Iron Mountain Inc at JPMorgan Ultimate Services Investor Conference Transcript

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

Question: Alex Hess - JPMorgan - Analyst : Barry, just to start off, you've had an initiative called Project Matterhorn announced in September 2022. Since Matterhorn's inception, Iron Mountain has spent about $340 million-odd on this transformation initiative with aims to spend about $150 million per year through next year. Can you remind investors about the thesis behind Matterhorn, the most concrete changes you've made, and how should we benchmark Matterhorn's success?

Question: Alex Hess - JPMorgan - Analyst : Do you think if you had gone out and said that you were a Fortune 500 company that was instituting a sales force for the first time in its history when your stock was trading at a low double-digit AFFO multiple, you might have seen a pick up pretty -- a bit sooner?

Question: Alex Hess - JPMorgan - Analyst : Awesome. Can you just walk through what work streams from Matterhorn are complete and which still have to be done?

Question: Alex Hess - JPMorgan - Analyst : So you're still building out the billings function, still building out --?

Question: Alex Hess - JPMorgan - Analyst : So with this growth portfolio you guys now have, data center where you guys give loads of color, digital solutions where we take what we can get, but it's getting more full and then asset lifecycle management -- your expectation is to grow these businesses collectively in excess of 20% for a very long period of time. Is there a unifying thesis or theme behind why Iron Mountain is the natural owner for all these businesses and behind the 2% projection?

Question: Alex Hess - JPMorgan - Analyst : That's all really, really helpful. When you said cross-sell easier, did you mean amongst each other or also with the global records business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2024 / 6:50PM, IRM.N - Iron Mountain Inc at JPMorgan Ultimate Services Investor Conference

Question: Alex Hess - JPMorgan - Analyst : Got it. That's super helpful. And I think we've asked to see you a couple of times, so apologies. But I've got to ask it again. As you sit there with these -- this cash cow global RIM business and these three businesses that are in focus for you, but kind of sometimes buried in certain financial statements, is there an opportunity to simplify by taking the rest and saying, it's good; it might not be for us?

Question: Alex Hess - JPMorgan - Analyst : Right. So maybe we'll spend a few minutes on the core. Sorry, but I can't start every time we speak with how are volumes in the quarter. So on the quarter, maybe -- the 727 million cubic feet, mostly business records in global RIM. Can you dimension and provide any granularity around these volumes? What percentage are US versus Europe or Asia to emerging markets versus developed markets? Maybe we'll start there.

Question: Alex Hess - JPMorgan - Analyst : That's RIM operations.

Question: Alex Hess - JPMorgan - Analyst : Wow. And then if you were to cut up RIM by -- or let's say, records management within RIM -- just by end market, what are your top end-market exposure?

Question: Alex Hess - JPMorgan - Analyst : So let's say, maybe a little bit of a tilt towards financial services, healthcare, manufacturing, government legal, but we're probably tracking GDP?

Question: Alex Hess - JPMorgan - Analyst : Got it. And then one last one here. Everybody thinks of that cubic footage, it's very -- can you say that? Cubic footage -- as very paper. But there are other forms of media in that cubic footage. Can you maybe dimension rough order of magnitude, how much is paper versus everything else?

Question: Alex Hess - JPMorgan - Analyst : And how many -- what's your sort of rough dimension size cubic feet in consumer space?

Question: Alex Hess - JPMorgan - Analyst : Got it. That's very, very helpful. So as you sort of think about these additional growth businesses and then the records management customer base, one question we get a lot is why don't they churn more often? Why are they so sticky? And our thesis is that maybe there's -- your global scale plus your ability to cross-sell makes you more embedded with that same customer. Am I missing something there? Is there some other reason that sort of keeps you in the door with them for so long and so effectively?

Question: Alex Hess - JPMorgan - Analyst : Right. And I presume that also is one of the reasons that you have the envelope to take mid- to high-single-digit price increases in the core.

Question: Alex Hess - JPMorgan - Analyst : That's super helpful. Want to maybe pivot to how you use this free cash flow that this great business generates. Barry, on the last earnings call, you disclosed that 2024 CapEx will be probably approaching $1.8 billion this year. That's well above where our model was. And you also indicated something of that order might be the annual budget going forward. Can you elaborate as to how Iron Mountain's internal plans have evolved that led to that uplift?

Question: Alex Hess - JPMorgan - Analyst : Excellent. You touched on sort of expediting a couple of data center deliveries. I believe those were the two in Virginia. And it's become apparent to us that you guys have really developed a track record as a strong data center developer building and operating these facilities. Can you elaborate on that Virginia asset? What led to the expedited delivery?

Question: Alex Hess - JPMorgan - Analyst : So yeah, a good point on the price per kilowatt hour. Was that in any way reflective of the fact that it closed right at the end of the quarter or what you guys put in the (multiple speakers) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2024 / 6:50PM, IRM.N - Iron Mountain Inc at JPMorgan Ultimate Services Investor Conference

Question: Alex Hess - JPMorgan - Analyst : No, I'm just saying was the disclosed amount pressured down by the fact you only had it in the financials for a few days?

Question: Alex Hess - JPMorgan - Analyst : I got you. So on capital allocation, just generally, generate a lot of EBITDA and spend a lot of CapEx. We think of this as -- you can easily cover the must covers at this juncture. And so your capital [outliers] are very growth-oriented and discretionary but do require incremental borrowing. That's sort of the framework to keep that leverage ratio, in fact, to borrow against the growing EBITDA. What happens if the EBITDA base just doesn't grow? Something happens -- one of your businesses, the structure change -- do you have a fallback or contingency plan for how to reorient your balance sheet and your structure in the event there is some broad-based pullback in one of your business systems?

Question: Alex Hess - JPMorgan - Analyst : Excellent. So I think we've got time for one more question, and I'm just going to ask you about the inorganic opportunities ahead. And obviously, you've got these three growthy businesses. You did the Recall acquisition back in 2016, which tremendously successful and I think really made you the global guys. As you sort of think about where you might want to deploy funds inorganically, keeping in mind that data center we can treat is inorganic for this question just even though it's very much organic, how do you think about prioritizing those asset classes and where you might look to do a deal or look to buy --?

Question: Alex Hess - JPMorgan - Analyst : Excellent. With that, we'll call it for the day. Thank you so much for your time, Barry. (multiple speakers)