Iron Mountain Incorporated (Delaware) · NYSE:IRM
Iron Mountain Incorporated (Delaware) — Iron Mountain — Investor Day (October 2015)
115 slides from Iron Mountain Incorporated (Delaware)'s investor day presentation, Oct 14, 2015
Slide 1: Durable Business Drives Cash Flow and Supports Dividend Growth
Durable Business Drives Cash Flow and Supports Dividend Growth October 14, 2015
Slide 2: Safe Harbor Language and Reconciliation of Non-GAAP Measures
Safe Harbor Language and Reconciliation of Non-GAAP Measures Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities
Slide 3: Today's Agenda
Today’s Agenda 8:30 Meeting Kick-Off Durable Business Drives Cash Flow William L. Meaney, President and CEO Solid Execution and Growth Potential Patrick Keddy, EVP & GM, North America and Western Europe Investing for Profitable Growth Marc Duale, President International Disciplined Execution and Exp
Slide 4: We Store & Manage Information Assets
We Store & Manage Information Assets Diversified Global Business (1) R$3.1 billion annual revenue 155,000+ customers Serving 92% of Fortune 1000 68 million square feet of real estate in ~1,100 facilities Compelling Customer Value Proposition Records & Information Management (2) Data Manageme
Slide 5: Leading Global Presence
Leading Global Presence Most expansive global platform Strong international expansion opportunity Attractive real estate characteristics Low turnover costs Low maintenance capex High retention, low volatility Solid track record of enhancing shareholder value Share buybacks, REIT conversion
Slide 6: Storage Rental Stream is Key Economic Driver
Storage Rental Stream is Key Economic Driver 26-year Track Record of Consecutive Growth $1,860 1989 2014 IRM Storage Rental Revenue (R$ in MM) 6
Slide 7: Durable Business Drives Cash Flow and Supports Dividend Growth
Durable Business Drives Cash Flow and Supports Dividend Growth William L. Meaney, President and Chief Executive Officer © 2015 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. All other trademarks a
Slide 8: Strategic Plan Delivering Expected Results
Strategic Plan Delivering Expected Results OUR PLAN FOR GROWTH GROWTH and VALUE DEVELOPED EMERGING ADJACENT MARKETS MARKETS BUSINESSES PILLARS 7M cu. ft. Net RM Emerging Markets = New Data Center Volume prior to 14% of Total Customers and Acquisitions* Revenues on a Expanded into C$ basis* Art Stora
Slide 9: Strategic Plan has Driven Performance Turnaround Since Year-end 2013
Strategic Plan has Driven Performance Turnaround Since Year-end 2013 STRATEGIC PLAN DEVELOPED EMERGING ADJACENT MARKETS MARKETS BUSINESSES 2013 -2015F 1% 33% 20% Revenue C$ CAGR Worldwide Revenue (C$ in MM) Adjusted OIBDA (C$ in MM) Regular Dividend per Share $925- $1.90 $3,050 - $2,894 $3,011 $3,11
Slide 10: Organic Document Storage Continues to Demonstrate Strong, Steady Growth
Organic Document Storage Continues to Demonstrate Strong, Steady Growth Developed Markets 50-year average customer retention 6% Less than 2% annual volume loss 3% from terminations Boxes stay with us for an average of 0% Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 15.9 ye
Slide 11: Transformation Program Updated to Deliver $125 Million in Cost Reductions
Transformation Program Updated to Deliver $125 Million in Cost Reductions Align Organization to Focus on Important and Leverage Offshoring and Strategic Plan Necessary Technology Adj. OIBDA Contribution 2015E 2016E 2017E 2018E Cumulative run-rate impact of $50 million $100 million $125 million actio
Slide 12: Plan to Extend Performance with 2020 Vision
Plan to Extend Performance with 2020 Vision Maintain focus on dividend growth Continue to de-lever Boost durability and long-term TSR 12
Slide 13: Standalone Plan to Extend Performance with 2020 Vision
Standalone Plan to Extend Performance with 2020 Vision TODAY 2020 85% Developed Core 15% Growth Portfolio 75% Developed Core 25% Growth Portfolio Emerging Markets = 14% Emerging Markets = 20% Adjacent Businesses = 1% Adjacent Businesses = 5% 2% Adj. OIBDA 10% Adj. OIBDA 3% Adj. OIBDA 10% Adj. OIBDA
Slide 14: 2020 Vision Extends Strategic Plan and Will Continue to Deliver Strong C$ Growth
2020 Vision Extends Strategic Plan and Will Continue to Deliver Strong C$ Growth Worldwide Revenue (C$ in MM) Projected Minimum Dividend Per Share $2.18 $3,165 – $3,770 – $2.10 4% growth $3,050 – $1.98 $3,870 through 2020 $3,110 $3,265 $1.90 2015E 2016E 2020E 2015 2016 2017 2018 2020 Dividend as % o
Slide 15: Recall Acquisition on Track
Recall Acquisition on Track Regulatory review underway • Confident of achieving satisfactory outcome • Targeted closing in Q1 2016 Significantly enhances financial performance • Total expected synergies of $155M • $110M to be recognized in 2017 • Potential synergy upside primarily from real esta
Slide 16: Recall Acquisition Significantly Enhances Financial Performance
Recall Acquisition Significantly Enhances Financial Performance Worldwide Revenue (C$ in MM) Projected Minimum Dividend per Share 4% Growth $2.35 through 2020 $2.20 $1.90 $1.94 $4,670 – $3,950 – $4,810 $3,050 – 2015 2016 2017 2018 2020 $4,050 $3,110 Dividend as % of AFFO 2015 2016 2020 Adjusted OIBD
Slide 17: Real Estate Strategy
Real Estate Strategy Increasing Real Estate ownership to create long-term value Financial arbitrage and capturing residual value Consolidating footprint to increase operating efficiencies Development opportunities in emerging markets to support business growth and consolidation Converting some of
Slide 18: 2020 Vision Delivers Strong and Durable Increase in Cash for Dividend Growth and Investment
2020 Vision Delivers Strong and Durable Increase in Cash for Dividend Growth and Investment (C$ in MM) 2020 vision drives 16% CAGR (2015 – 2020) 1,000 900 800 700 600 500 400 300 200 100 0 2015E 2016E 2017E 2018E 2019E 2020E Developed Markets Real Estate Transformation Emerging Markets Adjacent Busi
Slide 19: Driving Durable Cash Flow to Support Business and Dividend Growth
Driving Durable Cash Flow to Support Business and Dividend Growth Durable cash flow Three year plan on track and delivering per guidance Strong dividend growth Driven by durability of core, Transformation and Recall 2020 Vision Accelerates growth through ongoing optimization 19
Slide 20: Developed Markets: Solid Execution and Growth Potential
Developed Markets: Solid Execution and Growth Potential Patrick Keddy, EVP & GM, North America and Western Europe © 2015 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. 20 All other trademarks and
Slide 21: Sustainable Growth in Developed Markets
Sustainable Growth in Developed Markets Volume Growth and Revenue Management Customer Loyalty – 50 year average Managing price/volume mix and customer retention OUR PLAN FOR GROWTH Stabilised service revenue and margins Continuous improvement in SG&A VALUE PILLARS GROWTH and DEVELOPED EMERGI
Slide 22: Durable Revenue and Profit Growth in Developed Markets
Durable Revenue and Profit Growth in Developed Markets Revenue C$ Revenue Growth ($ in M) $2,640 – Positive RIM revenue growth $2,690 DM revenue growth also continues strong $2,575 – Augmenting core services with exciting new $2,592 $2,625 offerings including: $2,558 Cloud backup solutions w
Slide 23: Solid Execution on Performance Drivers
Solid Execution on Performance Drivers KEY DRIVERS Sales force excellence STORAGE VOLUME Customer Segmentation Customer Acquisitions GROWTH REVENUE Customer Retention MANAGEMENT Value Based Selling GOALS SERVICE REVENUE Align and Package + Expanding services+ New revenue streams & MARGIN
Slide 24: RM Storage - Strong net cube growth driven by improved retention, organic volumes and new sales
RM Storage - Strong net cube growth driven by improved retention, organic volumes and new sales RM Storage Revenue Growth (C$ in MM) Net Volume Growth (Cu.ft. MM) $1,275 – 1,325 435 – 445 $1,279 433 429 $1,244 FY13 FY14 FY15E FY13 FY14 FY15E Base Acquisitions Base Acquisitions 24
Slide 25: DM Storage Volumes Continue to Grow
DM Storage Volumes Continue to Grow DM Storage Revenue Growth (C$ in MM) Net Volume Growth (DPUs MM) $290 – $300 72 $286 70 $274 69 FY13 FY14 FY15E FY13 FY14 FY15E 25
Slide 26: New Service Lines Replacing Traditional Activity Based Services
New Service Lines Replacing Traditional Activity Based Services Total Company Service Revenue (C$ in MM) $1,181 $1,209 $1,195 - $1,205 Area / CAGR 17% 17% 19% Comp Service +4% 6% 7% 7% Shred Paper +2% 15% 14% 14% Shred Non-Paper -3% 7% 9% 10% DMS +13% 16% 15% 13% DM Core -9% 39% 39% 39% RM Core 0% 2
Slide 27: Worldwide Service Gross Margin Improvement
Worldwide Service Gross Margin Improvement 600 Total Service Gross Profit (C$ in MM) Facility Process Engineering and Productivity 500 400 $374 $310 - $310 - Re-Packaging Service Offerings and SLAs $335 $320 $350 300 Routing Optimisation 200 100 Hybrid Fleets - FY13 FY14 FY15E FY16E 3PL Options Tota
Slide 28: Continued Strong Developed Market Expected Revenue Growth
Continued Strong Developed Market Expected Revenue Growth (C$ in MM) $2,850 – Developed Markets Revenue Growth $2,950 $2,640 – 2,575 – $2,690 2,592 2,625 2,558 2013 2014 2015E 2016E 2020E Acquisitions Base 28
Slide 29: Developed Market Adjusted OIBDA Demonstrates Durability and Growth Potential
Developed Market Adjusted OIBDA Demonstrates Durability and Growth Potential (C$ in MM) Developed Markets Adjusted OIBDA Growth $1,150 – $1250 $1,090 – $1,040 – $1,140 $993 $1,042 $1,080 2013 2014 2015E 2016E 2020E Acquisitions Base 29
Slide 30: Emerging Markets: Investing for Profitable Growth
Emerging Markets: Investing for Profitable Growth Marc Duale, President, Other International © 2015 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. All other trademarks and registered trademarks ar
Slide 31: Emerging Markets Strategy Unchanged and On Track
Emerging Markets Strategy Unchanged and On Track Good Progress Toward 16% Goal • From 10% of total revenue in 2013 to 2015 Year-End Run-Rate C$ of 15% • Pipeline of potential acquisitions OUR PLAN FOR GROWTH represents 4x+ total needed to achieve goal by end of 2016 VALUE PILLARS GROWTH and DEVELOPE
Slide 32: Investing for Profitable Growth: Emerging Markets
Investing for Profitable Growth: Emerging Markets Build high performance Cube Growth 7% leadership teams Adj. OIBDA % 33% Drive organic growth ROIC 12% Invest in real estate and Cube Growth 14% infrastructure Adj. OIBDA % 9% Rapid execution of rich ROIC 4% M&A pipeline 32
Slide 33: Investing for Profitable Growth: Building Local Scale
Investing for Profitable Growth: Building Local Scale END OF FY13 PROJECTED END OF FY16 PROJECTED WITH RECALL Serbia India Romania Brazil Czech Rep. Slovakia Serbia Czech Rep. Slovakia Hungary Turkey Peru Slovakia Mexico Romania Hungary Peru Romania Chile Colombia Poland Chile Colombia Singapore Chi
Slide 34: 2020 Vision - M&A Pipeline is Strong
2020 Vision - M&A Pipeline is Strong EMERGING MARKET % GLOBAL REVENUES 20% 15% 16% 10% 2013 2015 E 2016 E 2020 E Anticipated Investment $100M/Year in Acquisitions Estimated revenue percentages reflect expected year-end run rate 34
Slide 35: Emerging Markets Growth Outlook
Emerging Markets Growth Outlook REVENUE GROWTH (C$ in MM) $735 – $785 $435 – $465 – $485 $515 $257 $334 $591 2013 2014 2015E 2016E 2020E Base Growth Acquisitions ADJ. OIBDA GROWTH (C$ in MM) $200 – $220 $75 – $90 – $67 $70 $110 $105 2013 2014 2015E 2016E 2020E Base Growth Acquisitions M&A Pipeline 4
Slide 36: Adjacent Business: Disciplined Execution and Expansion
Adjacent Business: Disciplined Execution and Expansion Ned Bicks, Senior Vice President, Chief Strategy Officer and Adjacent Businesses © 2014 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. All ot
Slide 37: By 2020, Adjacent Businesses Target: 5% of Revenue
By 2020, Adjacent Businesses Target: 5% of Revenue Strategic Plan Goal and Progress OUR PLAN FOR GROWTH Developed diverse portfolio with VALUE PILLARS solid acquisition pipelines GROWTH and DEVELOPED EMERGING ADJACENT MARKETS MARKETS BUSINESSES On track to exceed 2015 revenue New Data Center run
Slide 38: Consistent With Our Core Capabilities
Consistent With Our Core Capabilities CAPABILITIES STORAGE- CHAIN OF INFORMATION SECURITY AND CENTRIC REAL CUSTODY / MANAGEMENT TRUST RELATIONSHIPS ESTATE LOGISTICS CURRENT Data Centers CUSTOMERS RELATED CUSTOMERS Art NEW CUSTOMERS 38
Slide 39: IRM Well Positioned to Succeed in Data Center Market
IRM Well Positioned to Succeed in Data Center Market We Service Over 30,000 Data Center Locations in North America Data center market presents a very large and growing opportunity Uniquely positioned to compete for the enterprise and private cloud segment of the market Disciplined execution, a
Slide 40: Large and Growing Market
Large and Growing Market Sector Outsourced Market Size IRM Focus Mainstream $3B enterprise & private cloud segment Enterprise, Government and ~$3B Segment growing 10% per year Private Cloud Private cloud = 12% Non-Inter-Connect Enterprise = 8% Cloud SPs / IT ~$1B Services Growth and churn cr
Slide 41: IRM Advantage in Target Market Segments
IRM Advantage in Target Market Segments TOP 3 BUYING CRITERIA IRON MOUNTAIN SCORES THE HIGHEST AMONG COMPETITION Attribute Strongly Desires Iron Mountain SunGard CyrusOne Digital Realty Highly secure 77% 50% 44% 27% 23% Customer 74% 29% 22% 21% 18% support Regulatory 69% 43% 37% 27% 23% compliance U
Slide 42: Disciplined Execution and Expansion Driving Value Creation
Disciplined Execution and Expansion Driving Value Creation Value Creation and Estimated Stabilized Current footprint supports ~$8M/ year Returns on Existing Footprint in new sales with ROIC in low to mid ($ MM) teens Revenue $60 Adjusted OIBDA $35 Further market expansion enables us NOI $40 to t
Slide 43: Iron Mountain's Legacy Extends Beyond Traditional Business Information
Iron Mountain’s Legacy Extends Beyond Traditional Business Information 43
Slide 44: . . . And Includes Fine Art Storage
. . . And Includes Fine Art Storage 44
Slide 45: Fine Art is High Growth Market with Meaningful Focus on Investment
Fine Art is High Growth Market with Meaningful Focus on Investment Sotheby’s and Christie’s Fine Auction Sales Why individuals purchase art $8 9% 10% Investing $6 Collecting $in Billion 81% $4 Investing & Collecting $2 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Deloitte / ArtT
Slide 46: Formalizing Art Business with Acquisition of Premier Brand
Formalizing Art Business with Acquisition of Premier Brand Fine Art Attractive Space for IRM Planned Crozier Acquisition $900MM+ industry with solid growth(1) Leading brand in North America Global Driver of global industry standards Fragmented Strong storage (58%) and storage Durable R
Slide 47: Iron Mountain's Advantage in Art Storage
Iron Mountain’s Advantage in Art Storage We Complement Crozier And Bring Some Critical Advantages Secure storage expertise Global footprint Legacy of trust Roll-up experience Chain of custody and logistics Marquee clients in entertainment and government 47
Slide 48: Adjacent Businesses 2020 Vision to Create $175 Million of Revenue
Adjacent Businesses 2020 Vision to Create $175 Million of Revenue Expected Adjacent Businesses Revenue ($MM) Manage Adjacent Businesses $175 as a portfolio of opportunities with the expectation that not Acquisitions Base all will succeed $75 Two current Adjacent Businesses comprise base Strong org
Slide 49: Transformation, Integration and Talent
Transformation, Integration and Talent Deirdre Evens, Executive Vice President, Chief People Officer © 2015 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. All other trademarks and registered trade
Slide 50: Transforming Iron Mountain to Support 2020 Vision
Transforming Iron Mountain to Support 2020 Vision OUR PLAN FOR GROWTH Critical enablers to achieving our growth VALUE PILLARS strategy: GROWTH and DEVELOPED EMERGING ADJACENT • Transformation efforts underway to simplify MARKETS MARKETS BUSINESSES and improve business processes, delivering $125M red
Slide 51: Transformation – Faster and Greater Benefit
Transformation – Faster and Greater Benefit • All of global SG&A in scope • 7 key transformation levers • 40+ initiatives identified • $125 M cost reductions, bringing SGA in line with benchmark • Facilitates speed, agility, greater accountability, decision making 51
Slide 52: Transformation timeline
Transformation timeline Transformation Phase I 2015 Executed July 2015 $50M 2016 FY benefit Funding Approach Manage program to Non-essential work elimination self-fund Simplification and demand management Select technology and 2016 Operating model / governance / controls capability i
Slide 53: Recall Acquisition on Track
Recall Acquisition on Track Integration planning is on track • Joint Recall / Iron Mountain team • Excellent integration collaboration • Synergy execution planning • People and Integration planning • REIT implementation 53
Slide 54: Structured planning for Recall integration
Structured planning for Recall integration SYNERGY PLANNING AND GOVERNANCE DAY 1 READINESS VALUE CAPTURE Global Steering Committee Run-rate synergy target of Ensure operating certainty $110M in 2017 and total net Operating model Joint effort between Iron Management synergies of $155M Mou
Slide 55: Develop and enable talent to support growth strategy
Develop and enable talent to support growth strategy MAKE TALENT A PRIORITY IDENTIFY AND DEVELOP STRENGTHEN / BUILD Part of comp-related goals EXISTING TALENT CURRENT AND FUTURE and objectives for Senior Break down silos and CAPABILITIES REQUIRED FOR Executive Team flatten organization to GROWTH
Slide 56: Transformation, Integration, and Talent are key enablers for continued success
Transformation, Integration, and Talent are key enablers for continued success Total Cost Reduction ($MM) Business simplification, process improvements and efficiencies from Transformation drive $125M in SG&A reduction Leveraging global scale across Recall delivers $155M in synergies Deploying
Slide 57: Leverage REIT Status to Create Long-term Value
Leverage REIT Status to Create Long-term Value Ellen Hall, Senior Vice President, Global Head of Real Estate Investments © 2015 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. All other trademarks
Slide 58: Real Estate as an Enabler to Growth
Real Estate as an Enabler to Growth Developed Markets: converting leased OUR PLAN FOR GROWTH properties to owned to capture residual value; some consolidation where we can VALUE PILLARS GROWTH and increase operating efficiencies DEVELOPED EMERGING ADJACENT MARKETS MARKETS BUSINESSES Emerging Markets
Slide 59: Recent Investment Enhancing Ownership and Generating Solid Returns
Recent Investment Enhancing Ownership and Generating Solid Returns LEASE CONVERSION PROGRAM - PROGRESS REPORT Standalone Leased vs. Owned [68.4 million Square Feet] Closed Purchases: since Q1 ‘14 RM Utilization(1) Owned Building: 84% $51.1M investment 36% Leased Racking: 91% 64% DP Utilization
Slide 60: Major Market Presence Supports Durable Revenues and Value
Major Market Presence Supports Durable Revenues and Value Seattle Owned Gross Assets Boston Chicago San Francisco New York Philadelphia Denver- Boulder Washington Los Angeles D.C. Dallas-Fort Worth- Book value including Phoenix-Mesa- Arlington leasehold improvements San Diego Scottsdale and racking
Slide 61: Multiple Opportunities to Create Value
Multiple Opportunities to Create Value Control Space More predictable operating costs, residual appreciation Higher quality portfolio Better operating efficiencies, increased financing flexibility Development margins with low risk Transfer construction risk and cost to land bank while still capturin
Slide 62: Selective Lease Conversions Capture Market Inefficiencies
Selective Lease Conversions Capture Market Inefficiencies Leased Gross Assets . Seattle Leased Facilities 44 million sq. ft. / 839 facilities International: 13 million sq. ft. / 343 Detroit Boston facilities Chicago New York Denver- Boulder Metro Philadelphia Buyout option: ~3.5 million sq.
Slide 63: New Development Similar to Enterprise Build to Suit
New Development Similar to Enterprise Build to Suit . Investment in New Building and Racking Mexico City, Mexico Capacity: 4.7M cu. ft. in 6 buildings all fully utilized Expected annual average growth CF 250K CF Own additional land that can be used for development Construct “3 Wall Addit
Slide 64: 2020 Vision Drives Ownership to 45% - 50%
2020 Vision Drives Ownership to 45% - 50% Increased Ownership Opportunity $400 - $550 MM over 2015 – 2020 Solid investment return potential Expected to reduce borrowing costs over time Higher real estate residual value * Opportunity does not include the potential upside benefit from the cons
Slide 65: Value Creation and Financial Outlook
Value Creation and Financial Outlook Rod Day, EVP and Chief Financial Officer © 2015 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. 65 All other trademarks and registered trademarks are the proper
Slide 66: Strong Record of Achievement since 2013
Strong Record of Achievement since 2013 Improved storage growth, volume growth in all major markets Achieved 3%+ C$ Total Revenue Growth Delivered 4%+ C$ Adj. OIBDA Growth Successfully converted to REIT, dividend per share up 75% Realized high returns on investments – IRR of 9 to 15%+ Generated stro
Slide 67: Summary of Financial Roadmap 2015 – 2020
Summary of Financial Roadmap 2015 – 2020 Disciplined Capital Growing Storage Stabilized Service Improved SG&A Spend on Maintenance, Revenues And Margins Gross Margin Efficiency Non-Real Estate Investment and Racking Consistent Contribution and Cash Flow Improvement Accretive Acquisitions, Dividend G
Slide 68: Growing Storage Revenues and Margins
Growing Storage Revenues and Margins Total Internal Storage Rental Growth 3.1% 3.0% 2.9% 2.1% 2.2% Storage 61% of Maintain annual growth of 2.5% to 3% through 2020 Total Revenue(1) 2011 2012 2013 2014 1H 2015 Storage Gross Margin(2) 77.4% Storage 83% of 76.6% 75.3% Modest annual growth, Total Gross
Slide 69: Stabilized Service Gross Margins
Stabilized Service Gross Margins Total Internal Service Revenue Growth Service 39% 0.4% Improve growth to 1% - 2% of Total annually 2016 through 2020 (0.7%) (0.5%) Revenue(1) Archival trends moderate (3.4%) Maintain progress in scanning, (4.4%) projects and shredding 2011 2012 2013 2014 1H 2015
Slide 70: Improved SG&A Efficiencies – Transformation
Improved SG&A Efficiencies – Transformation Cumulative SG&A Savings SG&A(1) as % of Revenue 30.0% IRM Trend $125 $100 28.0% Transformation $50 26.0% 2016 2017 2018 24.0% 22.0% Improvement driven by offshoring, outsourcing, reducing complexity, automation and procurement 20.0% effectiveness 2013 20
Slide 71: Disciplined Capital Management
Disciplined Capital Management Capital Requirements Debt Financing Maintenance Capex (Storage and Recently raised $1 billion at 6% Service) 2.5% of revenue allowing for repayment of higher interest dollar and euro bonds Non-Real Estate Investment 2.2% of revenue Average interest rate reduced
Slide 72: Building Blocks of the Financial Roadmap for 2020 Vision
Building Blocks of the Financial Roadmap for 2020 Vision 2020 Vision IRM Standalone + Recall Benefits 2 IRM Standalone 1 72
Slide 73: Discretionary Investment Has Yielded Compelling Returns
Discretionary Investment Has Yielded Compelling Returns Discretionary Investments DEVELOPED AND REAL ESTATE ADJACENT EMERGING MARKETS CONSOLIDATION AND LEASE CONVERSION BUSINESSES BUSINESS DEVELOPMENT PROGRAM ACQUISITIONS GROWTH 10 – 14%+ IRR 14-19% IRR 9 – 10% IRR 11-14% IRR Project Specific 3-5 Ye
Slide 74: M&A in Emerging and Developed Markets Deliver Solid Growth and Returns
M&A in Emerging and Developed Markets Deliver Solid Growth and Returns Emerging Markets Acquisition Economics Acquisition Spend/Yr. $100 MM Strong returns, Ongoing Topline Growth 10% + Storage Rental supports progress to increase exposure to IRR 13% – 14% higher growth markets Developed Markets Acqu
Slide 75: Real Estate Investment Offers Predictable, Attractive Returns
Real Estate Investment Offers Predictable, Attractive Returns Selective Lease Conversions Capture Market Real Estate an Enabler of Growth Inefficiencies Investment per Yr. $100 MM Developed Markets: convert to owned and consolidate for efficiency IRR 9% – 10% Stabilization Immediately Emerging M
Slide 76: Adjacent Businesses Offer Potential Further Upside
Adjacent Businesses Offer Potential Further Upside 2020 Target = 5% of total Revenue 10% long-term organic growth Data center continued organic growth offering good returns Art storage through planned Crozier acquisition Data Center Economics Art Storage Economics Capital Invested Per Year $
Slide 77: IRM Standalone Cash Available for Dividend and Discretionary Growth Investments
IRM Standalone Cash Available for Dividend and Discretionary Growth Investments Enhanced by 2020 Vision Cash Available for Dividends and Discretionary Growth Investments – Standalone $760 $45 $545 $485 $35 $15 $520 $420 $404 $90 $70 $75 $105 $(4) $15 2015E 2016E 2020E Cash for Investment Organic Gro
Slide 78: IRM Standalone with Investments Drives Good Dividend Growth
IRM Standalone with Investments Drives Good Dividend Growth Minimum Projected Dividend Per Share (Standalone) $2.18 $2.10 $1.98 $1.90 4% Growth Through 2020 2015E 2016E 2017E 2018E 2020E Dividend/ AFFO 82% 77% 72% 67% 67% Shares Outstanding 213 214 215 216 218 Lease Adjusted Leverage Ratio 5.7X 5.7X
Slide 79: Building Blocks of the Financial Roadmap for 2020 Vision
Building Blocks of the Financial Roadmap for 2020 Vision 2020 Vision IRM Standalone + Recall Benefits 2 IRM Standalone 1 79
Slide 80: Recall Transaction Delivers Significant Synergies
Recall Transaction Delivers Significant Synergies Estimated US$155 mm Total Net Synergies(1) Estimated Cumulative One-time Costs to Anticipated at Full Integration Achieve and Integrate(2) Includes Operating and Capital Expenditures $300 $140 $80 $155 $110 $255 $210 $220 $105 $15 2016E 2017E 2018E F
Slide 81: Cash Flow Including Recall Supports Further Increases in Dividends Per Share
Cash Flow Including Recall Supports Further Increases in Dividends Per Share and Partially Funds Discretionary Growth Investments Cash Available for Dividends and Cash Available for Dividends and $1,000 Discretionary Growth Investments – Discretionary Growth Investments – Standalone With Recall(1) $
Slide 82: Standalone Dividend Growth Potential Further Enhanced by Recall Transaction
Standalone Dividend Growth Potential Further Enhanced by Recall Transaction Minimum Projected Dividend Per Share (With Recall) $2.35 $2.20 4% Growth Through 2020 $1.94 $1.90 2015E 2016E 2017E 2018E 2020E Dividend/ AFFO 82% 76% 71% 69% 69% Shares Outstanding 213 272 272 273 275 Lease Adjusted Leverag
Slide 83: 2020 Vision: Revenue Build-Up
2020 Vision: Revenue Build-Up (C$ in MM) $4,670 – $4,810 $900 - $940 $150 - $160 $290 - $310 $3,050 – $290 - $310 $3,110 2015 Developed Emerging Adjacent Recall 2020 Markets Markets Businesses Assumes close on 01/01/2016 for Recall transaction 2 83
Slide 84: 2020 Vision: Adj. OIBDA Build-Up
2020 Vision: Adj. OIBDA Build-Up (C$ in MM) $1,725 – $1,825 $395 - $415 $30 - $40 $60 to $70 $90 - $110 125 $925 – $945 $100 - $120 2015 Developed Transformation Emerging Adjacent Real Estate Recall 2020 Markets Markets Businesses ROIC 12% 14% Assumes close on 01/01/2016 for Recall transaction Real
Slide 85: 2015 C$ Guidance In-Line with Expectations and Preliminary 2016 Guidance
2015 C$ Guidance In-Line with Expectations and Preliminary 2016 Guidance Standalone R$ 2015 Guidance R$ 2015 C$ 2015 C$ 2016 C$ Growth Confirmed at 07/30/15 As of 10/14/15 Revenue Lower end of original range $3,000 - $3,060 $3,050 - $3,110 $3,165 - $3,265 4% - 5% $3,030 - $3,150 Adj. OIBDA Closer to
Slide 86: Key Takeaways
Key Takeaways Durable RM volume growth delivered; internal and with acquisitions High return investments enhance shareholder returns Debt financed investments; no equity Strong cash flow generation Adjacent Businesses provide upside potential and are closely linked to core Standalone strategic plan
Slide 87: Driving Durable Cash Flow to Support Business and Dividend Growth
Driving Durable Cash Flow to Support Business and Dividend Growth Durable cash flow Three year plan on track and delivering per guidance Strong dividend growth Driven by durability of core, Transformation and Recall 2020 Vision Accelerates growth through ongoing optimization 87
Slide 88: Appendix
Appendix © 2015 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated. All other trademarks and registered trademarks are the property of their respective owners.
Slide 89: Presentation Assumptions
Presentation Assumptions All figures are in C$ 2015 budget rates unless otherwise noted Recall layered on as net, no FX adjustment made based on 2015 budget rates Assume Recall transaction close of 01/01/2016 Storage internal growth of 2.5% to 3.0% in 2016 through 2020 Service internal gro
Slide 90: Synergies Support Accretion in Earnings, FFO and AFFO
Synergies Support Accretion in Earnings, FFO and AFFO Significant Accretion Across Relevant Financial Metrics Accretion Percentages Are Incremental to Iron Mountain’s Strategic Plan and Reflect Estimated Synergies Achieved in Each Year Adjusted EPS Accretion Normalized FFO Accretion AFFO Accretion 2
Slide 91: IRM Standalone Cash Available for Dividends and Discretionary Investments
IRM Standalone Cash Available for Dividends and Discretionary Investments Cash Available for Distribution and Investment ($MM) C$. Numbers reflect midpoint of guidance 2015E 2016E 2020E IRM Adj. OIBDA $935 $960 $1,245 Benefit from Transformation - $ 50 $125 PF IRM Adj. OIBDA $935 $1,010 $1,370 Add:
Slide 92: Cash Flow Including Recall Supports Further Dividend Growth and Discretionary Investment
Cash Flow Including Recall Supports Further Dividend Growth and Discretionary Investment Cash Available for Distribution and Investment ($MM) C$ Numbers reflect midpoint of guidance 2015E 2016E 2020E IRM Adj. OIBDA $935 $1,195 $1,650 Benefit from Transformation - $ 50 $125 PF IRM Adj. OIBDA $935 $1,
Slide 93: Leverage Ratio with Adjusted OIBDA Including Recall Operating Costs to Achieve Synergies
Leverage Ratio with Adjusted OIBDA Including Recall Operating Costs to Achieve Synergies 5.6x 5.4x 5.4x 5.1x 5.1x 5.0x 2016 2017 2018 Lease Adjusted Leverage Ratio on a Reported Basis Lease Adjusted Leverage Ratio with Adjusted OIBDA Including Recall One-Time Operating Costs to Achieve Synergies 93
Slide 94: Planned 2015 – 2020 Capital Investments
Planned 2015 – 2020 Capital Investments ($ in MM) Investments(1) 2015 2016 2020 M&A Developed Markets $15 $50 $50 Emerging Markets $25 $100 $100 Real Estate Consolidation and $80 $80 $80 Development Data Center $25 $35 $35 Lease Conversion $50 $100 $100 Adjacent Businesses $85 $50 Total $280 $365 $4
Slide 95: Planned 2015 – 2020 Capital Investments with Recall
Planned 2015 – 2020 Capital Investments with Recall ($ in MM) Investments(1) 2015 2016 2020 M&A Developed Markets $15 $50 $50 Emerging Markets $25 $100 $100 Real Estate Consolidation and $80 $100 $100 Development Data Center $25 $35 $35 Lease Conversion $50 $100 $100 Adjacent Businesses $85 $50 Tota
Slide 96: Reconciliation of Operating Income to Adjusted OIBDA
Reconciliation of Operating Income to Adjusted OIBDA 96
Slide 97: Storage Rental Stream is Key Economic Driver
Storage Rental Stream is Key Economic Driver Same Store Revenue Growth (Historical) 8% 6% 4% 2% 0% 2007 2008 2009 2010 2011 2012 2013 2014 -2% 7-Year Average -4% IRM Internal Storage Revenue Growth (1) 4.4% Self-Storage Average Same Store Revenue(2) 3.3% Industrial Average Same Store Revenue(3) 1.0%
Slide 98: Iron Mountain REIT Taxability
Iron Mountain REIT Taxability 98
Slide 99: Definitions
Definitions Non-GAAP Measures Non-GAAP measures are supplemental metrics designed to enhance our disclosure and to provide additional information that we believe to be important for investors to consider when evaluating our financial performance. These non-GAAP measures should be considered in addit
Slide 100: Definitions
Definitions Adjusted Operating Income Before Depreciation, Amortization, Intangible Impairments, and REIT Costs, or Adjusted OIBDA Adjusted OIBDA is defined as operating income before depreciation, amortization, intangible impairments, (gain) loss on disposal/write-down of property, plant and equipm
Slide 101: Definitions
Definitions Non-GAAP Measures (continued) Service Adjusted OIBDA Service Adjusted OIBDA is calculated by taking service revenues excluding terminations and permanent withdrawals less direct expenses and allocated overhead tied to the service business. Terminations and permanent withdrawals are exclu
Slide 102: Definitions
Definitions Capital Expenditures and Investments – Our business requires capital expenditures to support our expected storage rental revenue and service revenue growth and ongoing operations, new products and services and increased profitability. The majority of our capital goes to support business
Slide 103: Definitions
Definitions Constant Dollar Growth (C$) – Constant currency growth rates are calculated by translating historical results and projections at the 2015 constant dollar budget rates. DPUs – Data protection units, a unit of measurement specific to our Data Protection storage services. Internal Revenue G
Slide 104: Definitions
Definitions Recall Costs – Includes costs associated with our proposed acquisition of Recall, including costs to complete the acquisition (including advisory and professional fees) as well as costs to integrate Recall with our existing operations (including moving, severance, facility upgrade, REIT
Slide 105: Management Biographies: President & Chief Executive Officer
Management Biographies William Meaney is president and CEO of Iron Mountain and serves as a director on the company’s board. He previously served as CEO of The Zuellig Group, a $12 billion primarily business-to-business conglomerate Chief Executive Officer based in Hong Kong that saw sales triple du
Slide 106: Management Biographies: SVP, Chief Strategy Officer
Management Biographies Ned Bicks is senior vice president of Adjacent Business and Chief Strategy Officer for Iron Mountain, responsible for identifying and driving growth and value creation initiatives on a global basis. In addition to those strategic SVP, Chief Strategy Officer initiatives, he als
Slide 107: Management Biographies: EVP & Chief Financial Officer
Management Biographies As Iron Mountain’s executive vice president and chief financial officer, Rod EVP & Chief Financial Officer Day has overall responsibility for accounting, external reporting, financial planning and analysis, internal audit, investor relations, tax and treasury functions. He has
Slide 108: Management Biographies: President, International
Management Biographies Marc Duale was appointed president, international in September 2008, after overseeing Iron Mountain’s business in Europe for two years. A French native, Marc joined Iron Mountain in May 2006 with more than 25 years of President, International international leadership experienc
Slide 109: Management Biographies: EVP, Human Resources
Management Biographies Deirdre Evens oversees global human resources for Iron Mountain, leading people operations and strategy necessary to support the company's growth EVP and Chief People Officer through the recruitment, development, and retention of global talent. She came EVP, Human Resources to
Slide 110: Management Biographies: SVP, Real Estate Investments
Management Biographies Ellen Hall is responsible for refining and executing an optimal global real estate investment SVP, Real Estate Investments and portfolio strategy, thereby enhancing Iron Mountain’s position within the real estate investment trust (REIT) community. Working in close partnership
Slide 111: Management Biographies: NA & Western Europe
Management Biographies Patrick Keddy is the EVP and General Manager, North America & Western Europe, a role he assumed in March 2015. NA & Western Europe Prior to this role, Patrick served as the Senior Vice President, Western Europe, since November 2011 where he was responsible for driving sustaina
Slide 112: Management Biographies: SVP and General Manager, Data Centers
Management Biographies Mark Kidd assumed the role of the Senior Vice President and General Manager of Data Centers in the spring of 2013. Prior to that, Mark was the SVP and General Manager, SVP, Enterprise Strategy supporting the executive team in shaping the overall company strategy and also had r
Slide 113: Management Biographies: SVP & GM, Data Management
Management Biographies Eileen Sweeney leads Iron Mountain’s Global Data Management business SVP & GM, Data Management which provides service to more than 30,000 customers across 75 markets via nearly 100 data management facilities. Sweeney is responsible for the continued development of the data man
Slide 114: Management Biographies: EVP, Global Services and CIO
Management Biographies EVP, Global Services and CIO As Iron Mountain’s Executive Vice President, Global Services and Chief Information Officer, Tasos Tsolakis lead Iron Mountain’s Global Service Organization, which includes IT, Security and Procurement. As leader of the Global Service Organization,
Slide 115: Management Biographies: EVP & GM, Records and Information Management
Management Biographies NA John Tomovcsik (JT) is our Executive Vice President and General Manager for Records and Information Management in North America. JT focuses on Management, EVP & GM, Records & long-term strategy and planning for the business unit and has direct P&L responsibility. His organi