Iron Mountain Incorporated

Good morning and welcome to the Iron Mountain third quarter 2023 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 followed by zero on your telephone. 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.

Thank you, Andrea. Good morning and welcome to our third quarter 2023 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 of our presentation, and our quarterly report on Form 10-Q 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, and we've included the reconciliations to these measures in our supplemental financial information. 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 to discuss another record quarterly result. Once again, our mountaineers have gone above and beyond in their efforts to serve our customers with innovative solutions that support their businesses. Putting our customers first runs deep in all we do and sits at the core of Iron Mountain. This legacy, combined with our dedication to not only protect but to elevate the power of our customers' assets and work, continues to drive our execution and growth. Turning to our results, we delivered record third quarter performance, once again achieving our highest ever quarterly revenue of $1.4 billion, which, to put that in context, is an increase of over $100 million year over year and record EBITDA of $500 million. The strength in these results is a direct result of the positive momentum we are building from Project Matterhorn. We are more than a year into our growth journey and are pleased with our enhanced operating model which is empowering our commercial organization to cross-sell our products and services. In the third quarter, we delivered organic storage rental revenue growth of 10% as a result of continued revenue management success and improved volume trends and drove over 20% organic growth in our data center business. Let's begin by turning to some of our customer wins, which played a significant role in our ability to achieve these record results. In our records management business, we had a public sector win this quarter in the UK with a new contract worth nearly $2 million. This new project is with an important government agency that has been an Iron Mountain customer for 18 years. In that time, our relationship has expanded from an off-site records management provider to an integral partner at our customer's highly secure site, which indicates the trust and confidence our customers have in us. By relocating and digitizing important records securely, our customer can make faster and more informed decisions that are critical due to the sensitive nature of its work, whilst also freeing up on-site space. As a public sector organization, the value for each dollar they spend is a key concern for this customer, and we continue to demonstrate that Iron Mountain is the partner of choice for the digital transformation journey. In digital solutions, this business continues to gain momentum, especially with our ability to provide higher-value, technology-enabled solutions to new and existing Iron Mountain customers. Customer wins for our digital solutions are underpinned by three key differentiators. First, our unique ability to provide a unified, end-to-end solution for our customers across their physical and digital assets. our proven capabilities to operate at scale in complex regulated environments and industries. Last, but importantly, our ability to drive business outcomes for our customers, leveraging our artificial intelligence platform, which translates unstructured data into actionable insights. For example, we have been awarded a contract by the TV and film production distribution division of a major technology company. With a story history dating back almost 100 years, we are leveraging our Insight platform to digitize, archive, and preserve over 200,000 legal records containing the media rights for distribution and licensing of thousands of films and titles and TV episodes. With all this data available through one cloud-based digital platform, we can help our customer identify and develop new business opportunities by leveraging its rich intellectual property. This latest deal builds on a growing portfolio of solutions we are providing for this global customer's different business units, including records management and IT asset disposition. The multifaceted and long-standing relationship we have with this customer truly highlights the success of Project Matterhorn in our cross-selling efforts. Now let's turn to our continued success in winning government business around the world. We are supporting government agencies in Europe to digitize public services as part of an initiative to make their economies and societies more sustainable and resilient following the COVID-19 pandemic. This quarter, we won a two-year deal to digitize around 10 million files to accelerate a backlog of pension payments for one national government social security administration agency. In awarding Iron Mountain this contract, the customer recognized the specialist nature of our solution, including our AI and human-in-the-loop capabilities and our ability to quickly scale operationally to deliver this project within the required time frame. Also in the public sector, we are pleased to be working with the U.S. Citizen and Immigration Services to help drive efficiency and reduce the backlog of applicants awaiting adjudication decisions to become U.S. citizens. Over the last 10 years, we have been a proud partner with this important government agency. Having been entrusted with over 500,000 cubic feet of files and high-density tapes, Our digitization solutions will enable remote adjudicators to have faster access to vital data, helping them make overall immigration decisions. Turning to our asset lifecycle management business, consistent with the projections we shared last quarter, pricing has been stable, having hit a low level last February. Whilst industry projections are for significant price improvements in late 2023 and throughout 2024, We have continued to take a prudent perspective and are only assuming marginal incremental pricing improvement for the remainder of the year. Our pipeline is robust and we have delivered solid results this quarter that were in line with our expectations. Also, we are excited to share that we have signed an agreement to acquire Regency Technologies subject to customary closing conditions as we continue our roll up of the ALM market. Regency is a little over $100 million annual revenue business in the ALM space based in Ohio. The long-term customer relationships that Regency brings to Iron Mountain are an excellent strategic fit to our ALM business. Regency will add operational scale as we continue our growth journey in this fast-growing sector. As the world's need for both secure and more circular solutions for end-of-life IT assets becomes more vital, we are pleased to add to our capability in this category. With that, let us turn our discussions to some individual wins within the ALM space this quarter. I am pleased to share a particularly exciting win for our ALM business with a large global technology company. The deep relationship and trust we have built with this customer over many years was instrumental in Iron Mountain securing this significant deal, serving multiple business lines and geographies for the customer. These geographies include India, where our presence and ability to service the customer was a decisive differentiator alongside our global footprint, the expertise and responsiveness of our ALM team, and our reputation for data security and chain of custody. Also in ALM, we have signed a long-term contract with a private US insurance company that has been a longtime customer of our US secure shredding and destruction services. Last year, we began supporting this customer with one-off IT asset destruction projects, which demonstrated the value of remarketing thousands of these assets. The agreement we have now reached positions us as our customer's strategic partner for its future end-to-end IT asset management needs. By supporting the requirements of an organization with over 37,000 leased IT assets that need returning from remote employees, we are extending the value of the solutions we bring and have changed our customers' perception of what Iron Mountain can offer. Finally, we have a particularly exciting win to share. We have secured a significant five-year ALM contract to support a leading pharmaceutical retailer in the U.S. to advance its commitment to zero waste by 2030. Iron Mountain will provide a circular economy solution by removing and recycling thousands of tons of pharmaceutical stock bottles and pill bottles from thousands of its retail outlets across the U.S. We are providing this leading retailer with an advanced recycling solution, turning plastic into raw materials. This will enable the creation of new virgin plastic, helping this retailer meet their environmental goals. This is made possible by the scale of our physical presence, our highly experienced ALM team, and a reporting platform for all of the confidential waste that we have managed for this customer since 2014. We are pleased to be able to extend the value of our partnership with this new contract. Moving on to our data center business, our pipeline continues to expand with positive pricing trends. The continuing strong demand for data center capacity continues to be driven by digital transformation and most recently, the explosive demand for AI. Supporting the growth and expansion needs of our customers is paramount to our collaborative partnerships, and we are pleased to provide this required capacity to our customers in the markets in which they are keen to operate. From a leasing perspective, in the third quarter, we signed 65 megawatts. This means that through the end of the third quarter, we have already signed 120 megawatts, far beyond our original projection for the year of 80 megawatts. In the quarter, 60 megawatts were signed across two leases to a single Fortune 500 technology company at our campus in Northern Virginia. The deal provides this hyperscale customer with capacity across two buildings on our 142-acre, 276-megawatt campus and represents the largest revenue deal in Iron Mountain Data Center's history. We have also won a deal to provide nearly three megawatts of capacity at our Frankfurt Data Center for an existing North American cloud services customer looking to expand their European footprint. Our sales teams work closely with the customer's technical team to agree on a strategic solution that meets the customer's unique infrastructure needs. Given the strong customer demand in our data center business, we are continuing to expand the reach of our platform. To that end, I am pleased to announce a couple of capacity additions. First, we are repurposing a previous records management facility in Miami to data center use. Miami is a key market where a number of our customers are looking for edge deployments, and this newly repurposed facility will add 16 megawatts to our data center portfolio. Furthermore, we have acquired additional land and power this quarter, growing our total data center capacity to 860 megawatts, up 80 megawatts from last quarter. In summary, the hard work, dedication, and execution of our mountaineers continues to deliver strong results for our loyal customers and ultimately our company shareholders. Through our Matterhorn initiative fueled by our enhanced operating model, our team continues to achieve record sales growth by selling our entire mountain range of products and services to our longstanding 225,000 customers. Even in a tumultuous geopolitical climate, the resilience and strength of our business model combined with the dedication and customer first passion of our mountaineers continues to drive us ever higher. I would also like to express my deepest gratitude to our team for their hard work and continued focus as we continue our growth journey. With that, I'll turn the call over to Barry.