Iron Mountain Inc at Goldman Sachs Communacopia & Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: George Tong - Goldman Sachs - Analyst : So let's start with strategy. Over the years, Iron Mountain has transformed its business to build out several hybrid businesses like data centers, asset life cycle management solutions, digital solutions. Can you talk a little bit more about this strategy and why these businesses are synergistic with Iron Mountain's legacy records information management business?

Question: George Tong - Goldman Sachs - Analyst : Yes. And we'll certainly dive in more into the data center business a bit in the discussion. Let's talk a little bit about M&A. You recently acquired Regency Technologies to expand upon your asset life cycle management business. But you've also stated that transformative M&A is not likely in the data center business as you've done so much already, which parts of the business do you see room for transformative M&A at this point?

Question: George Tong - Goldman Sachs - Analyst : Right. Now Iron Mountain is a REIT. And as a REIT, it does come with minimum dividend payout requirements. How do you manage balancing dividend payment required investments for growth as well as managing the financial leverage on the balance sheet?

Question: George Tong - Goldman Sachs - Analyst : Makes sense. Let's talk a little bit more about the records management business. I think most people would be surprised to hear that global RIM volumes are flat to slightly up. Can you talk a little bit about what's driving that slight growth in organic storage volumes? And how long do you believe storage volumes can sustain positive growth?

Question: George Tong - Goldman Sachs - Analyst : Right. You talked a little bit about pricing. Let's talk about your revenue management strategy. Through your revenue management strategy, you've been able to achieve elevated pricing leverage or pricing gains in the legacy business -- was 7% to 8%. Can you talk a little bit more about what is revenue management and what has been customer receptivity to it?

Question: George Tong - Goldman Sachs - Analyst :

Question: George Tong - Goldman Sachs - Analyst : Right, right. Let's talk a little bit about your traditional services, which is typically driven by retrievable activity, filing activity. Can you talk about what you're seeing there with service activity levels, especially with people working from home more?

Question: George Tong - Goldman Sachs - Analyst : Yes. Makes sense. Let's switch gears and talk a little bit more about the data center business. Your data center business makes about 10% of revenues. Can you talk a little bit more about your data center portfolio? Where do you have presence geographically and how much megawatt capacity -- you currently have? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 6:50PM, IRM.N - Iron Mountain Inc at Goldman Sachs Communacopia & Technology Conference

Question: George Tong - Goldman Sachs - Analyst : Now in the second quarter, your data center revenues grew 24% year over year. How much of that growth came from generative AI?

Question: George Tong - Goldman Sachs - Analyst : Right. Makes sense. You raised your guidance for expected megawatts leased for this year from 100 megawatts to 130 megawatts. What drove the upside surprise? And where do you see that going forward?

Question: George Tong - Goldman Sachs - Analyst : Right. Now if your data center revenues are being in the mid-20s, does it stand a reason that megawatts leased should also grow at 20s or other considerations at play that could be for --?

Question: George Tong - Goldman Sachs - Analyst : Right. Makes sense. Let's talk a little more about your ALM business. Last year, the ALM business grew 30% organically and two-thirds of that growth came from volumes. Can you talk a little bit more about what's driving the volume growth in asset life cycle management?

Question: George Tong - Goldman Sachs - Analyst : Right. So on the semiconductor component pricing front, what have you seen so far year to date? And what are your expectations for a component price recovery over the remainder of this year? Are you looking for further acceleration? Are your assumptions more conservative that prices will stay stable?

Question: George Tong - Goldman Sachs - Analyst : Got it. And let's talk a little bit more about Regency. The integration, it sounds like it's progressing well. Can you give us an update there? And what you're currently seeing in terms of strategic benefits of having Regency within Iron Mountain?

Question: George Tong - Goldman Sachs - Analyst : Let's talk a little bit about Project Matterhorn, which are your 2026 financial targets. You're targeting 10% revenue growth, 10% EBITDA growth, 8% AFFO growth. So the similar growth between revenue and EBITDA, does that imply margin should stay relatively flat at current levels of around 36%, all the way through 2026?

Question: George Tong - Goldman Sachs - Analyst : Iron Mountain is spending about $1.5 billion on CapEx each year with the vast majority going to data centers. How fast do you expect CapEx to grow going forward?

Question: George Tong - Goldman Sachs - Analyst : Yes. Makes sense. And I'll pause here to see if there are any questions from the audience. We have a question there, if we can wait for the mic. Unidentified Participant Hi, how are you? My name is Santiago Sinaga; I come from Infrastructure Mason. I will begin to listen about your current mix between hyperscale and non-hyperscale business? And how are you looking forward that those numbers could potentially be based on your pipeline?

Question: George Tong - Goldman Sachs - Analyst : Okay. We're just about out of time. Barry, thank you for the great discussion.