Iron Mountain Inc at JPMorgan Ultimate Services Investor Conference Transcript

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

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Excellent. Barry, so Iron Mountain are increasingly focused on cross-selling, sometimes you just call it selling the entire mountain range. How do you benchmark success in cross-selling. Can you disaggregate maybe how you think about firmwide organic revenue growth between upsell and cross-sell, new clients, less attrition and then pricing.

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Excellent. Excellent. So just to refresh investors on Project Matterhorn. I believe you guys have called this sort of a change in the operating model. But sort of in plain english, what are you spending the money on? It's $125 million a year...

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Excuse me, $150 million a year and where is it going to work? What sort of the input where is the money going? And then what's the output?

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Right. Absolutely. So within that sort of framework of -- you've got this focus on cross-sell, you've reorganized -- you've reengineered the whole organization to sell not just a point solution or storage versus data center versus ALM, but really figure out how to solve the clients' problems and meet their needs. But your -- maybe to sort of as a more pointed question. You had a Net Promoter Score of 14.1% in 2022. It's disclosed in your proxy every year. How important is raising that figure to your cross-sell efforts and a little higher NPS drive cross-selling? Or will stronger cross-selling drive the NPS higher? How should we sort of see it as a leading vessel lagging of this year?

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Got it. That's very helpful. So maybe we'll dig into some of the specific businesses. Global records and information management also called Global RIM is the firm's largest segment. And it's an area where Iron Mountain have taken pricing actions you call revenue management on both the storage and services side of the portfolio. Can you discuss the firm's general approach to pricing. And then maybe to tie it into the cross-sell discussion, how does a broadening portfolio of solutions help you guys maintain healthy price value gaps?

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Got it. Yes. So raising price and extra point in the slower growth areas like records management, maybe not as helpful as getting that same dollar in the faster growth area where that same client might come back next year and say, "Hey, we actually need even more of that service", whereas the records management, they have a pretty good (inaudible)

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Got it. So shifting gears, you do have a lot of businesses, a lot you're selling the economics of all these revenue streams can be quite different. And you added -- you recently acquired a business called Clutter. Now we quite like that sort of B2C consumer concierge storage business. This is not like your sort of typical publicly traded storage companies, it's a bit different. . But Clutter been valued at $600 million back in 2019. Your net purchase price was, let's say, a fraction of that figure. What does actually owning Clutter, bring to Iron Mountain? And are there any synergies between that B2C business and the B2B business, you guys are in more generally?

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Got it. So it definitely helps from an absorbing capacity perspective. With -- even though it's a modest part of volumes help -- On the margin with volumes. Thinking about this, you guys have disclosed for a number of years, a couple of utilization metrics. Building utilization, racking utilization. I don't know quite how informative those are for the actual unit economics of the business for records management. But the format of call out on the last earnings call that about 15% to 20% of the operating portfolio that is sort of your footprint is under evaluation on any given day and that was in the context of converting a records management facility to data center. Is the right way to think about it that either you're building utilization in the low 80s, you're racking utilization in the high 80s that 100 minus that figure is the amount of space you have that you can use for data centers?

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Right. That's well framed. Let's pivot to data center. Let's talk about sort of the CapEx here. You have guided to around $1.3 billion in CapEx this year. You have, by my math, about $1.1 billion and change of construction in progress in the portfolio. A lot of that is scheduled for delivery in 2024. Not all, but a lot. Data center has, of course, been the biggest driver of your CapEx. Should we see total CapEx normalize towards that $1 billion growth capital call out that you had at the '22 investor event? And is growth capital the same as CapEx?

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Right. And just to maybe benchmarking for investors, math is 94.6% pre-leased, round up to 95% -- sorry, 94.6% leased in the operating portfolio right now. 91.8% pre-leased in the development portfolio. So that is revenue that is in the future it's got to build the box to put it in. .

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : So let's pivot with that to ALM, asset life cycle management. This is a smaller business for you guys. But it's one where you guys are pretty bold up and it's a business that sort of matches nicely with the data center business. You recently announced the intended acquisition of Regency Technologies for $200 million that expands your presence into new verticals, into new selling channels. But I wanted to sort of take a step back and -- your latest guidance points to, call it, $176 million to $178 million about in ALM revenues this year. Pro forma for Regency, which is north of $100 million in revenues, we're talking something like $285 million, $300 million, let's call it, probably closer to $25 million. How do we get from less than $300 million this year in pro forma to the $900 million plus outlook you have for 2026, which is 3 years out.

Question: Alexander Eduard Maria Hess - JPMorgan Chase & Co, Research Division - Analyst : Great. That's awesome. And I think we'll end it there for the day. Thank you, everybody, for joining us, and have a lovely day.