Durable Business Drives Cash Flow and Dividend Growth January 2018
Safe Harbor Language and Reconciliation of 2 Non-GAAP Measures This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws and is subject to the safe harbor created by such Act. Forward-looking statements include, but are not, limited to statements concerning our operations, economic performance, financial condition, goals, targets, beliefs, future growth strategies, investment objectives, plans and current expectations and Iron Mountain’s proposed acquisi tio n (the “Acquisition”) of IO Data Centers, LLC (“IODC”). These forward -looking statements are subject to various known and unknown risks, uncertainties and other factors. When Iron Mountain uses words such as "believes," "expects," "anticipates," "estimates" or similar expressions, it is making forward-looking statements. Although Iron Mountain believes that its forward-looking statements are based on reasonable assumptions, Iron Mountain’s expected results may not be achieved, and actual results may differ materially from i ts expectations. In addition, important factors that could cause actual results to differ from Iron Mountain’s expectations include, among others: (i) Iron Mountain’s ability to remain qualified for taxation as a real estate investment trust for United States federal income tax purposes; (ii) the adoption of alternative technologies and shifts by Iron Mountain’s custom ers to storage of data through non-paper based technologies; (iii) changes in customer preferences and demand for Iron Mountain’s storage and information management service s; (iv) the cost to comply with current and future laws, regulations and customer demands relating to data security and privacy issues, as well as fire and safety standards; (v) the impact of litigation or disputes that may arise in connection with incidents in which we fail to protect Iron Mountain’s customers' information; (vi) changes in the price for Iron Mountain’s storage and information management services relative to the cost of providing such storage and information management services; (vii) changes in the political and economic environments in the countries in which Iron Mountain’s international subsidiaries operate and changes in the global political climate; (viii) Iron Mountain’s ability or inability t o complete acquisitions on satisfactory terms, to close pending acquisitions, including the Acquisition, and to integrate acquired companies, such as IODC, efficiently; (ix) changes in the amo unt of Iron Mountain’s capital expenditures and Iron Mountain’s ability to invest according to plan; (x) Iron Mountain’s ability to comply with existing debt obligations or to o btain additional financing to meet its working capital needs; (xi) changes in the cost of Iron Mountain’s debt; (xii) the impact of alternative, more attractive investments on dividends; (xiii ) the cost or potential liabilities associated with real estate necessary for Iron Mountain’s business; (xiv) the performance of business partners upon whom Iron Mountain depends for techni cal assistance or management expertise outside the United States; (xv) other trends in competitive or economic conditions affecting Iron Mountain’s financial condition or resul ts of operations not presently contemplated; and (xvi) other risks described more fully in our filings with the Securities and Exchange Commission, including under the caption “Risk Fact ors ” in our periodic reports or incorporated therein. In addition, Iron Mountain’s ability to close the Acquisition is dependent on the satisfaction of customary closing conditions s et forth in the purchase agreement for the Acquisition. You should not rely upon forward- looking statements except as statements of Iron Mountain’s present intentions and of its present ex pectations, which may or may not occur. Except as required by law, Iron Mountain undertakes no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Reconciliation of Non-GAAP Measures: Throughout this presentation, Iron Mountain may discuss (1) Adjusted EBITDA, (2) Adjusted Earnings per Share (“Adjusted EPS”) , ( 3) Funds from Operations (“FFO NAREIT”), (4) FFO (Normalized) and (5) Adjusted Funds from Operations (“AFFO”). These measures do not conform to accounting principles gene ral ly accepted in the United States (“GAAP”). These 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 in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as operating income, income (loss) from continuing operations, net income (loss) or cash flows from operating activities from continuing operations (as determined in accordance with GAAP). The reconciliation of these measures to the appropriate GAAP measure, as required by Regulation G under the Securities Exchange Act of 1934, as amended, and the definitions of such Non-GAAP measures and certain operational measures are included in the Supplemental Financial Information. Iron Mountain does not provide a reconciliation of non-GAAP measures that it discusses as part of its annual guidance or long term outlook because certain significant information required for such reconciliation is not available without unreasonable efforts or at all, including, most notably, the impact of exchange rates on Iron Mountain’s transactions, loss or gain related to the disposition property, plant and equipment (including of real estate) and other income or expense. Without this information, Iron Mountain does not believe that a reconciliation would be meaningful. Note: All financial projections and forward looking statements included herein are current as of reporting the company’s thir d quarter results on October 25, 2017. Selected metrics are defined in the appendix of our Q3 2017 Supplemental Financial Information.
Introduction and Strategic Plan
4 Iron Mountain Provides Mission-critical Services 1 BILLION 680 MILLION 627 MILLION 89 MILLION Medical images stored Cubic feet of hardcopy Images scanned Pieces of media stored records archived annually 30 MILLION 45,730 99.99999% ~250 Megawatts Film and sound elements Disaster recovery Inventory accuracy rate Existing and potential data center capacity (1) protected and preserved tests supported 1 TRUSTED GUARDIAN of your most precious assets (1) Pro forma for Credit Suisse and IO Data Centers acquisitions and based on existing and expansion megawatt capacity.
5 Leading Global Information Management Brand Business Mix (1) Global Footprint Other (2) Service - 19% 11% Shredding 10% Data Protection 14% Records Storage - 81% Management 66% 53 COUNTRIES 6 CONTINENTS Revenue: $3.9B (3) Adj. Gross Profit: $2.2B (3) 230,000+ 95% 87MM 1,400+ customers Fortune 1000 SF of real estate Facilities companies Note: Statistics as of 9/30/17 unless otherwise stated (1) Based on 9/30/17 YTD. (2) Other revenues include Fulfillment Services, Information Governance and Digital Solutions, Technology, Escrow Services, Data Center, Consulting, Entertainment Services, Fine Art Storage, Consumer Storage and other ancillary services. (3) Based on annualized Q3 2017.
Durable Business Supports Cash 6 Flow and Dividend Growth Protect Durable, Growing Extend Business Model to Sustainable High-Margin Business Fast-Growing Markets Growth in Cash Flow and Dividends per Share Sustainable Growth in Cash Flow and Dividends per Share Build on Customer Relationships and Trust to Leverage Brand
Durability and Performance Will 7 Continue to Drive Shareholder Returns Targeted Growth in Ordinary Cumulative Ordinary Dividends and Dividend/Share vs. Inflation Special Distributions $in Billions $2.8 $2.2 $1.7 $1.3 5.0% 4.0% 4.0% 2.3% 2.1% 2.0% $0.3 2018E 2019E 2020E 2013 2014 2015 2016 2017 Growth in Div./Share CPI Index CPI Source: FactSet, as of December 20, 2017
50% of Boxes Stored 15 Years 8 Ago Remain in our Facilities IRM Retention Rate – North America 100% 50% of boxes that were stored 15 years ago still remain 80% 25% of boxes that were stored 22 years 60% ago still remain 40% 20% 0% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Box Age (Years) Source: Iron Mountain Propriety Safekeeper Plus Inventory Management System
9 We Continue to See Box Growth Worldwide Internal Volume ACHIEVING NET VOLUME CuFt in MM GROWTH IN ALL Change Excludes Business Acquisitions MAJOR MARKETS 504 495 487 477 469 462 48 48 43 43 39 39 35 35 42 42 32 32 41 41 41 41 34 34 34 34 48 MM+ NEW FROM EXISTING AND NEW CUSTOMERS ANNUALLY (1) 8 MM+ INTERNAL 2011 2012 2013 2014 2015 2016 NET VOLUME ANNUALLY (1) 676MM CuFt including acquisitions
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