• Revenue: $1.6 billion, up 12% from the prior year.
• Adjusted EBITDA: $568 million, up 14% year on year.
• AFFO per Share: $1.12, up 10% compared to the prior year.
• Total Storage Revenue: $936 million, up $77 million year on year.
• Total Service Revenue: $622 million, up $92 million from last year.
• Adjusted EBITDA Margin: 36.5%, up 50 basis points year on year.
• Global RIM Business Revenue: $1.26 billion, an increase of $78 million year on year.
• Global Data Center Business Revenue: $153 million, an increase of $26 million year on year.
• Data Center Adjusted EBITDA Margin: 43.6%, an increase of 190 basis points from the third quarter of last year.
• Asset Lifecycle Management Revenue: $102 million, an increase of 145% year on year.
• Capital Expenditures: $415 million, with $373 million of growth and $41 million of recurring.
• Net Lease Adjusted Leverage: 5.0 times, the lowest level since prior to the Company's reconversion in 2014.
• Dividend: $0.715 per share to be paid in early January.

• Warning! GuruFocus has detected 12 Warning Signs with IRM.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Iron Mountain Inc (NYSE:IRM) achieved record quarterly revenue of $1.6 billion, up 12% from the prior year.
• The company set a new adjusted EBITDA record of $568 million, up 14% year-over-year.
• AFFO per share on a normalized basis increased by 10% to $1.12 compared to the prior year.
• Strong performance in the digital solutions business with the launch of the DXP platform, securing 24 recurring revenue deals.
• Significant growth in the asset lifecycle management (ALM) business, with a 145% year-over-year increase in revenue.

Negative Points

• The strength of the US dollar posed a headwind, impacting revenue and AFFO on a constant currency basis.
• Data center service revenue was slightly down due to customer-specific installation work from the previous year.
• The company faces challenges in maintaining consistent growth in the data center business due to the lumpiness of large hyperscale contracts.
• Capital expenditures are expected to increase significantly, with a projection of $1.8 billion for the year, primarily for data center growth.
• Exposure to Latin American currencies, such as the Argentine peso and Brazilian real, negatively impacted financial results.

Q & A Highlights

Q: Can you elaborate on trends in the data center and enterprise side of the ALM business, including contributions from volumes and pricing? A: William Meaney, CEO, explained that strong growth is seen in data center decommissioning, particularly with hyperscale clients upgrading to new equipment. Barry Hytinen, CFO, added that pricing trends are stable, with some variability in component pricing. Organic revenue growth in ALM was significant, driven by volume increases and synergies from the Regency acquisition.

Q: What are the CapEx requirements for growth, particularly in data centers, for the next year? A: Barry Hytinen, CFO, stated that due to strong leasing growth, significant investment in data center growth capital will continue. Total capital expenditure guidance for the year is around $1.8 billion, with the majority allocated to data centers. This trend is expected to continue, driven by pre-leased assets under construction.

Q: Can you discuss the pacing of data center construction and revenue growth expectations? A: William Meaney, CEO, noted that despite lumpiness in signings, the company expects to meet or exceed its 130-megawatt leasing target for the year. Revenue growth is expected to accelerate in the fourth quarter, setting up strong momentum into 2025. Barry Hytinen, CFO, added that recent commencements will contribute significantly to fourth-quarter revenue.

Q: What are your expectations for RIM volumes and pricing in the fourth quarter and next year? A: Barry Hytinen, CFO, indicated that physical volume is expected to remain stable or slightly increase, with revenue management opportunities continuing in the mid to upper single digits. The company is focused on driving value for clients through new offerings and expects these trends to persist into next year.

Q: Can you provide more details on the WiseTech acquisition and your appetite for larger acquisitions? A: William Meaney, CEO, explained that WiseTech expands Iron Mountain's presence in Europe and North America, adding strong customer relationships in both enterprise and hyperscale segments. Barry Hytinen, CFO, noted that while the company is open to acquisitions, the ALM space consists mostly of smaller players, and significant organic growth is expected to continue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.