Good morning, and welcome to the Iron Mountain Third Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity for questions. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead, ma'am.

Thank you, Chuck. Good morning, and welcome to our third quarter 2024 earnings conference call. On today's call, we will refer to materials available on our Investor Relations website. We're joined here today by Bill Meaney, President and Chief Executive Officer; and Barry Hytinen, Executive Vice President and Chief Financial Officer. After prepared remarks, we'll open the lines for Q&A. Today's earnings materials contain forward-looking statements, including statements regarding our expectations. All forward-looking statements are subject to risks and uncertainties. Please refer to today's earnings materials, the safe harbor language on Slide 2 and our quarterly report on Form 10-Q for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements. In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations to these measures in our supplemental financial information. With that, I'll turn the call over to Bill.

Thank you, Gillian, and thank you all for taking time to join us today to discuss our third quarter results. We delivered another excellent quarter, with record results across all financial metrics of revenue, adjusted EBITDA and AFFO. This is a direct result of the portfolio-based momentum we have built, which will continue to deliver sustained double-digit growth. During the quarter, we achieved our highest ever quarterly revenue of $1.6 billion, up 12% from the prior year. We also set a new adjusted EBITDA record of $568 million, up 14%. In addition, AFFO per share on a normalized basis was $1.12, up 10% compared to the prior year. Given our strong performance year-to-date, we are now on track to achieve the high end of our full year 2024 guidance range. I'll now turn to an update of our key achievements during the quarter, which are grounded in the following strategic priorities: driving continued revenue growth in our physical storage records management business; delivering differentiated digital solutions that provide truly transformative results for our customers in terms of revenue, cost and cybersecurity; providing asset life cycle management capabilities that are both economic and environmentally sustainable; and supplying differentiated data center offerings through our global scale and customer trust. Now let me highlight some important wins from the quarter that showcase how we demonstrate the power of our platform. Let's begin with our Records and Information Management business. In Australia, a large government department was looking for a partner that could provide a number of services. We earned their trust and signed a seven-year contract delivering storage, digital solutions and asset life cycle management services. In our digital solutions business, this quarter, we launched our InSight Digital Experience, or DXP, a SaaS-based platform. DXP allows customers to automate the generation of metadata as well as having the ability to access, manage, govern, and monetize physical and digital information. We launched this enhanced platform on August 1, and already booked 24 recurring revenue deals. I'll speak to two existing customer wins where we cross-sold our DXP offering. Let's start with the customer in Mexico. Due to new requirements for all pension information to be digitized, a longstanding customer turned to Iron Mountain to swiftly gain compliance. We secured a DXP contract with this large financial services company to sort, digitize, and manage their pension records over the next 12 months, comprising more than 50 million images. Secondly, in the U.S., a large healthcare company that has an existing records management and ALM customer will leverage our DXP platform to manage a complex set of multi-format records. By digitizing and migrating this data into our DXP platform, our customer will be able to manage their records more effectively, including the elimination of ineligible claims. This is an example of how our DXP platform drives value for our customers and our unique ability to support their physical and digital information management needs. Turning to our asset life cycle management business, we are pleased with the progress we are making to expand our capabilities and geographic footprint. In Australia, a telecommunications provider needed services for the secured destruction and disposal of e-waste and IT assets. Given our nationwide scale, this customer determined that we were the right partner to handle a high volume of IT hardware efficiently. As a result, Iron Mountain was awarded a recurring contract for these services. In the U.S., our expanded footprint and capabilities following our acquisition of Regency Technologies has resulted in a significant ALM contract with a global technology company. Under this agreement, we will be managing all IT asset disposition services for our customer's U.S. operations, in addition to the records management services that we already provide. The strength of our logistics capabilities was a major factor in winning this contract. Consistent with our strategy to significantly grow our presence in the large and fragmented enterprise asset life cycle management space, we are pleased to announce the acquisition of Wisetek, an end-to-end IT asset disposition company, which will provide us with an expanded footprint across Europe and the United States. We also completed the acquisition of APCD, a leading Australian IT asset disposition specialist. These acquisitions will enable us to continue to expand our reach across a number of categories. Turning to our data center business, I would like to share two examples that demonstrate the continued demand for capacity at our campuses across the world. In Virginia, our team won a second 2 megawatt deal with a global technology company, building on a similar deal with this customer at our data center in Pennsylvania earlier this year. In Arizona, we are supporting a global fintech provider to migrate from an internal data center in a 1.5 megawatt deal with scope for further expansion. Our compliance program was a deciding factor for this highly regulated customer. The leasing achieved in the first three quarters brings us to 106 megawatts compared to the increased guidance for the year of 130 megawatts. To conclude, I'll leave you with three key takeaways. Our strategy is built on the strength of our portfolio of growth businesses, including digital solutions, data center, and asset life cycle management, each growing at a CAGR of over 20%. This coupled with the mid to high-single digit growth of our records management business will continue to deliver consolidated growth in excess of 10% for years to come. This growth is sustained and resilient, as it is based upon a portfolio of products and services that meet the current and future needs of our customer base of nearly 250,000 customers, including 95% of the Fortune 1000. And the cornerstone of this strategy is our company's DNA of placing our customers' needs and well-being at the heart of how we serve them. This is all thanks to our dedicated team of Mountaineers. With that, I'll turn it over to Barry to provide more details on our financial results and outlook.

Thanks, Bill, and thank you all for joining us to discuss our results. In the third quarter, our team delivered strong performance across all of our key financial metrics, including revenue, EBITDA, and AFFO. Results for each of those were ahead of the projections we provided on our last call. Our team drove solid performance across all of our business segments, each of which I will discuss in more detail before turning to our outlook for the fourth quarter. During the third quarter, we achieved record revenue of $1.56 billion, up 12% on a reported basis, driven by 9% storage growth and 17% service growth. We delivered strong organic growth in the quarter, up 10%. Total storage revenue in the quarter was $936 million, with an increase of $77 million year-on-year. We drove 9% organic storage growth, two-thirds of which was due to revenue management trends in our global RIM business and one-third from our data center business. Total service revenue was $622 million, up $92 million from last year. Organic service revenue growth accelerated to 10% year-on-year. This represents our best quarterly growth rate for organic service revenue in the last two years. Revenue was driven by strong performance in our ALM and global RIM businesses. Reported service revenue growth at 17.4% reflects the inclusion of our Regency Technologies acquisition. Adjusted EBITDA was $568 million, a new record, up 14% year-on-year, driven by strong growth in our Global RIM, ALM, and data center businesses. Adjusted EBITDA margin was 36.5%, up 50 basis points year-on-year, reflecting improved margins across all our businesses. AFFO was $332 million, up $31 million, representing growth in excess of 10% from the third quarter of last year. Reported AFFO on a per share basis was $1.13, up $0.11 from last year. AFFO per share included a $0.01 benefit due to our GAAP share count in the quarter. Normalizing for that, AFFO per share was up 10% to $1.12, which is comparable to the projection we provided on our last call of $1.10. The outperformance to our guidance was driven by higher adjusted EBITDA. As expected, the strength of the U.S. dollar continued to be a headwind, increasingly so toward the end of the quarter. On a constant currency basis, revenue was up 13% and AFFO was up 11%. Now turning to segment performance. I'll start with our global RIM business, which achieved revenue of $1.26 billion, an increase of $78 million year-on-year. Organic storage was up over 7%, driven by revenue management and consistent volume. Organic service revenue was also up 7%, with contributions from digital and core services. A key highlight is the performance of our digital business. The team launched the digital experience platform that Bill mentioned, while also delivering their best bookings quarter yet. Consistent with our Matterhorn plan, the vast majority of the digital wins were the result of cross-selling. Global RIM adjusted EBITDA was $569 million, an increase of $52 million year-on-year. Global RIM adjusted EBITDA margin was up 120 basis points sequentially and 140 basis points from last year. Margin expansion was driven by operating leverage and revenue management. Turning to our global data center business. The team delivered revenue of $153 million, an increase of $26 million year-on-year. From a total revenue perspective, we achieved 20% organic growth. We delivered storage rental revenue growth of 22% from the third quarter of last year. As expected, service revenue was down slightly this quarter due to the customer-specific installation work we had last year. As a reminder, installation revenue tends to be at low to breakeven margins. Data center adjusted EBITDA was $67 million, representing strong growth of 26%. Adjusted EBITDA margin was 43.6%, an increase of 190 basis points from the third quarter of last year and up 40 basis points sequentially. Margin expansion was driven by pricing, recent commencements, and operating leverage. Turning to new and expansion leasing. We signed 9 megawatts in the quarter, bringing total bookings year-to-date to 106 megawatts, and we expect to finish the year with 130 megawatts of new leases signed in 2024. Consistent with the strength and expanding nature of our hyperscale customer relationships, together with the outlook for long-term secular growth in the data center industry, we are pleased to announce that we have acquired a development site in Richmond, Virginia. When fully built out, the campus will operate with greater than 200 megawatts of capacity. As this transaction closed in the fourth quarter, it is not included in our supplemental. With this new market, our total data center capacity rises to in excess of 1.1 gigawatts, an increase of over 20%. Turning to asset life cycle management. Total ALM revenue in the quarter was $102 million, an increase of $61 million or 145% year-on-year. On an organic basis, our ALM team delivered strong double-digit growth, which was driven by data center decommissioning and expansion in our enterprise business. Regency Technologies performed very well this quarter with a revenue of $36 million. Leveraging Regency's capabilities, capturing synergies related to the deal and improved efficiencies in our data center decommissioning resulted in considerable improvement in ALM profitability. Our focus on cross-selling is delivering great results. For example, over 95% of our ALM bookings this quarter were cross sell wins. Regarding the ALM acquisitions that Bill referenced, we closed APCD in August, and it contributed $3 million to revenue. We closed Wisetek in late September, so we had no income statement contribution in the quarter from that acquisition. Turning to capital allocation. We remain committed to our strategy that is balanced between funding our growth initiatives while delivering meaningful returns to our shareholders and maintaining a strong balance sheet. Capital expenditures in the third quarter were $415 million, with $373 million of growth and $41 million of recurring. Turning to the balance sheet. With strong EBITDA performance, we ended the quarter with net lease adjusted leverage of 5.0 times, which is again the lowest level we have achieved since prior to the company's REIT conversion in 2014. A highlight in the quarter was the significant improvement in our cash cycle, with the third quarter having the best performance in that metric in over a decade. Our team drove days sales outstanding down by over five days from the third quarter of last year. We also improved days payable by two days. Turning to our dividend. Our Board of Directors declared our quarterly dividend of $0.715 per share, to be paid in early January. And now turning to our projections. For the full year, we are on track to achieve the high end of our guidance. For the fourth quarter, we expect revenue of approximately $1.6 billion, adjusted EBITDA of approximately $595 million, AFFO of approximately $358 million, and AFFO per share of approximately $1.21. In conclusion, our third quarter results represent another milestone on our growth plan. We operate in very large categories, with a total addressable market in excess of $150 billion annually and growing. Iron Mountain has long-standing relationships with nearly 250,000 clients, many measured in decades of duration. In the vast majority of those relationships, we are only penetrating a small fraction of our total product offering. We are driving value for our customers, and we are highly focused on cross-selling and expanding market share across our businesses. I would like to thank all of my fellow Mountaineers for their efforts to serve our clients and grow our company. And with that, operator, would you please open the line for Q&A.

Thank you. We will now begin the question-and-answer session. And the first question will come from George Tong with Goldman Sachs.

Hi. Thanks. Good morning. In your ALM business, can you talk a little bit more about trends that you're seeing in the data center and enterprise side of the business, including how much contribution you're seeing from volumes and pricing?

Good morning, George. Thanks for the question. Let me talk about the overall trends. Barry, I'll ask to comment a little on the pricing trends. As you alluded to, we see good growth or very strong growth coming out of the data center decommissioning, especially where a lot of the hyperscalers are renewing their equipment to take advantage of the latest GPU. So we continue to see strength in that trend. However, that doesn't ignore the strength in growth from the volumetric trends we see on the enterprise side. But you're right to assume that we see good growth in the hyperscale segment due to the refresh of their equipment to take advantage of AI.

And George, it's Barry. From a pricing standpoint, we continue to see it trend as I've been discussing throughout the year. It was up some on a year-on-year basis and trending. However, the spreads between new and second-hand have been a little variable based on the specific component. For example, memory has been a little wider than normal, while some others have been a little tighter. As I've said before, we're not really predicating our guidance on a meaningful increase in component pricing. Our total ALM business was about $102 million of revenue in the quarter. As I mentioned, Regency was $36 million, and then we had about $3 million from APCD. Our organic revenue in the quarter on ALM was about $64 million, compared to last year at $42 million. The volume is driving a lot of the increase, and with that volume, together with the synergies from our Regency deal, we're seeing the ALM profitability improve significantly. So we're very pleased with the way our ALM business is trending, George.

Got it. Very helpful. Thank you.

Your next question will come from Jonathan Atkin with RBC.

Thank you. I wanted to ask about CapEx requirements to fuel the growth going forward. Give us a sense of how to frame that for next year? I assume a lot of that would be for data centers, but any color on that would be helpful. Thank you.

Hi, Jon. It's Barry. You are correct that in light of the strong growth we continue to see in leasing, we will be continuing to invest significantly in data center growth capital. In fact, we'll probably be somewhere in the vicinity of a couple of hundred million dollars more growth capital than we were previously expecting earlier in the year. As you've probably seen in our supplemental, we are advancing heavily in the construction of pre-leased assets. Nearly all our construction is already pre-leased on very favorable terms. Our total guidance for capital this year is probably approaching $1.8 billion, with about $150 million of that being recurring. The vast majority of the growth is for data centers, and you should expect something along those lines going forward in light of our signings and the capacity we will be bringing online under those pre-leased agreements. Thank you.

Your next question will come from Shlomo Rosenbaum with Stifel.

Hi. Thank you very much. Could you talk a little about the pacing of when you expect some of the construction to come online? It wasn't a ton of sequential revenue growth in the data center business. And obviously, there was a huge signing quarter relative to what we saw in the last couple of quarters. So I want to know if you could just give us — I know it's lumpy on the signing side. And obviously, you have to put something into commission that your customers are using in order to generate revenue. Can you give us a little bit of an idea of how we should think about that pacing into the fourth quarter? And then in general, over the next year or so, are you looking to bring a lot of new capacity or new data centers online?

Thanks, Shlomo for the question. So there are a few pieces here. First, with the signing this quarter, the 9 megawatts. As mentioned, we expected some of this to land in Q3 last time that actually landed in Q2. We still feel very good with the pipeline that we have to land at 130 megawatts or maybe a little better for the year because of lumpiness of some of these large hyperscale contracts. However, we are pleased with the contracts we signed, which are more co-location, which obviously attract very high margins. We feel confident in our guidance for the year. The revenue growth pickup you're referring to is driven by the commencements. We expect to see an acceleration of revenue growth both year-on-year and sequentially as we head into the fourth quarter. This will position us well for continued double-digit growth or, in the best case, north of 20% CAGR in the growth of that business as we move into 2025. We also announced after the close of the quarter that we purchased more land to build out a campus in Richmond, Virginia. We feel optimistic about our setup heading into 2025. The fourth quarter will be very strong. Barry, do you want to add anything?

Sure. The additional color I would provide is, as reflected in our supplemental, we did commence into revenue-generating and completed construction on a number of megawatts. However, the majority of that occurred right at the end of the quarter, contributing very little revenue to the headline results. This is why we have a high degree of visibility toward something in the neighborhood of $20 million or more of incremental data center revenue in the fourth quarter versus the third. This amount is up from our prior guidance, reflecting our team's efficiency in keeping construction on budget and on time. We have several commencements coming over the next few quarters, so you should anticipate ramping levels of data center revenue from us going forward. As we've stated before, the returns we've encountered have been improving, and pricing in the data center has been increasing, so we expect that trend to continue. We feel good about where we are. Next question?

Your next question will come from Nate Crossett with BNP.

Hi. Good morning. I was wondering if you could give us your expectation for RIM volumes in 4Q? And maybe into next year, what should we expect for RIM pricing? And then one on the Richmond land, is that power provisioned already and maybe when can we see start developments on that site?

Thanks, Nate. Let me start with the Richmond land. Yes, that is power provisioned. It will support over 200 megawatts of critical IT load, and we are pleased with that expansion. I'll let Barry speak to RIM volumes and pricing.

Hi, Nate. As you see in the supplemental, we continue to expand our total physical volume in the quarter, and we expect that trend to continue into the fourth quarter and going into next year. The team is doing a great job capturing market share and growing our physical volume. Pricing and revenue management are our focus, as I mentioned, on driving value for our clients. We are really focused on being able to serve clients, especially our larger clients, in the ways that we do, and we are offering new offerings, which greatly enhance that value, including Smartstore, Image on Demand, and our DXP platform among others. Total revenue in the global RIM storage side was up a little over 7% organically this quarter, slightly ahead of what we anticipated as our team continues driving value. Our long-term outlook remains that our physical volume will remain flat to slightly up and I see no reason why that would be any different next year.

Your next question will come from Kevin McVeigh with UBS.

Great. Thanks so much. Good morning. Barry, you mentioned revenue and EBITDA at the upper end of the range last quarter too. It looks like you beat by a little in the quarter. Any thoughts as to just why it was reaffirmed as opposed to not take it up with one quarter left in the year? Was that FX? Any puts and takes on that?

Hi, Kevin. Good morning. I appreciate the question and your kind words. We've been clear about our guidance throughout the year, and we took it to the high end. If you review the guide, you'd find that we will likely be a little above the high end for revenue and EBITDA based on our fourth-quarter projections. AFFO and AFFO per share will work out to be at the high end of guidance. Of course, you're right, FX has been a headwind to us all year, which remains true in the fourth quarter, similar to the third quarter due to the strength of the dollar. Though it might sound counterintuitive when looking at the pound and euro, do note that we have substantial exposure in Latin America. Although our Latin America business is doing exceptionally well, significant currencies like the Argentine peso and Brazilian real have weakened against the dollar, impacting our results disproportionately. We feel good about where we are and our outlook is favorable. We're running ahead of our long-term target for a CAGR of 10%. We expect to continue delivering considerable profitability based on the portfolio growth that Bill spoke about, which we anticipate will continue growing at over 20% for the long term. Next question?

Next question will come from Andrew Steinerman with JPMorgan.

Hi, everybody. Question on InSight. You caught my ear with the 24 wins on the InSight DXP platform. I wanted to know if Iron Mountain is getting revenues for InSight? I know initially that wasn't the strategy, more of a cross-sell. So if you're not seeing much revenue, what's a typical revenue structure from new storage contracts that are bundled with the InSight capability? And if 24 is a large number of InSight wins, how should we understand this as being important?

Thanks, Andrew. I appreciate the question. First of all, it's 24, but who's counting? We don’t do anything for free. So these are highly profitable contracts, typically with double-digit service margins. Consider these contracts, depending on their length and our productivity, to fall in a gross margin range of 20% to 40%. With the DXP platform, we are not just tracking those contracts; our digital business has evolved significantly. This DXP platform encompasses digitization and more importantly, automates metadata generation. The success we've seen in projects like the savings bond example showcases how we've leveraged this platform to achieve great results without the need for human involvement. The profitability of this business is encouraging, and we are optimistic about its growth. And as you know, I don’t do anything for free.

Your next question will come from Eric Luebchow with Wells Fargo.

Thanks. Appreciate you taking the question. Maybe you could just touch on your longer-term aspirations with ALM. I know at your Investor Day a couple of years ago, you talked about getting to about $900 million in revenues by 2026, which is a significant ramp from where you're currently at. I just wanted to confirm if that's still your stated goal and how you plan to bridge from just above $400 million in annualized revenue to that number. Will it come from component pricing increases, volumes, or potential M&A?

Yes, Eric, we certainly still have line of sight to the targets we set at Investor Day. This will come from organic growth as we continue to deliver strong performance, especially this quarter with over 50% growth. We guide for over 20% growth based on volumetric trends in both enterprise and hyperscale sides. The reason for this growth reflects the different needs that customers have as they refresh their equipment. We are also actively pursuing strategic acquisitions, as highlighted with our recent transactions. So we feel very confident in achieving the goals we outlined at Investor Day. Barry, would you like to add anything?

Sure, Eric. The overall target we provided to the whole company was an expected 10% growth, and we are performing 200 to 300 basis points ahead of that. Our growth portfolio continues to outperform expectations. ALM is indeed a significant category; the total addressable market is substantial. We believe that through both organic means and targeted acquisitions, we can aim to achieve market leadership in that space. Thank you.

Your next question will come from Brendan Lynch with Barclays.

Great. Thank you for taking my question. I want to stay on the ALM theme. Can you give us more details about Wisetek and APCD in terms of their geography and product offerings? How do they differentiate between enterprise and hyperscale? Also, what is your appetite for larger acquisitions as opposed to these smaller bolt-ons?

Thanks, Brendan for the question. Wisetek allows us to expand our portfolio in Europe and North America, bringing solid customer relationships on both fronts. We also acquired a new hyperscale customer through Wisetek, which enhances our reach. The acquisition of APCD strengthens our capabilities in Australia, a significant market for Iron Mountain. Barry, do you want to elaborate on this?

Hi, Brendan. Good morning. We didn’t disclose financial terms on these smaller deals, but collectively, they represent about $75 million to $80 million in run rate revenue. Wisetek, based in Ireland, operates in both Europe and the U.S. while APCD, based in Australia, takes advantage of the strong data center market there. We're enthusiastic about these acquisitions boosting our scale and capability. Regarding larger deals, we see ourselves as a major player already; most competitors are significantly smaller than we are. Therefore, larger acquisitions are less likely. However, we excel at organic growth and are excited to welcome the teams from Wisetek and APCD to our company. Thank you for the questions.

This concludes our question-and-answer session and the Iron Mountain third quarter 2024 earnings conference call. Thank you for attending today's presentation. You may now disconnect.