Iron Mountain Incorporated

Good morning and welcome to the Iron Mountain fourth quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. We will limit analysts to one question and then you can rejoin the queue. Please note this event is being recorded. I would now like to turn the conference over to Jillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

Thank you, Emily. Good morning and welcome to our fourth quarter 2021 earnings conference call. On today's call, we will refer to materials available on our Investor Relations website. We are joined here today by Bill Meany, President and Chief Executive Officer, and Barry Heitman, our Executive Vice President and Chief Financial Officer. After prepared remarks, we'll open up the lines for Q&A. Today's earnings materials contain forward-looking statements, including statements regarding our expectations. All forward-looking statements are subject to risks and uncertainties. Please refer to today's earnings materials, the safe harbor language on slide two, and our annual report on Form 10-K for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements. In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations to these measures in our supplemental financial information. And with that, I'll turn the call over to Bill.

Thank you, Jillian, and thank you all for taking time to join us today. We are pleased to have delivered record performance for both the fourth quarter and the full year. These record results are reflective of our broad offerings, deep customer relationships, resilient business model, and our dedicated teams. Despite the challenges associated with the pandemic, and most recently with the Omicron variant, our mountaineers around the world have continued each and every day to put our customers first, now with renewed and invigorated focus on growth. And our historically high revenue and profitability are a testament to our mountaineers' commitment. Speaking about our mountaineers, I wish to begin my remarks by stating that we are all saddened by the overnight events in the Ukraine. Our thoughts and prayers are with our customers there and our fellow 60 mountaineers and their families living and working in the Ukraine. I am sure for all of us, given the current events in Europe, it feels in many ways inappropriate discussing our financial results with this backdrop. Yet at the same time, it is in keeping with our mountaineer spirit. With that, let me begin our discussion of a remarkable and record year. In the fourth quarter, we achieved our highest ever quarterly revenue of $1.16 billion, yielding 8.5% of total organic revenue growth and record EBITDA of $431 million. For the full year, we achieved record revenue of nearly $4.5 billion and EBITDA of $1.6 billion. These results were fueled by increased demand for our services across key markets. For the full year, we delivered organic storage rental revenue growth of 2.6%, reflecting continued benefit of pricing combined with positive volume trends. We drove double-digit growth in digital offerings, including data center, insider digital transformation services, and secure IT disposition, now referred to as ALM or Asset Lifecycle Management. Our digital services and ALM businesses continue to build momentum, growing over 20% in the fourth quarter and capping off an excellent year of growth. Further to our recent success in the ALM area, we are also pleased to report that the acquisition of ITRenew announced in December closed in January. This acquisition will accelerate our growth trajectory in this $30 billion market, which is growing over 10% per year. Our newly created ALM division will absorb our historical secure ITAD business line. This enlarged division not only helps us provide chain of custody for our customers' IT assets, but our ALM activities also assure our customers that their IT assets are wiped of any data at the end of their life and destroyed and recycled in a responsible way. On this last point, in terms of recycling, Our expanded offerings in this space around a circular economy are important for both IRMs and our customers' ESG goals leading to carbon neutrality. This expanded ALM division also strongly complements our fast-growing data center business, bringing capabilities to serve some of the largest and most innovative companies in the world in a more cradle-to-grave way, consistent with the best security and ESG practices. This expanded ALM platform will directly benefit from Iron Mountain's 225,000 loyal customer base, which includes 95% of the Fortune 1000. This global customer base is supported by 25,000 mountaineers across 1,450 facilities in 63 countries. Our recent expansions in data center, machine learning-driven data analytics and insights, And now ALM are just some of the examples of how we continue to invest in growth to capitalize on our many opportunities ahead, serving a customer base which has been loyal to Iron Mountain for decades. I have shared with you previously how in the last five years, these investments have taken the total addressable market, or TAM, of our products and services from $10 billion to some $80 billion. I am happy to report our continued build-out of new products and services in the last year, as well as growth in these underlying markets, has now taken our TAM to over $120 billion. Our continued drive in building an ever-expanding set of synergistic and customer-centric solutions together with global reach and scale is the fuel behind much of the acceleration in our growth. Let me share a few examples of how we've been empowering our customers' success and growth through our diverse solution offerings and unmatched customer service. Our recent customer win with a large aerospace company where we won a backfiled digitization deal of over $20 million is a superb example of collaboration amongst our entertainment services, technology organization, and our global records organization, Orgro. In order to achieve its goal of being a 100% model engineering company, and to most effectively use designs and data from historical archives to refine new designs, this aerospace company sought help with the digitization and auto-classification of over 50 million digital engineering assets. We were tasked to store, classify, and utilize machine learning to identify relevant information whilst maintaining compliance with international traffic and arms regulations known as ITAR. To this end, We developed and implemented an ITAR compliant solution using our Insight machine learning platform operating in the AWS government cloud environment. Iron Mountain is uniquely positioned to assist our partner with this initiative with our storage capabilities, our understanding of ITAR compliance complexities, our machine learning trained analytic engines, and our technological support to ensure efficiency and success. Moreover, this project enables us to deliver critical insight into engineering data, not just to this company, but also to other manufacturing and engineering customers across the globe. Another key win worth highlighting is with a branch of the U.S. federal government. We concluded a Phase I contract and have also been awarded a Phase II contract for this branch. The agency originally plan to select three vendors for the first contract due to the high volume of microfilm reels needing to be processed. But our solution surpassed the customer's expectations and Iron Mountain was awarded the exclusive contract to process all 177,000 of microfilm reels or over 2 billion records needing analysis. This win was based on our unique splitting technique, proprietary machine learning, automated QA process, and processing scalability that helped us to differentiate our offer from the competition. These technology innovations for the customer have enabled future use cases which rely on advanced pattern recognition at scale, including OCR microfilm processing projects, applying machine learning extraction techniques for digital mailroom, invoice processing, and extracting information from claims documents, to name a few. Another example of how Iron Mountain is working with customers to support their digital transformation is our recent partnership with a production and development company operating in the UK's North Sea. We've undertaken a significant backscan of their legacy archive records to meet their regulatory obligations to the UK Oil and Gas Authority in order to relinquish their license to operate on 230 wells they wish to abandon. They're required to digitally upload all information assets to the national data repository. Using the Insight platform, we were able to solve the problem of having enormous amounts of data to sift whilst consolidating physical and digital data in disconnected information silos and resulting in millions of dollars of annual savings. Moving back above ground, recently in our Crozier Fine Arts Division, we won a contract to provide comprehensive storage solutions and logistical support for the museum operations of the Academy Museum of Motion Pictures. We were excited and proud that, based upon a foundation of long-term partnership and trust built up through many years of support from Iron Mountain's Entertainment Services Division, they came to us to meet their evolving needs where Crozier services were an ideal match. Now turning to wins in our data center business, recall that our bookings target for the year was 30 megawatts. We are pleased to have finished the year with nearly 49 megawatts of leases signed with over 27 megawatts of leases in the fourth quarter alone. This includes the new 20 megawatt lease in our Manassas, Virginia data center announced in December. This lease is expected to commence in phases from mid 2022 through mid 2023. We continue to see strong demand for comprehensive data center solutions from our existing customer base. This lease is indicative of our ability to meet that demand and reflects our commitment to strategically partnering with our customers to meet their individual requirements. Based on current design plans, we now expect that the VA2 facility to support 36 megawatts up from 30 megawatts previously. With these changes and other additions to our portfolio, our total capacity is now in excess of 600 megawatts. Finally, we continue to be recognized for our leadership around ESG. This has been an important focus for us for many years, having produced annual sustainability reports outlining our commitments and progress since 2013. Some of our past recognitions have included 100% of our data center power is generated by renewables. We were the launch provider of green power paths, which allows our customers to report reductions in their carbon footprint when using our data centers. We were a cosigner with Google to expand our commitment to green-powered data centers to 24-7 carbon-free electricity, and we were one of the original signatories of the UN Global Compact on Sustainability back in 2016. More recently, we announced that in addition to their RE100 program, we have joined the climate group's EV100 initiative and reached a key milestone in electrifying our global vehicle fleet in line to reach our climate pledge commitment to achieve net zero carbon emissions by 2040. We have made real progress towards our carbon reduction goals since establishing our first science-based targets We have reduced absolute greenhouse gas emissions by over 60% from our 2016 baseline whilst growing the business. We believe that our commercial growth and ESG initiatives make us stand out and we suspect they were a major factor in our being ranked amongst the top 100 on Newsweek's list of America's most responsible companies. In summary, our future ahead is bright. We are building on our growth momentum as we expand our portfolio to meet our customers' evolving needs. And with our strong footprint, powerful portfolio, and deep customer relationships, we are confident that we can continue this momentum as we ascend our mountain range and provide another set of performance records this year and the years ahead. With that, I'll turn the call over to Barry. Thanks, Bill.