Good morning and welcome to the Iron Mountain Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead.

Thanks Sarah. Good morning everyone and welcome to our fourth quarter 2022 earnings conference call. On today’s call, we will refer to materials available on our Investor Relations website. We are joined here today by Bill Meany, President and Chief Executive Officer, and Barry Hytinen, our Executive Vice President and Chief Financial Officer. After prepared remarks, we’ll open up 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 annual report on Form 10-K 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. And with that, I’ll turn the call over to Bill.

Thank you, Julian. And thank you all for taking the time to join us today. We are pleased to have delivered record performance for both the fourth quarter and the full year. These exceptional results are reflective of our broad product portfolio, synergistic business model, deep customer relationships, and committed team. Before I dive into the drivers of our strong performance, I would like to take a few moments to relay how deeply saddened we are all feeling by the devastating and recent earthquakes in Turkey and Syria. Our thoughts and prayers are with our fellow mountaineers, customers and all of their families living and working in the region. The safety and security of our employees is our number one priority. And we are committed to supporting our colleagues in the region as they navigate this challenging time. Now let me begin our discussion of our recent performance. I am proud to report that Iron Mountain has had another outstanding year. In the fourth quarter we achieved quarterly revenue of $1.28 billion yielding 11.3% total organic revenue growth and record adjusted EBITDA $472 million up 10%. For the full year, we delivered record results across the board. Revenue of $5.1 billion adjusted EBITDA of $1.8 billion, and AFFO of $1.1 billion, representing growth of 14% 12% and 10%, respectively. This performance is a direct result of our close relationships with our customers and our commitment to innovation so we can provide them with expanded products and services to meet their needs. For the full year, we delivered organic storage rental revenue growth of 9%, reflecting continued benefit of pricing combined with positive volume trends. We drove double digit organic growth in our data center business, as well as our digital services and asset lifecycle management business areas capping off another…

Thanks Bill. And thank you all for joining us today to discuss our results. Before I begin, I would like to echo Bill sentiments with regard to the tragedy of the earthquakes in Turkey and Syria. Turning to our financials in the fourth quarter, our team continued the trend of delivering strong performance exceeding expectations for both adjusted EBITDA and AFFO. On a reported basis, revenue of $1.28 billion grew 10.3% year-on-year or 14.2% excluding the effects of the stronger U.S. dollar. Total organic revenue grew 11.3%. Revenue was in line with the expectations we shared when we reported the third quarter in November. A key highlight in the quarter is our organic storage revenue, which grew 11% and represents a sequential improvement of 130 basis points. Total service revenue increased 17% to $510 million driven by organic growth of 12%. These results reflect the strong performance of our commercial team and their focus on selling the entire mountain range of products and solutions. Adjusted EBITDA was $472 million in new record up 10% on a reported basis and up 13% year-on-year on a constant currency basis. As compared to the rates we were using at the time of our last guidance, the dollar strengthened in November, which resulted in an incremental headwind in the fourth quarter of several million dollars to adjusted EBITDA. Adjusted EBITDA margin was better than we projected at 36.9% and improved 40 basis points sequentially driven by revenue management and mix. AFFO was $287 million, or $0.98 on a per share basis of $20 million and $0.06 respectively from the fourth quarter of last year. This was well ahead of our projections, partially due to the timing of a nearly $10 million cash tax item, which is now incorporated into our 2023 guidance. Now, let…

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from George Tong with Goldman Sachs. Please go ahead.

Hi, thanks, good morning. Services organic revenue growth remained in the double digits at 12% year-over-year in 4Q, but decelerated from 22% growth in 3Q. Can you discuss the puts and takes you're seeing with respect to services, organic revenue growth trends?

Yes. No, thanks, George. So first of all, we're very pleased with the continued growth, especially where we just started Matterhorn last year. So if you look at overall in terms of the organic growth through the year and an increase in terms of total revenue growth, as we progress. So we're very pleased. To your specific question on service is one of the biggest factors in terms of when you're looking at the year-over-year comparison, if you recall, a year ago, we had the big fit-out for data center in Frankfurt. So that's the biggest factor in terms of that slight drop or that noticeable drop when you look at the year-over-year, still double-digit growth but that was the biggest factor. I don't know, Barry, if you want to add anything.

Yes George, the only other thing I'd add, I suppose, is that it was right in line with our expectations when we set the projections because, of course, as we signaled last quarter, we obviously knew that we had to anniversary over the fit-out services. So we're very pleased with the way services performed. And I will just tell you that as we look forward, we've got very good pipeline on things like digital solutions, our legacy IT asset disposition business is ramping, and we have as I mentioned in the prepared remarks, very nice pipeline there. And we will see some incremental benefit from revenue management. So we feel very well positioned, George. Thanks for the question.

The next question comes from Kevin McVeigh with Credit Suisse. Please go ahead.

Great, thanks. So it seems like FX was an incremental headwind as was ITRenew. I don't know if this is for Barry, where were the offsets? Because obviously, the revenue looked pretty good in EBITDA, but just were the offsets on the revenue management or anything else?

Thanks for the question, Kevin. I would say ITRenew actually performed consistent with our expectations, and I'll just provide a little more color there. As we've said before, with the lockdowns that we were experiencing or everyone is experiencing in China, we had been seeing ITRenew declining through last year. And in fact, in the fourth quarter, it stabilized was actually slightly up on a sequential basis, which we view as a positive. Now we are, I think, being prudent with our expectations for ITRenew going forward because as you've probably seen in the press, China continues to -- while the restrictions are off, they continue to have a lot of challenges with COVID there. And so we haven't seen the market develop meaningfully yet, but we are cautiously optimistic. So we are planning for the first quarter expectations for our ALM business to be consistent with the fourth quarter revenue levels and then ramping over the course of the year. As it relates to the rest of the business that you were pointing out, we had very strong contribution from revenue management, as you would have seen in the supplemental report. In fact, that ramped nicely on a sequential basis. And we feel very well positioned as it relates to revenue management as we move here through 2023 because as I mentioned in the remarks, all of our revenue management actions are essentially already in market. So we feel very, very good about how things are trending. The other thing I'd call out, which was a really nice performance was in our data center business. You saw the growth rate continue to be very strong on the storage side, high 20s and from a standpoint of bookings also ahead of our expectation. So that gives us very strong visibility into 2023 in terms of revenue generation. And I'll tell you the pipeline continues to build. So appreciate the question. Thanks, Kevin.

Our next question comes from Andrew Steinerman with JPMorgan. Please go ahead.

Hey Barry. Just for the sake of precision, could you just indicate what the organic constant currency revenue growth is at the midpoint of your first quarter and 2023 guide. And it definitely seems like you're expecting faster growth for the full year kind of after first quarter or maybe compared to first quarter and just maybe go over that dynamic more unless you feel like you've already addressed that.

Okay. So a couple of points there for you, Andrew, as it relates to how to think about the first quarter. When I mentioned that we probably have something approaching $40 million of FX challenge for the full year, the vast majority of that is going to be in the first quarter. So I think we'll probably have something like $30-plus million, maybe even more than that of a revenue headwind from FX in the first quarter just based on where rates are now versus last year. The other thing to be thinking about is that from a standpoint of ITRenew, that will go into our organic growth rate this quarter. In fact, as you know, we closed that transaction at the end of last January. And so it's organic for February and March. And last year, I don't mind giving you this number for your modeling purposes, I may have mentioned it last year. ITRenew was about $60 million in the quarter, and then it was $65 million in the second quarter. And since I'm planning it to be essentially consistent on a sequential basis, that's about, call it, $45 million that vicinity. So I think that will have about round numbers, a couple of point impact to organic growth. But from there, if you work through the model, you're going to see organic continue to improve through the year. And really, at that point, you don't have any additional acquisition revenue of any substance in the numbers. So you're essentially very close to the constant currency growth. And I think that at that out of pencil for you on the model.

[Operator Instructions] Our next question comes from Shlomo Rosenbaum with Stifel. Please go ahead.

Hi, it's Adam Parrington for Shlomo. What was the pricing lift in the quarter? And what should investors expect for 2023?

Thank you for the question. It was very strong, as you probably noticed. Organic revenue growth on storage was 11%. And overall, it was 11.3%. And so with volume being as we planned just slightly down on a sequential basis, by the way, up better than our projection for the full year. It was a very nice contribution, and we had 8.9% on that metric for the full year. So it shows you the ramp that we've been seeing through the year. In terms of -- for 2023, we continue to expect revenue management to be a very nice contributor and be thinking probably in at least the mid-single digit range for the whole year, if not a little bit higher in light of what we've got in market. And we feel quite good about where things are. And I guess I'll also add that from a volume perspective, since it goes a little bit to the question you were asking, from a volume perspective, we are continuing to see good trends there, and we would expect for the full year 2023 very similar projection to what we did last year. So something like consistent to slightly up. Thank you for the question.

This concludes our question-and-answer session and the Iron Mountain fourth quarter 2022 earnings conference call. Thank you for attending today's presentation. You may now disconnect.