Iron Mountain Incorporated (delaware) · NYSE:IRM
Iron Mountain Incorporated (delaware) — Iron Mountain — Investor Presentation (November 2015)
41 slides from Iron Mountain Incorporated (delaware)'s investor presentation, Nov 10, 2015
Slide 1: 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 2: We Store & Manage Information Assets
We Store & Manage Information Assets Diversified Global Business ƒ R$3.1 billion annual revenue ƒ 155,000+ customers ƒ Serving 92% of Fortune 1000 (1) ƒ 68 million square feet of real estate in ~1,100 facilities Compelling Customer Value Proposition ƒ Reduce costs and risks of storing and protecting
Slide 3: Storage Rental Stream is Key Economic Driver
Storage Rental Stream is Key Economic Driver Same Store Revenue (Historical) Growth 26-year Track Record of Consecutive Growth $1,860 8% 6% 4% 2% 0% 2008 2009 2010 2011 2012 2013 2014 -2% 7-Year Average 4.4% -4% IRM Internal Storage Revenue Growth (1) Self-Storage Average Same Store Revenue(2) 3.3%
Slide 4: Strategic Plan Delivering Expected Results
Strategic Plan Delivering Expected Results OUR PLAN FOR GROWTH DEVELOPED MARKETS EMERGING MARKETS ADJACENT BUSINESSES 7M cu. ft. Net RM Volume prior to Acquisitions* Emerging Markets = 14% of Total Revenues on a C$ basis* New Data Center Customers and Expanded into Art Storage TRANSFORMATION, INTEGR
Slide 5: Strategic Plan has Driven Performance Turnaround Since Year-end 2013
Strategic Plan has Driven Since Year-end 2013 Performance Turnaround STRATEGIC PLAN EMERGING MARKETS DEVELOPED MARKETS ADJACENT BUSINESSES 2013 -2015F Revenue C$ CAGR 1% 33% 20% Worldwide Revenue (C$ in MM) Adjusted OIBDA (C$ in MM) $3,050 - $3,110 $3,011 $2,894 2013 2014 2015E 2013 2014 2015E 2013
Slide 6: Solid Execution on Performance Drivers
Solid Execution on Performance Drivers KEY DRIVERS 9 Sales force excellence 9 Customer Segmentation 9 Customer Acquisitions STORAGE VOLUME GROWTH 9 9 9 9 9 Customer Retention Value Based Selling REVENUE MANAGEMENT Align and Package + Expanding services+ New revenue streams SERVICEREVENUE & MARGIN Ma
Slide 7: Organic Document Storage Continues Strong, Steady Growth in Developed Markets
Organic Document Storage Continues Strong, Steady Growth to Demonstrate Developed Markets ƒ 50-year average customer retention 6% ƒ Less than 2% annual volume loss from terminations 3% ƒ Boxes stay with us for an average 15.2 years(1) Net volume before acquisition growing in every major market No si
Slide 8: Standalone Plan to Extend Performance with 2020 Vision
Standalone Plan to Extend Performance with 2020 Vision 2020 TODAY 85% Developed Core 15% Growth Portfolio Emerging Markets = 14% Adjacent Businesses = 1% 75% Developed Core 25% Growth Portfolio Emerging Markets = 20% Adjacent Businesses = 5% 2% Adj. OIBDA 10% Adj. OIBDA 3% Adj. OIBDA 10% Adj. OIBDA
Slide 9: 2020 Vision Extends Strategic Plan and Will Continue to Deliver Strong Growth
2020 Vision Extends Strategic Plan and Will Continue to Deliver Strong C$ Growth Worldwide Revenue (C$ in MM) $3,770 – $3,870 $3,165 – $3,265 $3,050 – $3,110 2015 2016 2017 2018 2020 2015E 2016E 2020E Adjusted OIBDA (C$ in MM) $1,330 – $1,410 2015E 2020E $990 – $1030 $925 – $945 2015E 2016E 2020E 20
Slide 10: Recall Acquisition on Track
Recall Acquisition on Track Regulatory review underway ƒ Confident of achieving satisfactory outcome Targeted closing in Q1 2016 • • Significantly enhances financial performance ƒ Total expected synergies of $155M $110M to be recognized in 2017 Potential synergy upside primarily from real estate con
Slide 11: Recall Acquisition Significantly Enhances Financial Performance
Recall Acquisition Performance Significantly Enhances Financial Worldwide Revenue (C$ in MM) 20 $1.91 $4,670 – $3,950 – $4,810 2015 2016 2017 2018 2020 $3,050 – $4,050 $3,110 2015 2016 2020 Adjusted OIBDA (C$ in MM) 2015E 2020E $1,725 – $1,825 $1,220 – $1270 $925 – $945 2015 2016 2020 2015E 2020E As
Slide 12: Summary of Financial Roadmap 2015 – 2020
Summary of Financial Roadmap 2015 – 2020 Disciplined Capital Spend on Maintenance, Non-Real Estate Investment and Racking Stabilized Service Gross Margin Improved SG&A Efficiency Growing Storage Revenues And Margins Consistent Contribution and Cash Flow Improvement Accretive Acquisitions, Real Estat
Slide 13: Stabilized Service Gross Margins
Stabilized Service Gross Margins Total Internal Service Revenue Growth Service 39% of Total Revenue(1) Improve growth to 1% - 2% annually 2016 through 2020 0.4% (0.7%) (0.6%) ƒ ƒ Archival trends moderate Maintain progress in scanning, projects and shredding (3.4%) (4.4%) 2012 2011 2013 2014 Q3-15 YT
Slide 14: Worldwide Service Gross Margin Improvement
Worldwide Service Gross Margin Improvement Total Company Service Revenue (C$ in MM) Area / CAGR $1,181 $1,209 $1,195 - $1,205 $310 - $374 $310 - $335 Comp Service +4% Shred Paper +2% Shred Non-Paper -3% DMS +13% FY13 FY14 FY15E FY16E DM Core -9% RM Core 0% Total Service Gross Margin 2015(1) 27.0 – 2
Slide 15: Improved SG&A Efficiencies – Transformation
Improved SG&A Efficiencies – Transformation Cumulative SG&A Savings 30.0% $125 $100 28.0% $50 26.0% 2016 2017 2018 24.0% 22.0% ƒ Improvement driven by offshoring, outsourcing, reducing complexity, automation and procurement effectiveness Target levels of SG&A consistent with median level benchmarks
Slide 16: Attractive Discretionary Investment Opportunities
Attractive Discretionary Investment Opportunities DISCRETIONARY INVESTMENTS DEVELOPED AND EMERGING MARKETS BUSINESS ACQUISITIONS ADJACENT BUSINESSES REAL ESTATE Strong Stabilized Returns 18
Slide 17: M&A in Emerging and Developed Markets Deliver Solid Growth and Returns
M&A in Emerging and Developed Growth and Returns Emerging Markets Acquisition Economics Markets Deliver Solid Strong returns, supports progress to increase exposure to higher growth markets Acquisition Spend/Yr. $100 MM Ongoing Topline Growth 10% + Storage Rental IRR 13% – 14% Developed Markets Acqu
Slide 18: Investing for Profitable Growth: Emerging Markets
Investing for Profitable Growth: Emerging Markets ƒ Build high performance leadership teams ƒ Drive organic growth ƒ Invest in real estate and infrastructure ƒ Rapid execution M&A pipeline of rich 20 Cube Growth 14% Adj. OIBDA % 9% ROIC 4% Cube Growth 7% Adj. OIBDA % 33% ROIC 12%
Slide 19: Adjacent Businesses Offer Potential Further Upside
Adjacent Businesses Offer Potential Further Upside ƒ ƒ ƒ ƒ 2020 Target = 5% of total Revenue 10% long-term organic growth Data center continued organic growth offering good returns Art storage through planned Crozier acquisition Data Center Economics Art Storage Economics Capital Invested Per Year $
Slide 20: Formalizing Art Business with Acquisition of Premier Brand Crozier Fine Art
Formalizing Art Business with Acquisition of Premier Brand Fine Art Attractive Space for IRM ƒ ƒ ƒ Leading brand in North America Driver of global industry standards Strong storage (58%) and storage related services (34%) focus ~$30MM annual revenue, 30%+ stabilized Adjusted OIBDA margins Year 1 acc
Slide 21: Real Estate Investment Offers Predictable, Attractive Returns
Real Estate Investment Attractive Returns Offers Predictable, Real Estate an Enabler of Growth Real Estate Investment Consolidation and Development Focus ƒ Investment in Real Estate focused on consolidation and related development Consolidation drives significant operational improvements Additional
Slide 22: Non-Stabilized Returns Exceed WACC
Non-Stabilized Returns Exceed WACC ƒ ƒ ƒ Investment stabilization period ranges 1 – 5 years 2020 Vision – half of growth driven by investments Implied 9% non-stabilized return on total investments, above 8% WACC C$ 2016 Adj. OIBDA Excluding Transformation Benefit Absolute Internal Growth Absolute Gr
Slide 23: Illustrative Benefit Flow Through from Acquisitions
Illustrative Benefit Flow Through from Acquisitions Year 1 Year 2 ~$17 Million / 50% benefit flow through ~$34 Million / 100% benefit flow through $34 MM in Revenues + Internal Growth at ~3% $13 MM in Adj. OIBDA (Stabilized) ~$3 Million / 15% Adj. OIBDA Margin ~$9 Million / 25% Adj. OIBDA Margin + I
Slide 24: IRM Standalone Cash Available for Dividend and Discretionary Growth Investments
IRM Standalone Cash Available for Dividend and Discretionary Growth Investments Enhanced by 2020 Vision Cash Available for Dividends and Discretionary Growth Investments – Standalone $760 $485 $15 $405 $(5) 2015E Cash for Investment 2016E Organic Growth Racking 2020E Dividend R$ Adjustment Numbers r
Slide 25: IRM Standalone with Investments Drives Good Dividend Growth
IRM Standalone with Investments Drives Good Dividend Growth Minimum Projected Dividend Per Share (Standalone) $2.18 $2.10 2015E 2016E 2017E 2018E 2020E Dividend/ AFFO 82% 77% 72% 67% 67% Shares Outstanding 213 214 215 216 218 Lease Adjusted Leverage Ratio 5.7X 5.7X 5.5X 5.3X 5.3X Total Discretionary
Slide 26: Cash Flow Including Recall Supports Further Increases in Dividends Per Share
Cash Flow Including Recall Supports Further Increases in Dividends Per Share and Partially Funds Discretionary Growth Investments Cash Available for Dividends and Discretionary Growth Investments – Standalone $1,000 $760 $45 $545 $485 $35 $15 $15 $520 $420 $405 $90 $105 $15 $(5) 2015E 2016E 2020E 20
Slide 27: Standalone Dividend Growth Potential Further Enhanced by Recall Transaction
Standalone Dividend Growth Potential Further Enhanced by Recall Transaction Minimum Projected Dividend Per Share (With Recall) 2015E 2016E 2017E 2018E 2020E Dividend/ AFFO 82% 76% 71% 69% 69% Shares Outstanding 213 272 272 273 275 Lease Adjusted Leverage Ratio 5.7x 5.4x 5.1x 5.0x 4.9x Total Discreti
Slide 28: 2020 Vision: Revenue Build-Up
2020 Vision: Revenue Build-Up (C$ in MM) $4,670 – $4,810 2015 Developed Markets Emerging Markets Adjacent Businesses 2020 Recall Assumes close on 01/01/2016 for Recall transaction 30 $900 - $940 $150 - $160 $290 - $310 $3,050 – $3,110 $290 - $310
Slide 29: 2020 Vision: Adj. OIBDA Build-Up
2020 Vision: Adj. OIBDA Build-Up (C$ in MM) $1,725 – $1,825 $415 $60 to $70 $90 - $110 $925 – $120 Adjacent Businesses 2015 Developed Markets Transformation Emerging Markets Real Estate Recall 2020 ROIC 12% 14% Assumes close on 01/01/2016 for Recall transaction Real Estate includes lease conversion
Slide 30: Driving Durable Cash Flow to Support Business and Dividend Growth
Driving Durable Cash Flow to Support Business and Dividend Growth Durable cash flow Three year plan on track and delivering per guidance Strong dividend growth Driven by durability of core, Transformation and Recall 2020 Vision Accelerates growth through ongoing optimization 32
Slide 31: Appendix
Appendix © 2015 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. All other trademarks and registered trademarks are the property of their respective owners.
Slide 32: Major Market Presence Supports Durable Revenues and Value
Major Market Presence Supports Durable Revenues and Value Seattle OwnedGross Assets Boston Chicago New York San Francisco Philadelphia Washington D.C. Denver-Boulder Los Angeles Dallas-Fort Worth-Book value including leasehold improvements and racking Arlington Phoenix-Mesa-Scottsdale San Diego Metr
Slide 33: Investing for Profitable Growth: Building Local Scale
Investing for Profitable Growth: Building Local Scale END OF FY13 Serbia India Romania Brazil Czech Rep. Slovakia Serbia Turkey Peru Slovakia Mexico Romania Hungary Peru Czech Rep. Slovakia Hungary Poland Chile Colombia Singapore Chile Colombia Turkey Romania Chile Colombia Czech Rep. Hungary Austra
Slide 34: Disciplined Execution and Expansion Driving Data Center Value Creation
Disciplined Execution and Expansion Driving Value Creation Data Center Value Creation and ƒ Current data center footprint supports ~$8M/ year in new sales with ROIC in low to mid teens Estimated Stabilized Returns on Existing Footprint ($ MM) ƒ Further market expansion enables us to take advantage o
Slide 35: Recall Transaction Delivers Significant Synergies
Recall Transaction Delivers Significant Synergies Estimated US$155 mm Total Net Synergies(1) Anticipated at Full Integration $300 $155 $140 2016E 2017E 2018E Fully Synergized Real Estate 2016E 2017E 2018E Fully Synergized Operating Expense Capital Expense Overhead Cost of Sales Tax 2 37 (1) Net syne
Slide 36: Synergies Support Accretion in Earnings, FFO and AFFO
Synergies Support Accretion in Earnings, FFO and AFFO Significant Accretion Across Relevant Financial Metrics Accretion Percentages Are Incremental to Iron Mountain’s Strategic Plan and Reflect Estimated Synergies Achieved in Each Year Adjusted EPS Accretion Normalized FFO Accretion AFFO Accretion 2
Slide 37: IRM Standalone Cash Available for Dividends and Investments
IRM Standalone Cash Available Investments Cash Available for Distribution and Investment ($MM) C$. Numbers reflect midpoint of guidance for Dividends and Discretionary 2015E 2016E 2020E IRM Adj. OIBDA $935 $960 $1,245 Add: Stock Compensation/Other 45 45 50 Adj. OIBDA, Transformation and Other Non Ca
Slide 38: Transformation, Integration and Talent are Key Enablers for Total Cost Reduction
Transformation, Integration, continued success and Talent are key enablers for Total Cost Reduction ($MM) ƒ Business simplification, process improvements and efficiencies from Transform reductio tion drive $125M in SG&A ƒ Leveraging global scale across Recall delivers $ Deploying acquire n 55M in sy
Slide 39: Cash Flow Including Recall Supports Further Dividend Growth
Cash Flow Including Recall Supports Further Dividend Growth and Discretionary Cash Available for Distribution and Investment ($MM) C$ Numbers reflect midpoint of guidance Investment 2015E 2016E 2020E IRM Adj. OIBDA $935 $1,195 $1,650 PF IRM Adj. OIBDA $935 $1,245 $1,775 Add: Stock Compensation/Other
Slide 40: Leverage Ratio with Adjusted OIBDA Including Recall Operating Costs to Achieve Synergies
Leverage Ratio with Adjusted OIBDA Including Recall Operating Costs to Achieve Synergies 5.6x 5.4x 5.4x 5.0x 2016 Lease Adjusted Leverage Ratio on a Reported Basis 2017 2018 Lease Adjusted Leverage Ratio with Adjusted OIBDA Including Recall One-Time Operating Costs to Achieve Synergies 42 5.1x 5.1x
Slide 41: 2015 Guidance In-Line with Expectations; 2016 Guidance
2015 C$ Guidance In-Line with Expectations 2016 Guidance Standalone and Preliminary R$ 2015 Guidance Confirmed at 07/30/15 R$ 2015 As of 10/14/15 C$ 2015 C$ 2016 C$ Growth Lower end of original range $3,030 - $3,150 Revenue $3,000 - $3,060 4% - 5% $3,050 - $3,110 $3,165 - $3,265 Closer to midpoint o
Iron Mountain — Investor Presentation (November 2015) on 6ix