The paragraph is a transcript of Iron Mountain's First Quarter 2025 Earnings Conference Call. It begins with the operator introducing the call, which is in listen-only mode, and mentions that there will be a Q&A session later. Mark Rupe, the Senior Vice President of Investor Relations, then introduces the event, referring to materials available on the company's Investor Relations website. Present for the call are Bill Meaney, the President and CEO, and Barry Hytinen, the CFO. Rupe highlights forward-looking statements subject to risks and uncertainties and notes that non-GAAP measures will be discussed, with reconciliations provided in the supplemental financial information. Bill Meaney expresses satisfaction with a strong start to 2025, driven by the Matterhorn growth strategy, which exceeds expectations.

In the first quarter, the company reported record quarterly revenue of $1.6 billion and adjusted EBITDA of $580 million, reflecting significant growth driven by strong performance across key business units, especially in growth sectors like data centers, digital solutions, and asset lifecycle management. The company's commercial team has successfully executed its strategy, securing significant customer deals and achieving cross-selling success, aided by high customer satisfaction ratings. The company's integrated offerings and expanded solutions portfolio underpin its potential for sustained double-digit growth in revenue and profit.

The paragraph outlines the company's strategic efforts to enhance cross-selling and awareness of its complete solutions offerings. It highlights achievements that contribute to revenue growth, including strong performance in physical storage records management, digital solutions, data center offerings, and asset lifecycle management. The records and information management business saw increased storage volumes and accelerated revenue growth through integrated services. Notable new projects include storing records for a Greek bank after a merger and securing a three-year records management agreement with a global insurance company in Thailand using their Smart Sort solution. The paragraph also notes successes in the digital solutions business.

The InSight Digital Experience Platform (DXP) is gaining market traction, leading to higher deal values and shorter sales cycles. The platform's capabilities are expanding to handle unstructured content, enhance process automation, and improve compliance and data accessibility, with tailored industry-specific use cases. Notable contracts include a 10-year agreement in the UK for digitizing millions of images and providing DXP access to 2,500 users, and a three-year deal with a European healthcare client to digitize large volumes of patient documents and utilize AI capabilities. Additionally, their experience with US government digital transformation services positions the company to support broader governmental efforts. Recently, they secured a contract with the Department of Treasury.

The article discusses Iron Mountain's ongoing digital transformation efforts through a contract valued at approximately $140 million, benefiting from the DXP platform's AI capabilities, with expected major revenue in 2026. The company has gained increased recognition in digital services, enhancing its pipeline with various federal agencies. The paragraph then shifts focus to Iron Mountain's data center business, reporting over 20% revenue growth year-over-year, driven by 24% organic storage growth. Despite no new hyperscale contracts in the quarter, strong interest exists across its global sites, aiming for a total of 125 megawatts of new leasing this year. The potential expansion of the portfolio to 1.3 gigawatts is planned, more than triple its current capacity. Additionally, the company welcomes Gary Aitkenhead as the new EVP and General Manager of Data Centers.

The paragraph highlights Iron Mountain's success in the asset lifecycle management (ALM) business, where they have achieved significant revenue growth in a fragmented market. The company has seen strong organic growth and wins in both the enterprise and hyperscale channels. There is an expectation of increased demand from large enterprises due to rising cyber risk awareness, and from data center growth in the hyperscale channel. Iron Mountain plans to expand its ALM capabilities through strategic acquisitions, such as its recent purchase of Premier Surplus. The paragraph also emphasizes a notable win with a global fintech company, attributed to Iron Mountain's strong relationship and expertise in handling sensitive assets.

The paragraph highlights Iron Mountain's recent success, including securing a new customer, a global technology infrastructure provider, to manage materials acquired through acquisitions. This was attributed to Iron Mountain's solutions, reputation, and brand. The company is optimistic about its future performance and has increased its full-year guidance due to strong Q1 results. Barry Hytinen reports that the company achieved record first-quarter revenue of $1.59 billion, with significant organic growth in storage and service revenues. Adjusted EBITDA also reached a record $580 million, exceeding projections due to better-than-expected operating performance and favorable currency exchange rates.

The paragraph discusses the financial performance of the company, highlighting an improved adjusted EBITDA margin of 36.4%, which increased by 130 basis points year-on-year due to better margins across all businesses and significant operating leverage. AFFO grew to $348 million, with an 8% increase on a reported basis and 10% excluding FX, translating to $1.17 per share, reflecting a 6% rise on a reported basis and 9% excluding FX. The Global RIM segment saw first-quarter revenue of $1.26 billion, an increase driven by revenue management and digital solutions, despite a $20 million negative impact from the stronger US dollar. Organic storage revenue increased by 6%, and organic service revenue grew by 5%, although reported service revenue declined by $4 million sequentially. The digital business achieved record revenue, and improvements were seen in records management retention and storage capacity utilization. Global RIM's adjusted EBITDA rose by $30 million year-on-year to $556 million, with a margin of 44.3%, an increase of 80 basis points. The consumer storage business, while still a headwind, is showing solid operating improvements.

The paragraph highlights strong financial performance and growth trends for the company's data center and asset lifecycle management (ALM) businesses. Data center revenue reached $173 million in Q1, a $29 million increase from the previous year, with 24% organic rental growth due to new lease commencements and robust pricing. Lease renewals showed significant improvement, and adjusted EBITDA rose to $91 million with a margin of 52.4%. ALM revenue also grew by 44% to $121 million, driven by volume increases in enterprise and hyperscale sectors and contributions from acquisitions like Wisetek and APCD. The company is optimistic about continued growth driven by customer wins and acquisition synergies.

The paragraph highlights that the company's organic growth exceeded expectations despite stable to slightly declining prices. The acquisition of Premier Surplus is anticipated to contribute approximately $10 million to the full-year revenue, although its results are not included in the first quarter financials. The company remains committed to balancing growth initiatives, shareholder returns, and maintaining a strong balance sheet. First-quarter capital expenditures amounted to $657 million, with the full-year outlook unchanged. A quarterly dividend of $0.785 per share has been declared, with a payout ratio of 62%. Due to strong first-quarter performance and favorable currency exchange rates, the full-year 2025 revenue guidance has been increased, projecting growth of 11% at the midpoint, with expected revenue ranging from $6.74 billion to $6.89 billion.

The company has increased its revenue and adjusted EBITDA guidance due to a weaker US dollar, strong revenue management, improved ALM performance, and the acquisition of Premier Surplus, expecting adjusted EBITDA to range between $2.505 billion and $2.555 billion, representing a 13% year-on-year growth. AFFO is projected to be between $1.48 billion and $1.51 billion, with AFFO per share estimated to be $4.95 to $5.05, reflecting 11% and 10% growth, respectively. For the second quarter, the company anticipates a 10% revenue increase to $1.68 billion, a 14% rise in adjusted EBITDA to $620 million, and a 9% increase in AFFO to $350 million, with AFFO per share up 9% to $1.18. Additionally, a new Department of the Treasury contract was awarded but is not yet included in the financial guidance, expected to impact 2025 and 2026 revenue significantly. The company also clarifies that exposure to tariffs in its Global RIM and ALM businesses is minimal due to market-based revenue and cost alignment and local reselling practices.

The paragraph discusses a company's strategic efforts to diversify its sales away from China while minimizing exposure to tariffs, particularly in its data center business. It highlights the minimal impact of tariffs due to the original manufacturing country's role in tariff assessments and notes less than 5% exposure in data center construction costs. The company has achieved record-breaking first-quarter results and has a positive outlook for the year, aiming for double-digit revenue growth through cross-selling in large, fragmented markets. The management expresses gratitude to the team for their dedication and opens the floor for a Q&A session. The first question, asked by Shlomo Rosenbaum from Stifel, addresses the company's leasing market challenges and seeks assurance on achieving significant megawatt goals, citing recent market conditions affecting their decisions.

The paragraph discusses a company's data center expansion and its financial impact. Bill Meaney highlights successful leasing activity, particularly with enterprise colocation sales and hyperscale projects, which are on track with their 125-megawatt guidance for the year. Barry Hytinen elaborates on construction costs, noting that labor, design, and imported materials like steel contribute to the budget, but the exposure to tariff-related cost changes is under 5%. Despite these costs, the global data center market remains strong, with favorable pricing and renewal spreads.

In the paragraph, Bill Meaney discusses the stability and strength of demand for data centers, particularly from hyperscale customers, across North America, Europe, and India. Despite evolving industry dynamics, Meaney notes no significant changes in demand from their largest customers. In fact, some hyperscale companies have increased their capital expenditure guidance for the next 12 to 24 months, with a significant portion being outsourced. The scarcity of power and suitable locations also contributes to a robust pipeline for their data center business.

In the paragraph, Tobey Sommer from Truist asks about the most important sales initiatives and how the company is progressing with them. Bill Meaney responds by explaining the Matterhorn strategy, which involved appointing Greg McIntosh as the Chief Commercial Officer to centralize customer relationships. This strategy focuses on offering a single point of contact for customers, allowing for cross-selling across various products and services, which has significantly expanded the company's addressable market from $10 billion to over $160 billion. This approach has helped transform the company from single-digit to double-digit growth by providing a wide range of products and leveraging macroeconomic trends that support growth. The next question in the conversation is directed to Barry from Kevin McVeigh of UBS, asking for details on the $90 million increase in revenue and EBITDA.

In the paragraph, Barry Hytinen provides a breakdown of a $90 million increase, attributing approximately $75 million to changes in foreign exchange (FX) rates, $10 million to Premier, and $5 to $10 million to operating performance. He expresses confidence about the business's direction and mentions a recent US government contract win. Following this, Jonathan Atkin from RBC Capital Markets asks about opportunities in data centers by region. Bill Meaney responds, highlighting strong prospects in Northern Virginia, Richmond, and Chicago, with a new facility in Miami catering to edge deployments.

The paragraph discusses the strong market pipeline for the company's operations in various locations. In Arizona, the company is nearly at full capacity, while Northern Virginia, particularly the Manassas campus, and Richmond have added capacity and are experiencing strong demand. Chicago and edge deployments around Miami are also mentioned. In Europe, the company is expanding its Amsterdam campus, which is a key market for hyperscalers, with limited capacity across Europe. They are sold out in Frankfurt and London. In India, where they have fully acquired Web Werks, they are expanding in Mumbai and Chennai. The conversation then shifts to a question about the mix of cloud, hyperscale, and enterprise markets, both internationally and in the US, and how M&A potential is evaluated. Bill Meaney addresses the market mix, and Barry Hytinen is set to comment on M&A considerations.

The company is shifting its focus from predominantly hyperscale data center decommissioning to a more balanced approach that includes enterprise IT assets, driven by recent acquisitions such as ITRenew, Wisetek, Premier, and Regency. Historically, their business was 60% data center and 40% enterprise, but they're moving towards the market trend of 70% enterprise and 30% data center. They see value in cross-selling to their large enterprise customer base and have expanded their geographical reach in the US, Europe, and parts of Asia. They plan to grow further in India and the Middle East, where they currently have limited presence.

The paragraph discusses the company's strategic directions and market coverage. They recently acquired a business in Australia and see it as a promising market. Their business is expected to shift to a composition of 60-70% enterprise and 30-40% data center decommissioning. Geographically, they feel well-covered in North America, quite covered in Europe, particularly in Eastern Europe, and are considering acquisitions in India, the Middle East, and Latin America. Barry Hytinen adds that in the first quarter, the business was 59% enterprise and 41% hyperscale, and after the Premier deal, it will exceed 60% enterprise. While they value both enterprise and hyperscale segments, hyperscale involves high-volume data center decommissioning with lower margins due to a revenue-share model.

The paragraph discusses the company's enterprise business, which offers better margins due to its continuous, service-oriented nature, compared to the hyperscale side. The enterprise market is larger, providing opportunities for improved operating leverage and scale efficiencies. The company's ALM (Asset Liability Management) profitability has improved due to acquisition synergies and better leverage. They are actively seeking small acquisitions, expecting these to enhance organic growth, which was strong at 22% in the last quarter. The paragraph concludes with Brendan Lynch from Barclays being introduced to the call and resolving a mute issue before continuing the discussion.

The paragraph discusses the increase in volume during the quarter for Iron Mountain, attributed to winning more business and expanding enterprise accounts, particularly in data center decommissioning. Bill Meaney notes that the volume growth is due to consistently acquiring new accounts and increasing existing account shares. He mentions that market pricing was largely flat or slightly down, so it did not drive the increased volume. The company has adopted a conservative approach to future pricing projections, maintaining current pricing assumptions despite potential volatility. The paragraph concludes the Iron Mountain earnings conference call for the first quarter of 2025.

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