The operator welcomes participants to the Iron Mountain Fourth Quarter 2023 Earnings Conference Call, where they will hear from the Senior Vice President and Head of Investor Relations, the President and Chief Executive Officer, and the Executive Vice President and Chief Financial Officer. The call will discuss the company's record revenue and adjusted EBITDA for the fourth quarter and full year, and will include forward-looking statements and non-GAAP measures. The CEO attributes the success to the team's hard work and the company's resilient and growing business model.

In the fourth quarter, the company achieved strong revenue and record results, thanks to their work with customers in their records management business. They won contracts with a large health system, a Hungarian industrial gas supplier, and a British multinational asset management company, showcasing their cross-selling capabilities and the benefits of their services such as compliance, efficiency, and digitization.

Iron Mountain has had successful wins in their digital solutions business, including a contract with a large aerospace customer to deploy their InSight platform for managing and translating invoices in multiple languages. They also secured a new Master Services Agreement with a Canadian government agency for digitizing services, and a major television network in Brazil has asked them to manage the indexing and digitization of 50,000 boxes of records. Additionally, the Hong Kong division of a multinational bank has chosen Iron Mountain as their partner for a major transformation of their finance operations. These wins will contribute to Iron Mountain's growth and recurring revenue.

The company's data center business has seen significant growth, with 124 megawatts signed and potential for expansion in other locations including Singapore, India, the US, United Kingdom, and the United Arab Emirates. They have also secured contracts with a trading technology company and a secure cloud storage company in the US, and a major bank in India. Additionally, they have secured a significant contract with a global financial services company for their Asset Lifecycle Management business. The company's reputation for compliance and sustainability has been a key factor in winning these contracts.

In the fifth paragraph, the company discusses their successful integration of secure ALM services with a customer's existing business management platform, allowing them to streamline IT asset disposition activities. They also mention a contract with a vehicle insurance company for remote device retrieval and refurbishment, as well as their ability to provide data center renewal and decommissioning services. The company also acquired Regency Technologies, further enhancing their capabilities in this area.

In the fourth quarter, Regency's team joined our leadership and helped us serve the rapidly growing ALM sector. This, combined with our momentum in ALM and our dedicated team, has led to success and double-digit growth. We expect this momentum to continue into 2024 and beyond. In terms of financials, our team delivered record performance with revenue growing 11% year-on-year and 8.7% organically. Our organic storage revenue saw strong growth of 10.4%, driven by our records management and data center businesses. Our service revenue also increased by 8%, thanks to our team's efforts in selling our full range of products and services.

The company's adjusted EBITDA for the quarter was a new record at $525 million, up 11% from last year. This was driven by strong mix and cost productivity across all businesses. The company has updated its AFFO definition to exclude amortization of capitalized commissions, aligning with industry standards. AFFO for the quarter was $328 million or $1.11 per share, an increase of $29 million and $0.09 respectively from last year. For the full year, revenue was $5.5 billion, up 7% from last year, and adjusted EBITDA was $1.96 billion, an increase of $135 million. The global RIM business saw revenue of $1.19 billion, up 10% from last year, and adjusted EBITDA of $534 million, an increase of $48 million year-on-year.

In the fourth quarter, the global RIM adjusted EBITDA margin increased by 100 basis points due to a strong services mix and productivity. The data center business showed strong growth, with a 32% year-on-year growth in revenue and a 34% growth in data center storage revenue. The data center EBITDA also increased by $10 million and the EBITDA margin improved by 80 basis points. Pricing trends were strong and returns expanded by 100-150 basis points. The company leased 4 megawatts in Q4 and exceeded their projection for the full year, with 124 megawatts leased. The pipeline is at record levels and the company projects 100 megawatts of new and expansion leasing for 2024, a 25% increase from their initial projection for 2023. The Asset Lifecycle Management business also showed improved performance, with strong operating productivity and a modest increase in component pricing. Cross selling activity was strong and the acquisition of Regency Technologies was completed in January.

The company's recent acquisition has strengthened their ability to serve a growing customer base and expanded their capabilities in the ALM category. They have invested in growth and recurring capital expenditures for 2023 and 2024, with a focus on data center development. Their balance sheet is strong and they have declared a quarterly dividend. They are on track to meet their growth targets for revenue, adjusted EBITDA, and AFFO for the period of 2021 to 2026.

The company has achieved strong financial growth in the past year, with annual adjusted EBITDA and AFFO growth exceeding 10%. They project continued growth for the full year of 2024, with total revenue, adjusted EBITDA, and AFFO all expected to increase by double-digit percentages. However, they anticipate some foreign exchange headwinds. The company is confident in their ability to achieve their goals and thanks their team for their success. The call then opens for a Q&A session.

George asks a question about ALM volumes and component prices in the ALM business. William Meaney responds by stating that component prices have trended up quarter-over-quarter and are expected to continue to strengthen. He also mentions that volumes have increased throughout the year, but revenue was muted due to low component prices. Barry Hytinen adds that in 2023, ALM revenue was $177 million.

The company is expecting $355 million in total revenue for ALM, with $115 million coming from Regency. The fourth quarter run rate was over $200 million, assuming no improvement from enterprise bookings and a modest increase in component pricing. The guidance for organic ALM business has an incremental increase of $35 million, which the company feels good about. The pricing environment has contributed to revenue growth in the quarter and is expected to continue to contribute in 2024, with an uptake in RIM organic revenue growth.

The company's global RIM storage rental revenue increased by 8% in the quarter and 8.5% for the full year, driven by positive volume trends and revenue management. The company expects around 6% growth in global RIM for the new year, with a focus on value-added services such as digitization and Smart Sort. The company also expects strong service revenue growth in Q4. The company does not give formal guidance on RIM volumes, but expects to achieve the midpoint of 6% growth. In terms of data center pricing and leasing, the company has 100 megawatts in the pipeline and expects a cash mark to market of 5% for 2023.

William Meaney and Barry Hytinen respond to questions about the company's pipeline and pricing. Meaney states that they have a strong pipeline, especially in the hyperscale market, and their targets are consistent with what was laid out on Investor Day. Hytinen mentions that they are planning for physical volume to be slightly up for the year and that the majority of growth will be driven by services and revenue management. He also notes that mark to market trends have been positive and are expected to continue trending upward, particularly in the co-lo space.

The operator introduces a question from Brendan Lynch of Barclays about Matterhorn and its recent wins. William Meaney responds by acknowledging that the sales cycle for Matterhorn is longer than traditional sales cycles, but the revenue generated is also longer-lasting. He also mentions that recurring and multiyear projects make up a significant portion of the revenue, allowing for continued growth in the business. Barry Hytinen adds that there is a large cross-selling opportunity for Matterhorn.

The company has a large number of long-term clients and is seeing success in cross-selling services. They have reiterated their targets and are running ahead. The retention rates and customer satisfaction scores are strong, and the company's commercial team is winning new business. The storage revenue growth is impressive. The demand for data centers is outstripping supply and pricing is continuing to increase.

The speaker addresses the question about the targeted development yields for the company's $1.3 billion CapEx, with the majority being allocated to data centers. He mentions that the returns have increased despite the rise in interest rates and attributes this to higher pricing and demand from hyperscale customers. He also mentions the potential for further growth and funding sources, such as joint ventures, due to the company's fully funded plan and access to the full information services suite.

The company's records management business has a high gross margin and generates a lot of cash, allowing them to invest in data center development and provide dividends to shareholders. The company has a strong EBITDA and cash flow, allowing them to issue strong guidance and invest in data center development while maintaining leverage. The company is also optimistic about the potential for top line synergies and growth in their Regency segment.

In this paragraph, the speaker reiterates their excitement about the recent Regency acquisition, highlighting the strong leadership team and the potential for collaboration and expansion with Iron Mountain's resources. They also mention the added processing capabilities and profitability of Regency's business, making it a valuable addition to the company.

In the paragraph, Shlomo Rosenbaum from Stifel asks a question to Barry Hytinen about the company's gross margin changes. Hytinen explains that the increase in services margin was due to a good mix of deals and productivity, while the decrease in storage gross margin was due to a combination of all storage businesses, including the high gross margin Records Management Physical Storage Business.

The company is happy with the margins in their business, but data center growth has affected the overall rate. Data center gross margin has improved, but the mix has caused the overall rate to slightly decrease. The main driver of all other storage costs is power usage. The company's dividend payout ratio has dipped below their target of 65% and they are considering raising it again now that it is in the low 60s.

The speaker is discussing a potential decision for the Board regarding a natural increase in the near future. The guidance given for the year indicates this increase, and it is likely that the Board will consider it. The operator thanks the participants and ends the conference call.

This summary was generated with AI and may contain some inaccuracies.