliation of FFO (NAREIT), FFO (Normalized) and AFFO to reconcile these Non-GAAP measures to consolidated net income, rather than net income attributable to Iron Mountain. We have revised the Q1 2015 reconciliation of FFO (NAREIT), FFO (Norm
Slide 8: Year-over-Year Revenue Growth
Year-over-Year Revenue Growth 9 Revenue Growth Rates Reported 0.5% (0.3)% 0.2% Less: Impact of FX Rate Changes and Adjustments (3.4)% (4.0)% (3.6)% Constant Currency 3.9% 3.7% 3.8% Less: Impact of Acquisitions and Dispositions 1.7% 2.1% 1.8% Internal Growth Rate 2.2% 1.6% 2.0% Q1 2016 Storage Rental
Slide 9: Records Management Volume Growth
Records Management Volume Growth 10 2.0% 3.5% Q4-14 3.6% 1.1% Q2-15 2.8% 1.0% Q1-15 Q1-16 3.2% Q4-15 2.3% 0.7% Q3-15 2.7% Q3-14 5.5% Q2-14 7.6% Outperm/Terms Destructions New Volume from Existing Customers New Sales Business Acquisitions Total Iron Mountain (532 CuFt MM) North America (377 CuFt MM)
Slide 10: Records Management Volume Growth
Records Management Volume Growth 11 3.6% Q1-16 3.0% -2.3% -4.1% 5.0% 4.4% Q4-15 3.1% -2.1% -4.4% 5.1% 4.5% Q3-15 3.9%(2) -2.2% -4.6% 5.3% 4.6% 0.7% Q2-15 3.0% -2.1% -4.6% 5.4% 3.6% 0.7% Q1-15 5.4% -2.3% -4.5% 5.6% 4.9% 1.6% Q4-14 5.7% -2.3% -4.1% 5.5% 4.8% 1.8% Q3-14 5.4% -2.4% -4.2% 5.5% 4.6% 1.8%
Slide 11: Preliminary Guidance Summary
Preliminary Guidance Summary 12 Preliminary Financial Performance Outlook The 2016 C$ Budget Rate was set in January 2016. Guidance for Adj. EPS, FFO (Normalized) and FFO (Normalized) per share reflects the expected Purchase Price Accounting adjustments. YOY growth compared to 2015 constant dollar (
Slide 12: Quarterly Operating Performance
Quarterly Operating Performance 13 2016 results exclude Recall Costs. Variances from Q1 2015 reported results due to reclassification of Norway from the Western European operating segment to the Other International operating segment. Internal revenue growth rates are impacted by a year-to-date reven
Slide 13: Consolidated Balance Sheets
Consolidated Balance Sheets 14 Goodwill ASSETS 12/31/2015 3/31/2016 Current Assets: Cash and Cash Equivalents $128,381 $117,945 Accounts Receivable, Net 564,401 574,717 Other Current Assets 165,130 139,234 Total Current Assets 857,912 831,896 Property, Plant and Equipment: Property, Plant and Equipm
Slide 14: Consolidated Statements of Operations
Consolidated Statements of Operations 15 2016 includes $18.3mm of Recall Costs. Q1 2015 Q1 2016 % Change Revenues: Storage Rental $458,872 $461,211 0.5% Service 290,414 289,479 (0.3)% Total Revenues $749,286 $750,690 0.2% Operating Expenses: Cost of Sales (excluding Depreciation and Amortization) $3
Slide 15: Reconciliation of Operating Income to Adjusted OIBDA
16 Reconciliation of Operating Income to Adjusted OIBDA (1) Includes realized and unrealized FX (gains) losses. (2) Excludes realized and unrealized FX (gains) losses. Q1 2015 Q1 2016 % Change Net Income (Loss) Attributable to Iron Mountain Incorporated $41,096 $62,774 52.7% Add: Net Income (Loss) A
Slide 16: Reconciliation of Reported EPS to Adjusted EPS
17 Reconciliation of Reported Earnings per Share to Adjusted Earnings per Share(1) (1) Adjusted EPS for 2015 reflects a structural tax rate of 16.2%, while 2016 results reflect a structural tax rate of 14.0%. Q1 2015 Q1 2016 % Change Reported EPS - Fully Diluted from Continuing Operations 0.20 $ 0.3
Slide 17: Reconciliation of Net Income to FFO & AFFO
18 Reconciliation of Net Income to FFO & AFFO (1) 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 Q1 2015 reconciliation of
Slide 18: Reconciliation of Cash Flow from Operations to AFFO
19 Reconciliation of Cash Flow from Operations to AFFO Working capital adjustments in Q1 2016 are driven primarily by the timing of payroll accruals, incentive compensation accruals and accrued interest. Includes impact of options where holders elect to receive shares net of tax withholding at vesti
Slide 19: Quarterly Revenue Growth Bridge
20 Quarterly Revenue Growth Bridge 0.2% R$ Growth 3.8% C$ Growth FX Impact at Q1 2016 FX Rates $723 Q1 2015 Revenue - Reported $ $751 $26 YoY Growth Excluding FX Impact Q1 2016 Revenue - Reported $ $28 Q1 2015 Revenue at Q1 2016 FX Rates $749
Slide 20: Quarterly Normalized Adjusted OIBDA Bridge
21 Quarterly Normalized Adjusted OIBDA Bridge Q1 2016 Adjusted OIBDA was impacted by $5.7 mm net charges related to the Transformation Initiative. 7.0% Normalized C$ Growth FX Impact at Q1 2016 FX Rates $6 $225 $235 Q1 2016 Normalized Adj. OIBDA Add Back: Charges Related to Transformation Initiative
Slide 21: Quarterly Normalized Adjusted EPS Bridge
22 Quarterly Normalized Adjusted EPS Bridge $0.01 Reported Growth – 3.1% $0.03 Normalized Growth – 9.4% Q1 2016 Adjusted EPS was impacted by $5.7 mm net charges related to the Transformation Initiative. $0.32 $0.01 $0.35 $0.33 Reported Q1 2015 Adj. EPS $0.03 Reported Q1 2016 Adj. EPS Normalization o
Slide 22: Storage Net Operating Income (NOI)
24 Storage Net Operating Income (NOI) (1) (1) In Reported $ (2) Includes Data Center, Fine Art Storage, Consumer Storage, Intellectual Property Management, Digital Storage, Fulfillment Services, Document Management Services, Entertainment Services and other ancillary services. (3) Includes Rent Expe
Slide 23: Global Real Estate Portfolio
Global Real Estate Portfolio(1) 25 (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 23 leased building additions and expansions, 21
Slide 24: Revenue from Rental Activities and Storage NOI per Racked Square Foot
Revenue from Rental Activities and Storage NOI per Racked Square Foot 26 (1) Includes loading docks, unracked space, office space, common areas, as well as space in service-related facilities. (2) Excludes Revenue and NOI associated with Intellectual Property Management, Fulfillment Services, Data C
Slide 25: Portfolio Utilization
Portfolio Utilization Records Management Storage Portfolio (CuFt MM) As of 3/31/2016 100 50 0 550 500 450 400 +2.9% -0.1% +9.5% +36.6% 531 Asia Pacific +3.6% 547 Total IRM Latin America Europe North America 384 384 50 650 100 0 450 500 550 600 53 50 84% 88% Europe 115 103 84% 93% North America 452 4
Slide 26: Gross Book Value of Real Estate Assets
Gross Book Value of Real Estate Assets 28 (1) Includes warehouse equipment, vehicles, furniture, fixtures, computer hardware and software. Real Estate Assets Storage Operations Land $220,211 Buildings & Building Improvements 1,539,513 Leasehold Improvements 422,954 Racking 1,468,694 Construction In
Slide 27: Service Business Detail
Service Business Detail 29 (1) Includes Fulfillment Services, Document Management Services, Intellectual Property Management, Data Center, Consulting, Entertainment Services, Fine Art Storage, Consumer Storage and other ancillary services. (2) Includes Building Maintenance, Property Taxes, Utilities
Slide 28: Customer Data
Customer Data 30 No single vertical within ‘Other’ comprises greater than 1% of North America Revenue. Customer acquisition costs include the acquisition of customer relationships and customer inducements such as move costs and permanent withdrawal fees. Federal Healthcare Financial Legal Insurance
Slide 29: Debt Schedule
Debt Schedule 31 $222 Thereafter 2024 $1,000 2023 $600 2022 $575 2021 $154 2020 $1,000 2019 $1,208 2018 2017 2016 Floating Rate Debt at 3/31/16 Fixed Rate Debt at 3/31/16 27% 73% Fixed vs. Floating Rate Debt at 3/31/16(1) Debt Maturity Schedule ($MM)(1) Floating Rate Debt Fixed Rate Debt (1) Exclude
Slide 30: Capitalization
Capitalization 32 CAD 6.125% notes due 2021 are rated BB- by Standard & Poor’s. Debt net of cash is calculated as current portion of long-term debt of $90mm plus long-term debt net of current portion of $4,931mm plus $56mm of deferred financing costs less cash and equivalents of $118mm. (1) 6.5 5.5
Slide 31: Lease Obligations
Lease Obligations(1) (1) Includes capital and operating lease obligations. Weighted Average Remaining Lease Obligations (no exercise of extension options): 5.6 years Weighted Average Remaining Lease Obligations (exercise of all extension options): 12.4 years Thereafter 8.1% 2026 1.5% 2025 4.7% 2024
Slide 32: Capital Expenditures and Investments
Capital Expenditures and Investments 34 (1) Includes $16.0mm for data center in Q1 2016. Also includes $4.2mm for land-related investments in Q1 2016. (2) Includes Land, Buildings, Improvements, and Racking Structures. (3) FFO (Normalized) is adjusted for these items, among others, to arrive at AFFO
Slide 33: Investments
Investments(1) 35 (1) Based on C$ Budgeted FX Rates. (2) Racking Installations excludes consolidation spend in Total Expected Investment, Investment in Current Period and Cumulative Investment to Date of $40.0mm, $0.9mm and $36.2mm, respectively. (3) Building Development Projects excludes consolidat
Slide 34: Components of Value
Components of Value 36 (1) Includes South Africa. (2) Trailing four quarter prior to rental expense. (3) Includes Cash, Cash Equivalents, Restricted Cash, Accounts Receivable, Other Tangible Current Assets, Deferred Income Taxes and Prepaid Expenses. (4) Calculated as current portion of Long-Term De
Slide 35: Appendix: Non-GAAP Measures
Appendix 37 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 addit
Slide 36: 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 37: 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 38: 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 39: 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 Businesses operating segment, as well as costs related to executiv
Slide 40: Appendix: Definitions (continued)
Appendix 42 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 g
Slide 41: Appendix: Definitions (continued)
Appendix 43 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
Slide 42: Appendix: Definitions (continued)
Appendix 44 Definitions (continued) Internal Revenue Growth – Internal revenue growth represents the year-over-year growth rate of revenues excluding the impacts of changes to foreign currency exchange rates, acquisitions and other unusual items. In general, only acquisitions that have been in our r
Slide 43: Appendix: Definitions (continued)
Appendix 45 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 Revenu
Slide 44: Appendix: Definitions (continued)
A ronMouNTAIN” Appendix 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 ($) = Servic