Good morning, and welcome to the Iron Mountain First Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Mark Rupe, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, Chuck. Good morning, and welcome to our first quarter 2025 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 Meaney, President and Chief Executive Officer; and Barry Hytinen, our 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 certain risks and uncertainties. Please refer to today's earnings materials, the safe harbor language on Slide 2 and our annual and quarterly reports on Form 10-K and 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've included the reconciliations to these measures in our supplemental financial information. With that, I'll turn the call over to Bill.

Thank you, Mark, and thank you all for joining us today to discuss our first quarter results. We are pleased with our strong start to 2025. Our team's focus on providing solutions that meet our customers' needs as part of our Matterhorn growth strategy continues to drive record results across the business and above our expectations. On a reported basis in the first quarter, we achieved all-time high quarterly revenue of $1.6 billion, representing 8% year-over-year growth and record first quarter adjusted EBITDA of $580 million, an increase of 12% as compared to last year. This performance was even better when excluding the effects of foreign exchange with revenue increasing 9% and adjusted EBITDA growing 13% to last year. Strong growth was achieved in each of our key business units. Our portfolio of growth businesses, which represents more than 25% of our total revenue and includes data center, digital solutions, and asset lifecycle management collectively grew more than 20% in the quarter. And our traditional records business achieved record results as well. This formula supports our ability to sustainably drive double-digit revenue and profit growth. Our commercial team continues to make marked progress in executing our strategy. I'm especially pleased with the breadth and scope of customer deals we are winning. For example, during the first quarter, our global scale and reputation were key factors in securing multiple records management and ALM deals where customers consolidated to single vendors, further testimony of the benefits from our number one ranking in customer satisfaction by the Wall Street Journal of the top US-listed companies. And we achieved broad cross-selling success through both traditional add-on solution sales and by partnering across the business to integrate multiple solutions for the customer. This approach met the customer need to get their job done seamlessly and…

Thanks, Bill, and thank you all for joining us to discuss our results. Our team is off to a strong start this year, delivering record first quarter results across all of our key financial metrics. We achieved record revenue of $1.59 billion, up 8% on a reported basis and 9% on a constant currency basis. We delivered strong organic growth in the quarter of 8%. Total storage revenue was $948 million, up $64 million year-on-year and up 9% on an organic basis. Total service revenue was $644 million, up $52 million from last year. Organic service growth of 7.1% was ahead of our expectations and improved slightly from the fourth quarter rate despite lapping a much more difficult comparison from the prior year. Adjusted EBITDA of $580 million was a record for the first quarter and expanded $61 million year-on-year. This was $5 million ahead of the projection we provided on our last call. The upside to our projection was driven by $4 million of operating performance and approximately $1 million from the US dollar's weakening in the first quarter. Adjusted EBITDA margin was 36.4%, up 130 basis points year-on-year, which reflects improved margins across all of our businesses. A key highlight for me in the quarter was that our team delivered significant operating leverage with an incremental flow-through margin of greater than 50%, which is the highest we've achieved in years. AFFO was $348 million, up $25 million, which represents growth as compared to last year of 8% on a reported basis and 10% excluding FX. AFFO on a per share basis was $1.17, up 6% to last year on a reported basis and up 9% excluding FX. Now, turning to segment performance. I'll start with our Global RIM business, which achieved first quarter revenue of $1.26 billion, an…

[Operator Instructions] And the first question will come from Shlomo Rosenbaum with Stifel. Please go ahead.

Hi. Thank you very much. Bill or Barry, if you can just talk a little bit about the market for leasing. The leasing activity has been uncharacteristically low for the last three quarters. Last quarter, you talked about a large deal that you walked away from due to some market conditions you didn't want to accept. If you could just talk about what's going on, your confidence in being able to achieve that 125 million of megawatts, because it does assume pretty good step-up and down the rest of the year? And then if you don't mind my just tagging on, Barry, at the end of your last comment, you talked about the data center expansion, less than 5% exposure. If you don't mind just elaborating on that a little bit more because it's very timely and your ability to potentially change terms of customers in terms of there's tariff impacted cost changes with imports? Thank you.

Good morning, Shlomo. So, why don't I start on the leasing and then, Barry can talk -- give you a little bit more detail in terms of how we estimated the 5% impact on construction costs. So, on the leasing, first of all, we had a good quarter. If you look at the leasing activity that we had for our normal enterprise colocation sales, we were very pleased with the amount of activity in leasing and continued pipeline in terms of the enterprise colo side. On the hyperscale side is, we feel very good about our 125 megawatt guide for the year, and that's based on our pipeline and also the conversations that we're having with some of our largest hyperscale customers across a number of locations, both in the US, Europe, and India.

And, Shlomo, it's Barry. Yeah. So, when we look at the cost of construction on data center, of course, there's a fair amount of labor in the development of the sites. Then there is -- and that's in the form of general contractors, there's obviously design and other construction-related costs. There is some level of import both in things like steel, but also some of the component MEP that comes in. But when we look at it, we think the total exposure is sub-5%. Of course, I'll note, we do run a global data center portfolio. So, when you factor in what's affected in the US, that's a factor of that as well. And then I'll just say, as it relates to pricing, Shlomo, I think pricing in the data center market continues to be very strong. You saw our mark-to-market renewal spreads. And my expectation is to the extent that there were tariffs ongoing, the market would absorb those and returns would continue to be quite strong. So, we feel very well-positioned and don't see much in the way of tariff exposure to the data center business for the foreseeable future in light of the fact that a lot of the supply is on long-term supply commitments and we order those for delivery over a long period of time. Thanks.

The next question will come from George Tong with Goldman Sachs. Please go ahead.

Hi. Thanks. Good morning. I want to stick on the topic of data centers. You mentioned you're very pleased with leasing activity. You feel good about hyperscalers. But I want to take a step back. And so if you look at broader data center demand at the industry level, certainly has been evolving. Has there been any place within your business where you've seen any changes in demand in data centers from any part of your customer set?

Good morning, George. Thanks for the question. Actually no. I mean in the conversations that Mark and now Gary have been having, I tag along on some of those conversations, we haven't seen anything that's changed in terms of the appetite for the largest customer, the hyperscale side and that's really across the three geographies I mentioned, across North America, Europe, and India. And I think the other side about that is also what you see there even their announcements. They've been pretty rock solid. In fact, some of them have even increased their guidance around CapEx -- expected CapEx expenditure over the next 12 to 24 months. And you can kind of consider about half of their CapEx expenditure tends to be -- depending on the hyperscale, but tends to be outsourced, some are more, some are less. So we haven't seen any real change in that macro environment. And the scarcity of power and locations continues to give us a very strong pipeline.

Your next question will come from Tobey Sommer with Truist. Please go ahead.

Thanks. With respect to your sales strategy and initiatives across the businesses, I was wondering if you could talk to us about what your most important initiatives are and how you think you're tracking against them for this year and in the next.

Yeah. No, thanks, Tobey, for the question. At the core -- you're putting your finger on what really is the core behind the Matterhorn strategy. So, if you -- and I know you're catching up to the story, but the big shift that we made as part of Matterhorn is we created a Chief Commercial Officer, who is Greg McIntosh, and we have a central point, which is -- that drives our relationships with the customers. So, as I said, critical to what Matterhorn is all about is not just the products of portfolio that we -- or the increased portfolio of products that we've launched, which have taken us from $10 billion to now over $160 billion in terms of total addressable market, but it's how we get after that in terms of offering our customers a single point of contact for Iron Mountain and the cross-selling across those businesses. And that's really what's taken us from a single-digit growth company to a consistently double-digit growth company because people recognize that one-stop-shop, a broad range of products and services. And of course, it helps that 25% or a little bit more than 25% of those products and services just have macro tailwinds that typically grow more than 20%. But you're spot on that the big part of the transformation story around Matterhorn was that single customer point of contact into Iron Mountain where we can sell the whole range, Mountain range, if you will, of products.

The next question will come from Kevin McVeigh with UBS. Please go ahead.

Great. Thanks so much. Hey. Hey, Barry, can you maybe disaggregate the $90 million of increase on the revenue and the EBITDA? How much of that was currency versus revenue management? It sounds like Premier was about $10 million. But how much of the additional $80 million or so was FX as opposed to other things?

Hey, Kevin. Good morning. Thanks. The increase was $90 million. And of that $90 million, $75 million of that just -- maybe just under that is the change in the FX rates. And then we've got $10 million from Premier and then the remainder, so between $5 million and $10 million -- depending upon how you cut the FX, between $5 million and $10 million is just pure operating performance. And honestly, it's still early in the year, Kevin. So, I would tell you that we feel extraordinarily good about way the business is trending. And as we mentioned on the call, I didn't include the recent -- yesterday contract win that we had with the US government. So, I feel good about where we are in terms of that guide and continue to update the market on how we're trending through the year. So, thanks for that question.

The next question will come from Jonathan Atkin with RBC Capital Markets. Please go ahead.

Thanks. One on data centers and then one on ALM. So, for data centers, just interested in kind of where you see the opportunity set by region. Where might be the deal volumes or the deal sizes be the most meaningful relative to your portfolio?

Okay. No, thanks for the question. I think the -- if we -- let's start with the US. In the US, we continue to have a lot of pipeline, as you would expect, in Northern Virginia and now also in Richmond, kind of the new Northern Virginia for that region. We also see strong pipeline and interest in our Chicago locations, relatively new to the portfolio. Miami, we just broke ground on that facility just recently. That's a smaller facility. So, it's more kind of edge deployment, but also strong pipeline. So, those three markets, we continue to see strong pipeline also in Arizona, but we're almost completely full in Arizona. So, I'd say right now, it's Northern Virginia, including our Manassas campus, as well as Richmond, which we've added capacity to Manassas, and Richmond is relatively new and then Chicago and then more edge deployment around Miami. In Europe, the expansion of our Amsterdam campus, again, strong pipeline. As you know, Amsterdam is a key market for a lot of the hyperscalers and there's limited capacity in Europe broadly, in Amsterdam in particular. So, we feel really good about the pipeline that we have associated with Amsterdam and now Madrid, right? So those are probably the biggest markets for us. We're sold out in Frankfurt and London at this point. So, then if we go to India, which is relatively newer to our portfolio, and you might have noticed that we actually bought out the remaining stake in Web Werks. That's now 100% owned. But we have really strong pipeline across their sites. But specifically, I would say, as you would expect, Mumbai, we're expanding nicely in Mumbai -- in the Mumbai market and as well as Chennai. On the ALM, maybe, Barry, you might want to comment.

Jon, did you have an ALM question there? I know you said you did.

Impressed, if you were going to answer it before I asked it.

Well, I'm not doing my Kreskin impersonation this morning, Jon. So, we'll take the question.

I was interested just the mix and how you see it evolving across cloud, hyperscale and enterprise, international versus US and then the lens with which you kind of evaluate potential for the M&A in that segment.

Maybe I'll start with the mix and then, Barry, you can comment a little bit to the question on the M&A. On the mix is -- I think we might have mentioned this on the last call, because of the ITRenew acquisition, is our mix has been historically more skewed towards the hyperscale or decommissioning of data center assets. That is starting to shift because the acquisitions, whether it's Wisetek, Premier or Regency for that matter, have been more on the enterprise -- and the market itself is more enterprise. So, if you think about the market is more like maybe 70%-30%, 70% enterprise end-user devices, other IT assets within enterprise customers, and 30% data center decommissioning, ours was almost the opposite. It was more like 60% data center decommissioning and 40% enterprise. That's starting to shift as we are doing the acquisitions and we feel good about that shift. It's not that we love the hyperscale business, but you can imagine with also the cross-selling -- our cross-selling ability into almost 250,000 customers on the enterprise side building out that footprint is really nice. In terms of geography is, although we're really pleased that we have better coverage now in the southern part of the United States because of our recent acquisition, but I think we feel we're pretty well covered in the United States from a geography standpoint where we need to get to in terms of serving the customers. Wisetek, which obviously was an Irish-based company, has really helped us fill out a lot of the European side, although they also have a small presence in Thailand. So, that helped us in Asia. And I think in India, that's a market that we are continuing to look at in terms of acquisitions. We have small presence in…

Jon, it's Barry. Just a couple more thoughts there to add on. From an enterprise versus hyperscale perspective, in the first quarter, we were just about 59% enterprise, 41% hyperscale. Pro forma for the Premier deal would be in the low 60%s as Bill was suggesting and trending higher. We like both parts of the business, obviously, enterprise and hyperscale. On the hyperscale side, there's a high visibility of a massive amount of volume that continues to grow in light of data center decommissioning needs in light of the fleets of data centers out there that have been growing and continue to grow at, as you know, very fast rates. And so, that brings with it a considerable amount of volume. As we've also talked about before, though, the margins on that business, it's more of a revenue-share model. So, margins are lower, but high degree of volume. On the enterprise side, where it's much more of a flow business and a continuous business that somewhat annuity like, the margins are better. It's more of a service offering. And we -- and obviously, as Bill was mentioning, the market there is much larger than the hyperscale side. So, we do expect the business to continue to trend more enterprise. That brings with it a better margin mix, as I was mentioning. Also, it creates more opportunity for operating leverage and scale efficiencies across our network and to be able -- as we service our clients better. And you're seeing some of that play out as the business continues to get more scale. As I mentioned on the prepared remarks, the ALM profitability has continued to improve. I think the team is doing a great job there and that's thanks to acquisition synergies as well as improved operating leverage. And just one last point on acquisitions in the ALM space. We continue to be on the lookout and actively working on incremental tuck-ins here and there. We generally continue to see multiples in that mid to high single-digit of EBITDA. And on an acquisition synergy adjusted, that kind of very quickly gets down below five times. So, we think it's a very positive way to both grow and augment the organic growth that the team is delivering. I'd just echo one of the points we made, the team delivered 22% organic growth in the quarter in ALM, a very strong performance as -- and ticking up meaningfully from the fourth quarter. And as we said earlier, we've got a strong trajectory for that organic growth to continue to accelerate, Jon. So, thanks for that question.

[Operator Instructions] Our next question will come from Brendan Lynch with Barclays. Please go ahead. Mr. Lynch your line is open.

Brendan, if you're on mute, we just -- we can't hear you.

Sorry, how about now?

Yeah, we got you, Brendan.

Okay. Sorry about that. Yeah, sticking with the ALM theme, the volume was up quite a bit in the quarter. Can you talk about what triggered that? Did downstream pricing or something else change in the market that allowed you or your customers to accelerate the pace of selling inventory?

Yeah. So, Brendan, I think it's much more aligned with the fact that we've been consistently winning more business and the team is both growing our enterprise book of business through the wins that we've made throughout last year, which kind of build on themselves. As I was describing earlier, it is kind of tends to be a flow-oriented business where you win an account and then you start taking on more and more volume from the account because of course, all of the accounts that we're winning have an existing means for recycle reuse. So, the enterprise volume continues to come through. And then on the data center decommissioning, as we mentioned last year, we continue to win additional accounts and win more share within the accounts that we were already servicing. Pricing, just I'll reiterate something I made -- comment I made in the prepared remarks, pricing in the market was actually kind of largely flat to slightly down, I would say. So, it wasn't like pricing created a opportunity. And incidentally, in my go-forward projections, we got a little more conservative with pricing. We left our pricing assumptions at levels where they exited the first quarter, which I think could prove conservative, but we just felt like that was the right way to do it in light of what we were seeing in the quarter. So, feel very well positioned.

This concludes our question-and-answer session and the Iron Mountain first quarter 2025 earnings conference call. Thank you for attending today's presentation. You may now disconnect.