The paragraph is an introduction to the Iron Mountain Third Quarter 2024 Earnings Conference Call. The operator introduces the call and mentions that it will be in a listen-only mode, with an opportunity for questions after the presentation. Gillian Tiltman, Senior Vice President and Head of Investor Relations, welcomes participants and introduces key speakers Bill Meaney, the CEO, and Barry Hytinen, the CFO. The call includes forward-looking statements subject to risks and uncertainties, and references several non-GAAP financial measures. Bill Meaney thanks participants and highlights the company's record financial performance this quarter, underscoring its sustained double-digit growth.

During the quarter, the company achieved record quarterly revenue of $1.6 billion, a 12% increase from the previous year, and a record adjusted EBITDA of $568 million, a 14% rise. AFFO per share increased by 10% to $1.12. The company is on track to meet the high end of its 2024 guidance. Key achievements included growth in physical storage records management, digital solutions with transformative results, environmentally sustainable asset life cycle management, and data center offerings. Significant wins include a seven-year contract with an Australian government department for various services and the launch of the InSight Digital Experience (DXP), a SaaS platform for managing physical and digital information. The platform was launched on August 1 and has already secured 24 recurring revenue deals, including cross-selling successes in Mexico.

Iron Mountain has secured several major contracts leveraging its DXP platform and expanded asset life cycle management (ALM) capabilities. A financial services company in a country with new digitization requirements contracted Iron Mountain to manage and digitize 50 million pension records. In the U.S., a healthcare company will use the DXP platform to better manage multi-format records and reduce ineligible claims. Additionally, in Australia, a telecommunications provider awarded Iron Mountain a recurring contract for secure e-waste and IT asset disposal. In the U.S., the acquisition of Regency Technologies facilitated a significant ALM contract with a global technology company to manage IT asset disposition services, showcasing the strength of Iron Mountain's logistics capabilities.

The paragraph outlines the company's strategic focus on expanding its presence in enterprise asset life cycle management, highlighted by the acquisitions of Wisetek and APCD. The data center business is also thriving, with significant leasing deals in Virginia and Arizona, contributing to a leasing total of 106 megawatts so far this year. The company's overall strategy capitalizes on its diverse portfolio, including digital solutions, data centers, and asset life cycle management, which are growing at over 20% CAGR. This, along with steady growth in records management, aims to deliver long-term consolidated growth exceeding 10%, supported by a broad customer base including 95% of the Fortune 1000.

The paragraph details the company's strong financial performance in the third quarter, highlighting record revenue of $1.56 billion, a 12% increase driven by storage and service growth. Organic growth was 10%, with total storage revenue reaching $936 million and service revenue at $622 million. The growth in service revenue was the highest in two years, aided by the acquisition of Regency Technologies. Adjusted EBITDA reached a record $568 million, with a margin of 36.5%, reflecting significant growth in the Global RIM, ALM, and data center segments.

In the third quarter, AFFO increased by over 10% to $332 million, with AFFO per share rising to $1.13, surpassing projections due to higher adjusted EBITDA despite the strong U.S. dollar's impact. On a constant currency basis, revenue and AFFO were up 13% and 11%, respectively. The global RIM business saw a revenue increase to $1.26 billion, with organic storage and service revenue both up 7%. The digital business launched a new platform and achieved strong bookings, largely through cross-selling. Global RIM's adjusted EBITDA rose to $569 million, improving margins due to operating leverage and revenue management. Additionally, the global data center business reported a 20% organic growth in total revenue, with storage rental revenue up 22% year-on-year.

This quarter saw a slight decline in service revenue due to a decrease in customer-specific installation work, which generally yields low margins. Data center adjusted EBITDA rose to $67 million, showing 26% growth and a margin increase to 43.6% thanks to pricing, recent commencements, and operating leverage. The company secured 9 megawatts of new leasing, totaling 106 megawatts year-to-date, with expectations to reach 130 megawatts by year-end 2024. They also announced acquiring a development site in Richmond, Virginia, to eventually support over 200 megawatts of capacity, boosting their total center capacity by over 20% to more than 1.1 gigawatts. Asset life cycle management (ALM) revenue was $102 million, growing 145% year-on-year, driven by strong organic growth and successful cross-selling, evidenced by 95% of ALM bookings being cross sell wins. Regency Technologies contributed $36 million, enhancing ALM profitability through synergies and improved decommissioning efficiencies.

In the paragraph, the company discusses its recent acquisitions and financial performance in the third quarter. They acquired APCD, which added $3 million to revenue, and Wisetek, which had no income impact in that quarter. The company remains committed to balancing growth initiatives and shareholder returns, spending $415 million on capital expenditures. They achieved a net lease-adjusted leverage ratio of 5.0 times, their lowest since 2014, and improved their cash cycle significantly. The Board declared a quarterly dividend of $0.715 per share. They project strong financials for the fourth quarter, expecting high revenue and earnings. The company's growth plan includes operating in large markets with a sizable addressable market and maintaining long-standing client relationships.

The paragraph involves a discussion on business trends within the company's ALM (Asset Lifecycle Management) segment. The company is experiencing strong growth, particularly from data center decommissioning as hyperscale companies upgrade their equipment for newer GPUs and AI capabilities. There is also positive growth in the enterprise sector. In terms of pricing, there is an upward trend, although the price differences between new and second-hand components have been somewhat inconsistent. The dialogue concludes with an operator introducing a Q&A session, with the first question being asked by George Tong from Goldman Sachs regarding these trends.

The paragraph discusses the financial performance and future investment plans of a business. It highlights that the ALM business generated nearly $103 million in revenue for the quarter, showing a significant increase from the previous year due to higher volumes and synergies from the Regency deal. Barry Hytinen addresses a question from Jonathan Atkin about capital expenditure (CapEx) requirements to support future growth, emphasizing substantial investments in data center expansion driven by strong leasing growth. The company expects to spend a few hundred million dollars more on growth capital than previously anticipated, with most of their construction projects already pre-leased under favorable terms.

The paragraph discusses the capital guidance for the year, which is approaching $1.8 billion, with about $150 million being recurring. Most of the capital growth is allocated for data centers. Shlomo Rosenbaum from Stifel inquires about the timing of new data center construction coming online, noting the significant signings this quarter despite minimal sequential revenue growth in the data center business. William Meaney responds, explaining that the company secured 9 megawatts this quarter and has a strong pipeline, targeting 130 megawatts or more for the year. He acknowledges the lumpiness in securing large hyperscale contracts, which affects the timing and revenue generation from these projects.

The paragraph discusses the positive outlook for the company's revenue growth, driven by two high-margin contracts and project commencements. The company expects strong revenue acceleration into the fourth quarter and projects continued growth into 2025, aiming for a compound annual growth rate of over 20%. They've also acquired more land in Richmond, Virginia for expansion. Barry Hytinen notes that while many projects began at the end of the quarter, contributing minimally to current revenue, they anticipate over $20 million in incremental data center revenue in Q4. This projection exceeds previous guidance, demonstrating effective construction management and upcoming commencements in future quarters.

The paragraph discusses the anticipation of increased data center revenue due to improving returns and better pricing. As a result, margins are expected to increase sequentially. William Meaney addresses a question about Richmond land, confirming it has power provision for over 200 megawatts of critical IT load, indicating a favorable expansion. Barry Hytinen comments on the growth of physical RIM volumes, expecting continued expansion through the fourth quarter and into next year. The team is successfully capturing market share and enhancing value for clients through various offerings like Smartstore, Image on Demand, and the DXP platform, improving client service, particularly for larger clients.

The paragraph discusses the financial performance of a company's global Records and Information Management (RIM) division, highlighting a 7% organic revenue increase on the storage side, exceeding expectations. The long-term outlook for physical volume growth is stable, with revenue management opportunities expected to remain in the mid to upper-single digit range. During a question-and-answer session, Kevin McVeigh from UBS asks Barry Hytinen about maintaining revenue and EBITDA guidance at the high end of the range, despite surpassing expectations in the quarter. Hytinen explains that the company's projections suggest they will slightly exceed the high end for revenue and EBITDA, while FX (foreign exchange) has been a consistent headwind throughout the year.

The paragraph discusses a business's financial performance and strategy, emphasizing its exposure to Latin American currencies like the Argentine peso, Chilean currencies, and Brazilian real, which have negatively impacted revenue and EBITDA due to their decline against the dollar. Despite this challenge, the business remains optimistic and is performing better than its long-term growth target, with a current CAGR exceeding expectations by 200-300 basis points. The growth is driven by a portfolio including ALM, digital, and data centers, along with a strong global RIM business. The paragraph then shifts to a Q&A session where Andrew Steinerman from JPMorgan asks about the InSight DXP platform's recent 22 wins. He inquires whether Iron Mountain is earning revenue from InSight, which was initially intended as a cross-sell rather than a direct revenue source, and seeks to understand the significance of these wins.

In the paragraph, William Meaney discusses the profitability and capabilities of their DXP platform, highlighting that their service contracts typically yield a 20% to 40% gross margin depending on the contract's length and productivity improvements. He emphasizes that they never provide services for free and that their digital business has evolved from basic digitization of documents to processing digital data through a SaaS platform, automatically creating metadata and workflows. He provides an example of their work with historical savings bonds, demonstrating the platform's efficiency and potential for growth, and reiterates his commitment to profitability.

In the paragraph, Eric Luebchow from Wells Fargo asks William Meaney about their long-term revenue aspirations with ALM, specifically if they still aim for $900 million by 2026, given the current revenue of just over $400 million. Meaney confirms their target, citing a combination of organic growth and acquisitions, mentioning a strong organic growth rate of over 20%. He highlights volumetric trends in enterprise and data centers and acquisitions in Q3 as supporting factors, expressing confidence in meeting the Investor Day goals.

In the paragraph, Barry Hytinen discusses the company's achievement of surpassing their growth target, highlighting their success in the global Records and Information Management (RIM) business and noting the significance of the Asset Lifecycle Management (ALM) category. He emphasizes ALM's large Total Addressable Market (TAM) and the company's potential to become the market leader organically and through acquisitions. During a question from Brendan Lynch, William Meaney expands on recent acquisitions, Wisetek and APCD, explaining that Wisetek enhances their presence in Europe and North America and brings valuable customer relationships, including acquiring a new hyperscale customer.

Iron Mountain is expanding its capabilities through acquisitions, such as Wisetek, which is based in Ireland with operations in Europe, the U.S., and Asia, and APCD in Australia, a key market for data centers. These acquisitions are expected to add around $75 to $80 million in run rate revenue. The company sees significant opportunity in expanding services like enterprise and decommissioning in underpenetrated markets. Although open to more acquisitions, Iron Mountain is already a major player in the industry, with most other companies being relatively small. The focus remains on organic growth and integrating the new teams from Wisetek and APCD.

The paragraph indicates the conclusion of the Iron Mountain third quarter 2024 earnings conference call, thanking participants for their questions and attendance, and informing them that they can now disconnect.

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