Iron Mountain Incorporated

Good morning, and welcome to the Iron Mountain fourth quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, 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 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.

Thanks, Sarah. Good morning, everyone, and welcome to our fourth quarter 2022 earnings conference call. On today's call, we will refer to materials available on our Investor Relations website. We are joined 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 earning 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, in 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 used 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 the time to join us today. We are pleased to have delivered record performance for both the fourth quarter and the full year. These exceptional results are reflective of our broad product portfolio, synergistic business model, deep customer relationships, and committed team. Before I dive into the drivers of our strong performance, I would like to take a few moments to relay how deeply saddened we are all feeling by the devastating and recent earthquakes in Turkey and Syria. Our thoughts and prayers are with our fellow Mountaineers, customers, and all of their families living and working in the region. The safety and security of our employees is our number one priority, and we are committed to supporting our colleagues in the region as they navigate this challenging time. Now let me begin our discussion of our recent performance. I am proud to report that Iron Mountain has had another outstanding year. In the fourth quarter, we achieved quarterly revenue of $1.28 billion, yielding 11.3% total organic revenue growth, and record adjusted EBITDA of $472 million, up 10%. For the full year, we delivered record results across the board, revenue of $5.1 billion, adjusted EBITDA of $1.8 billion, and AFFO of $1.1 billion, representing growth of 14%, 12%, and 10%, respectively. This performance is a direct result of our close relationships with our customers and our commitment to innovation so we can provide them with expanded products and services to meet their needs. For the full year, we delivered organic storage rental revenue growth of 9%, reflecting continued benefit of pricing combined with positive volume trends. We drove double-digit organic growth in our data center business as well as our digital services and asset lifecycle management business areas, capping off another excellent year. Our continued drive to build an ever-expanding suite of synergistic and customer-centric solutions together with global reach and scale fuels our accelerated growth consistent with the Matterhorn Excellence Model we unveiled last autumn. Let me share a few examples of how we've been enabling our customers' success and growth through the diverse solutions and unmatched customer service we offer. Beginning with our records management business, we reported a substantial cross-sell win with a large nonprofit healthcare provider, which has been an Iron Mountain customer for more than 20 years. The win resulted in a new 10-year contract covering records management, ALM, data management, secure storage of non-records, and document digitization services, taking this customer from $2.5 million per year to $5 million annually. Just a few years ago, we would have been unable to provide such a broad range of services and solutions to this long-tenured customer. Today, with our broad offerings, we not only cross-sold the new services and solutions, but we increased our share of wallet for our records management services and solidified our position as a trusted and strategic partner. We also provided a solution for a large U.S. bank to develop a simple and cost-effective process to manage its vast inventory of over 24 million mortgage files. This partnership involves meeting stringent compliance obligations, mitigating risk, and reducing cost. Also in the quarter, we won new business serving the Australian government. Through this work, we will drive considerable cost savings for one of Australia's largest government agencies. Iron Mountain will have a dedicated team to pack, enter data, and transport 375,000 cartons to our new facility in Melbourne. In digital solutions, a key win I would like to highlight is with a branch of the U.S. federal government. As a result of the enormous success of our original project with the customer to digitize 177,000 reels of microfilm in less than the prescribed year, we have executed a sole-source follow-on contract to digitize another 133,000 reels of microfilm. This win is the result of the strategic development of a best in breed AI machine learning solution to auto classify and automate data capture. In addition, we worked with a large global medical equipment and electronics manufacturer to navigate an extensive global medical product recall. The customer needed an efficient partner to assist with the recall in order to meet regulatory requirements and avoid further legal ramifications. The customer also required rapid response in tight turnaround times and was seeking a single partner. The win includes several service offerings delivered by a single point of contact and illustrates the early success of our new commercial operating model that we introduced with Project Matterhorn. Turning to ALM, another noteworthy win this quarter was with a health insurance provider which selected Iron Mountain as its dedicated asset lifecycle management partner. Due to the unique nature of their business, the customer has constant attrition throughout the course of the year, and consequently, they were seeking a dedicated ALM partner to provide collection, wiping, imaging, secure storage, and redeployment of technology assets. The customer's previous positive experience with Iron Mountain and our team, combined with our strong solutions, led to mutual success. Our services resolved their challenges around collection, ease of use, and reporting and tracking. This illustrates our commercial team's strength and ability to cross-sell our set of solutions across the mountain range and is another example of our increased focus and success in driving commercial engagement as part of our Matterhorn client. Moreover, we are especially proud to say that we renewed our largest ALM contract this quarter. This is the fourth contract renewal with this client, one of the largest technology companies in the world. We have worked with them for the past 12 years and are proud of this relationship, the continuation of which demonstrates the potential for longevity in this area of our business. We continue to be excited and encouraged by the total addressable market of the asset lifecycle management category. despite the headwinds we have faced this year as a result of enduring COVID-19 lockdowns in China. In spite of this, our legacy ITAD business continues to perform well, and as we gain momentum on our Matterhorn climb, we continue to focus on moves to accelerate this growth. Finally, turning to our data center business, we are pleased to have finished the year with 139 megawatts of new leases signed, exceeding our original booking guidance of 50 megawatts and our most recent target expressed in the third quarter of 130 megawatts. In the fourth quarter, we successfully completed 14 megawatts of leasing. This area of our business has gone from strength to strength over the past several years, and we continue to see tremendous opportunity in serving both hyperscale and colocation customers and significant growth potential for our data center footprint. With 37% year-on-year bookings growth, excluding our large lease in Virginia 4-5, we will continue to prioritize data centers with our capital program, more details of which Barry will provide in his remarks. One customer win in our data center business that I would like to share is a six megawatt expansion lease at our Phoenix campus with an existing global Fortune 100 customer. The customer, which has a long-term strategic relationship with Iron Mountain across service lines, and has existing capacity in several of our other locations, needed space to expand in Arizona. Our customer was able to leverage our Phoenix data center for their expansion, and we look forward to supporting them in their future growth. Also in the quarter, our team announced a win for our joint venture at the Mumbai 2 data center, which is connected to our Mumbai 1 data center, one of the most robust carrier hotels in the country, providing superb connectivity and flexibility for our customers. We partnered with a global content delivery network company to expand their presence in Mumbai. They required a robust network ecosystem backed by reliable power infrastructure, which we were able to provide. Another win to highlight our ability to cross-sell across business segments involves our existing relationship with one of the largest German banks. This resulted in a new partnership with our data center team, who leveraged their excellent network within the German financial market and demonstrated proficiency in its high regulatory standards, customer buying team structures, and the data center competition in Frankfurt. The customer felt confident in our team's expertise and our ability to support a highly regulated environment to meet their needs. This is yet another excellent example of our ability to listen to our customers and find ways to meet their needs. To conclude, I am incredibly proud of our dedicated team our unmatched customer dedication and relationships, and our solutions, which continue to drive our transformation and excellence. The reorganization we completed in 2022 through the initiation of Matterhorn has established a strong foundation, which is already delivering double-digit growth. It is this foundation built by Matterhorn, which will continue to fuel our growth trajectory and to realize our greatest ambitions. Turning toward 2023, this momentum will continue to drive the opportunities ahead with another year of double-digit top-line growth expected. Barry will speak in detail about our guidance for the year ahead. Our goals are well within sight as we climb on with Project Matterhorn and beyond. With that, I'll turn the call over to Barry.