Q1 2025 Iron Mountain Inc Earnings Call
Good morning, and welcome to the Iron Mountain first quarter 2025 earnings Conference call.
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Speaker Change: We will limit analysts to one question and you can rejoin the queue. 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 Jeff.
Mark Rupe: Good morning, and welcome to our first quarter 2025 earnings conference call on.
Mark Rupe: On today's call, we will refer to materials available on our Investor Relations website.
Mark Rupe: We are joined here today by Bill Meaney, President and Chief Executive Officer.
Mark Rupe: Barry Heightening, our executive Vice President and Chief Financial Officer.
Mark Rupe: After prepared remarks, we'll open the lines for Q&A.
Mark Rupe: Today's earnings materials contain forward looking statements, including statements regarding our expectations.
Mark Rupe: All forward looking statements are subject to certain risks and uncertainties.
Mark Rupe: Please refer to today's earnings materials, the Safe Harbor language on slide two.
Mark Rupe: In 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.
Mark Rupe: In addition, we use several non-GAAP measures when presenting our financial results.
Mark Rupe: We have included reconciliations to these measures in our supplemental financial information.
That I will turn the call over to Bill.
Bill Meaney: 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 teams 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 base.
Bill Meaney: In the first quarter, we achieved all time high quarterly revenue of $1 $6 billion, representing 8% year over year growth in record first quarter, adjusted EBITDA of $580 million, an increase of 12% as compared to last year.
Bill Meaney: This performance is even better when excluding the effects of foreign exchange with revenue, increasing 9% and adjusted EBITDA growing 13% to last year.
Bill Meaney: 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.
Bill Meaney: And our traditional records business achieved record results as well this formula supports our ability to sustainably drive double digit revenue and profit growth.
Bill Meaney: 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.
Bill Meaney: For example, during the first quarter, our global scale and reputation were key factors in securing multiple records management L. M deals where customers consolidate into a single vendor's further testimony at the benefits from our number one ranking in customer satisfaction by the Wall Street Journal of the top U S listed companies.
Bill Meaney: 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 in truly differentiates our individual offerings by the whole suite being worse.
Bill Meaney: More than any single product.
Bill Meaney: Our potential for growth remains significant, especially with the substantial expansion of our solutions offerings in recent years.
Bill Meaney: To complement our cross selling efforts and capitalize on this opportunity we have marketing initiatives underway to increase awareness of our complete solutions offering.
Bill Meaney: We now turn to an update of our key achievements and customer wins. This showcase the success, we are delivering against our strategic priorities, which are driving continued revenue growth in our physical storage records management business, delivering differentiated digital solutions, which truly which give truly transformative results to our customers.
Bill Meaney: In terms of revenue security and cost supplying differentiated data center offerings through our global scale and customer trust and providing asset lifecycle management capabilities, which are secure economic environmentally sustainable let's.
Bill Meaney: Let's begin with our records and information management business.
Bill Meaney: We are pleased with our consistent and strong performance storage volume continues to increase modestly each quarter each quarter and our revenue management is further accelerating growth by capturing the enhanced customer value, we're providing through our global integrated services.
Bill Meaney: Additionally, we are driving record digital revenue and a growing percentage of this revenue is recurring.
Bill Meaney: Let me highlight a few new projects, we secured during the quarter, starting first with records management.
Bill Meaney: A Greek bank and.
Bill Meaney: An existing customer for over 10 years chose Iron Mountain to store records from 20 locations following our merger.
Bill Meaney: The strength of our relationship the security of our facility in the speed and efficiency of our document retrieval services lead to cost savings for the customer. Additionally, our global insurance companies operations in Thailand awarded Iron Mountain, a three year Records management agreement with the first project utilizing our smart sort solution to manage.
Bill Meaney: Over 3 million co mingled files.
Bill Meaney: I'm also excited to share recent accomplishments and our digital solutions business.
Bill Meaney: Our insight digital experience platform or DXP continues to gain traction and acceptance in the market customers are realizing the value of the SaaS platform, which is reflected in larger deal values and shorter sales cycles.
Bill Meaney: We are continuing to expand dxp's capabilities to manage and create structure from unstructured content increase efficiency through process automation enabled visibility of dark data increased compliance and make information actionable. We're also tailoring T X P use cases to industry specific.
Bill Meaney: Vic requirements.
Bill Meaney: I'll highlight a few of our recent wins in digital solutions.
Bill Meaney: In the United Kingdom, we have secured a 10 year contract with an existing customer expanding our relationships significantly.
Bill Meaney: Under the agreement we will then taken additionally, additional 350000 cubic feet of documents digitize close to 9 million images per year and provide DXP access to 2500 users.
Bill Meaney: Our store digitize and access solutions will enable the customer to realize financial savings operational efficiencies and an overall improved stakeholder experience.
Bill Meaney: In Europe, we strengthened our relationship with a long standing health care client through a three year deal to digitize patient documents. Moreover, the customer is using our insight DXP platforms AI capabilities to provide concise summaries of patient incidence into facilitate efficient access to critical.
Speaker Change: <unk> information.
Speaker Change: We will digitize 500000 documents and 750000 images eight months, whilst also providing physical records management.
Speaker Change: Our solution will provide enhanced scalability and accelerated processing time, resulting in substantial cost reductions for the customer.
Speaker Change: As we mentioned on our last earnings call. We believe our many years of experience in providing digital transformation services to the United States government positions us well to assist the broad Doe Jeff Burt.
Speaker Change: And now let me briefly highlight a significant order we received yesterday.
Speaker Change: We have been awarded a contract for the department of Treasury, we will be assisting with a broad digital transformation efforts, leveraging our DXP platform and its embedded AI capabilities the.
Speaker Change: The contract value is approximately $140 million and will commence immediately with the majority of the revenue in 2026.
Speaker Change: I would like to thank the Treasury and the department of government efficiency for their trust in Iron Mountain.
Speaker Change: Lastly, during the process of this award more people involved in transforming the federal government have learned about our capabilities and experience in digital transformation.
Speaker Change: The result has been that we have seen a marked increase in our digital services pipeline, serving a broad range of federal agencies across a number of improvement and efficiency initiatives.
Speaker Change: Let me now turn to our data center business for the quarter, we continue to execute on our strong leasing backlog with revenue growth of over 20% year over year, driven by more than 24% organic storage growth.
Speaker Change: In the first quarter, our enterprise leasing activity was in line with expectations leasing approximately four megawatts of new business well.
Speaker Change: Whilst we did not sign new hyperscale contracts in the quarter, we were responding to strong interest across our U S European and Indian sites. We expect this to convert over the course of the year, which aligns with our projection for 125 megawatts of total new leasing.
Speaker Change: We continue to see strong demand for data center development across our global portfolio and our pipeline remains strong when fully developed our current portfolio will reach one three gigawatts more than triple the size of our current operating portfolio.
Speaker Change: Finally, I would also like to welcome Gary Aitken had our new EVP and general manager of Datacenters, Gary joins us from Equinix and reports to Mark Kidd, who leads our data center in a L M businesses.
Speaker Change: His global experience proven leadership in driving transformation and growth and commitment to fostering high performing inclusive teams will be a key asset to our customers and team as we further expand the business.
Speaker Change: Turning to our asset lifecycle management business, we continue to drive strong growth in this large and highly fragmented a L M market.
Speaker Change: In the first quarter, we achieved 44% reported revenue growth, including 22% organic growth with strength across both the enterprise and Hyperscale channels.
Speaker Change: In the enterprise channel, our commercial team's success as evidenced by the size and scope of deals. We are winning we think over time as large enterprises become more sensitive to the cyber risks with the disposal of their I T assets Iron Mountain's brand will play an ever increasing factor in their vendor selection.
Speaker Change: And in the Hyperscale channel given the robust robust growth in data center development in recent years, we anticipate strong tailwind for decommissioning work for the foreseeable future.
Speaker Change: We will leverage our differentiation as a data center operator in this channel to capture additional share.
Speaker Change: We will also continue to selectively acquire a L M enterprise businesses to expand our capabilities and geographic footprint in late March we acquired Premier surplus in the southern U S expanding our customer base and capabilities.
Speaker Change: To illustrate our growing strength in this segment, let me now share some of the a L. M wins achieved during the quarter, which continued to drive strong double digit organic growth.
Speaker Change: A large global fintech companies specializing in online payments and employing over 20000 people globally is selected Iron Mountain has as exclusive a L. M partner, but the secured disposition of its assets following the customers consolidation of providers, our longstanding relationship with this customer our flexibility and our <unk>.
Speaker Change: Maryann handling sensitive assets contributed to this win we also secured a new customer win with a global technology infrastructure provider with over 35000 employees Iron Mountain was chosen to manage a large batch of materials the customer accumulated through a series of acquisitions.
Speaker Change: Solution met all of this customers requirements, including chain of custody reconciliation secure wiping and remarketing.
Speaker Change: Our reputation and brand were also key to this win.
Speaker Change: In conclusion I'm proud of the strong results that our dedicated mountaineer has continued to deliver.
Speaker Change: Our team's commitment to meeting the needs of our nearly 250000 customers worldwide is integral to our success.
Speaker Change: As Barry will share in more detail, we are increasing our full year guidance to reflect the strong Q1 performance and positive outlook with that I'll turn the call over to Barry.
Barry Heightening: Thanks, Bill and thank you all for joining us to discuss our results.
Speaker Change: 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.
Speaker Change: We delivered strong organic growth in the quarter of 8%.
Speaker Change: Total storage revenue was $948 million up $64 million year on year and up 9% on an organic basis.
Speaker Change: Total service revenue was $644 million up $52 million from last year organic service growth of seven 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.
Speaker Change: Adjusted EBITDA of $580 million was a record for the first quarter and expanded $61 million year on year.
Speaker Change: 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 U S dollar weakening in the first quarter.
Speaker Change: Adjusted EBITDA margin was 36, 4% up 130 basis points year on year, which reflect reflects improved margins across all of our businesses.
Speaker Change: 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.
Speaker Change: <unk> was $348 million up $25 million, which represents growth as compared to last year of 8% on a reported basis and 10% excluding FX.
Speaker Change: <unk> on a per share basis was $1 17 up 6% to last year on a reported basis and up 9% excluding FX.
Speaker Change: Now turning to segment performance.
Speaker Change: Start with our global rim business, which achieved first quarter revenue of one point to $6 billion, an increase of $46 million a year on year, driven by revenue management and digital solutions, partially offset by the stronger U S dollar, which negatively impacted revenue by approximately $20 million.
Speaker Change: Organic storage was up 6% driven by revenue management and consistent volume.
Speaker Change: Organic service revenue was up 5% with contributions from digital and core services.
Speaker Change: Reported service revenue was down $4 million on a sequential basis due to a $3 million decline in terminations and permanent withdrawal revenue and another $3 million headwind from the stronger U S. Dollar.
Speaker Change: Our digital business had another strong quarter achieving record revenue. We are also pleased to report improvement in our records management retention rate and storage capacity utilization, both of which achieved the highest levels. We've seen in some time.
Speaker Change: Global <unk> adjusted EBITDA was $556 million, an increase of $30 million year on year.
Speaker Change: <unk> adjusted EBITDA margin of 44, 3% was up 80 basis points from last year, driven by operating leverage and revenue management.
Speaker Change: Let me provide a brief update on our consumer storage business following our commentary on our last call.
Speaker Change: While consumer storage remained a headwind to revenue growth in the first quarter. The team is driving solid operating improvement profitability is increasing and we are seeing very positive trends in storage reservations, which is a key forward indicator for revenue.
Speaker Change: Turning to our global data Center business total data center revenue was $173 million in the first quarter, an increase of $29 million year on year.
Speaker Change: Organic storage rental growth increased 24% driven by lease Commencements and continued strong pricing trends in.
Speaker Change: In the first quarter, New Commencements were 12 megawatts, including eight megawatts in northern Virginia pricing remained strong with the average price per kilowatt on new Commencements up 15% as compared to last year we.
Speaker Change: We renewed leases totaling 10 megawatts with strong renewal spreads of 19, and 27% on a cash and GAAP basis, respectively.
Speaker Change: Quarter data center, adjusted EBITDA was $91 million up 48% adjusted.
Speaker Change: Adjusted EBITDA margin was up 960 basis points from the first quarter of last year and up 60 basis points sequentially to 52, 4% improved pricing recent commencement and operating leverage or the key drivers of the strong margin expansion in the quarter.
Speaker Change: Turning to asset lifecycle management total a L. M revenue was $121 million, an increase of $37 million or 44% year over year.
Speaker Change: On an organic basis or a L. M team delivered 22% growth. The strong performance was driven by volume increases in all of our enterprise and Hyperscale businesses.
Speaker Change: On an inorganic basis, why is tech and <unk> continue to perform well and contributed revenue of $18 million. We are pleased with the continued improvement in a L. M profitability, which was up significantly as compared to last year benefiting from acquisition synergies as well as improved.
Speaker Change: Performance across the business.
Speaker Change: As we discussed last quarter, our strong customer wins, both in enterprise and Hyperscale give us high visibility.
Speaker Change: 82 accelerating growth as we move through 2025.
Speaker Change: I will note that our organic growth increased over 1000 basis points on a sequential basis ahead of our expectations, despite pricing being broadly flat to slightly down.
Speaker Change: Regarding our acquisition of Premier surplus I should note. This was completed right at the end of the first quarter. So its results were not included in our quarterly financials.
Speaker Change: For modeling purposes, we expect premier will contribute revenue of approximately $10 million to our full year results.
Speaker Change: Turning to capital allocation, we remain committed to our strategy that is balanced between funding our growth initiatives delivering meaningful shareholder returns and maintaining our strong balance sheet cash.
Speaker Change: Capital expenditures in the first quarter were $657 million with $629 million of growth in $28 million of recurring.
Speaker Change: Our outlook for capital expenditures is unchanged from our prior call with approximately $1 8 billion of growth and approximately $150 million of recurring both consistent with the levels from last year, we are planning for capital spending to be more first half weighted.
Speaker Change: Turning to the balance sheet with strong EBITDA performance, we ended the quarter with net lease adjusted leverage of 5.0 times in line with our expectations for both the quarter and year end.
Speaker Change: Turning to our dividend our board of directors declared a quarterly dividend of 78, and a half cents per share to be paid in early July on a trailing four quarter basis. Our payout ratio is now 62% in line with our long term target range and now turning to our outlook.
Speaker Change: Based on our strong first quarter performance and positive outlook and recent changes in currency exchange rates. We are pleased to increase our financial guidance for the full year 2025, we now expect total revenue to be within the range of $6 74 to $6 eight $9 billion, which represents year on year growth.
Speaker Change: Even of 11% at the midpoint relative to our prior guidance, we are raising revenue by $90 million based on a weaker U S. Dollar continued strong revenue management improved outlook for a L M performance and the Permian surplus acquisition.
Speaker Change: We now expect adjusted EBITDA to be within the range of 2.5052 to 555 billion, which represents year on year growth of 13% at the midpoint relative to our prior guidance, we are raising adjusted EBITDA by $30 million.
Speaker Change: And we now expect <unk> to be within the range of 1.48 to $1 five $1 billion and <unk> per share to be $4 95 to $5.05 at the midpoint. This represents 11 and 10% growth respectively.
Speaker Change: For the second quarter, we expect revenue of approximately $1 $6 billion to $8 billion, an increase of 10% to last year adjusted EBITDA of approximately $620 million up 14% year on year.
Speaker Change: <unk> of approximately $350 million, which is up 9% and <unk> per share of approximately $1 18 up 9% to last year before closing I would like to address two additional items.
Speaker Change: First regarding the contract with the department of the Treasury that Bill mentioned as it was awarded just last night, we have not included it in our financial guidance.
Speaker Change: For modeling purposes, we expect the contract will generate revenue in both 2025 and 2026 with the majority of the benefit next year.
Speaker Change: We look forward to updating you on the progress of this deal and our large pipeline of digital transformation initiatives on our next few calls.
Speaker Change: Second knowing that tariffs are a key area of investor interest I wanted to provide some perspective on our exposure.
Speaker Change: In our global rim business, our exposure to tariffs is essentially zero as our revenues and costs are matched based on each market in which we operate.
Speaker Change: In our <unk> business. The vast majority of the revenue is generated from ITE gear that we decommission and then resell in the same market. For example, we decommission here in the U S. And then resell it to U S based customers and as a result, there is no cross border impact.
Speaker Change: While we do have some components, which are sold into China, Let me share a couple of important points.
Speaker Change: First over the last few years the team has done a terrific job significantly diversifying our downstream sales away from China.
Speaker Change: And for those components that are sold into China, I would highlight that tariffs tend to be based on the original manufacturing country of origin and as such we would not anticipate an impact on our components sales.
Speaker Change: Lastly, in our data center business. The vast majority of the cost of construction is not subject to tariffs, we estimate that we have less than 5% exposure within data center construction.
Speaker Change: With that said, let me conclude.
Speaker Change: Our year is off to a great start with record breaking first quarter results across all key financial metrics. Our outlook is strong and we are pleased to increase our full year guidance. We are focused on driving double digit revenue growth over many years supported by our strong cross selling opportunity into what our very large free.
Speaker Change: Minted markets I want to express my gratitude to all of our mountain years for their continued dedication to serving our customers and with that operator would you. Please open the line for Q&A.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: We will limit analysts to one question and you can rejoin the queue and at this time, we will pause momentarily to assemble our roster.
Speaker Change: And the first question will come from Shlomo Rosenbaum with Stifel. Please go ahead.
Shlomo Rosenbaum: Hi, Thank you very much.
Speaker Change: Bill or Mary if you could just talk a little bit about the market for leasing the leasing activity has been uncharacteristically low for the last three quarters of last quarter, you talked about large deal that you walked away from.
Speaker Change: Due to some market conditions, you didn't want to accept if you could just talk about what's going on in your confidence in being able to achieve that $125 million of megawatts because it does this.
Speaker Change: It's been pretty good.
Speaker Change: Step up in the rest of the year and then if you don't mind me just tagging on dairy at the end of your last comments 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 its very timely and your ability to potentially change in terms of customers in terms of if there was tariffs impacted cost.
Speaker Change: <unk> with imports. Thank you.
Speaker Change: Hey, good morning, Shlomo So why don't I start on the leasing and then as you suggested Barry could talk give you a little bit more detail in terms of how we estimated the 5% impact on construction cost. So on the on the leasing is first of all we had a good quarter. If you look at the leasing activity that we had for our normal enterprise Colocation sale.
Speaker Change: So 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 I think conversations that we're having with some of our largest hyperscale customers.
Speaker Change: A number of locations both in the U S Europe and India.
Barry Heightening: And Shlomo it's Barry.
Barry Heightening: Yeah. So when we look at the cost of construction on datacenter of course, there is a fair amount of labor in the development of the sites than theirs and that's in the form of general contractors is obviously design and other construction related costs. There is some level of import bolt in things like steel, but also saw.
Barry Heightening: Some of the component MEP that comes in but when we look at it.
Barry Heightening: We think the total exposures is sub 5% of course I'll note, we do run a global data center portfolio. So when you factor in what.
Barry Heightening: What's are affected in the U S. That's 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 mark to market renewal spreads and my expectation is to the extent that there were tariffs.
Barry Heightening: <unk> ongoing the.
Barry Heightening: The market would would absorb those in and returns will 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.
Barry Heightening: Supply commitments and we ordered those for delivery over over a long period time. Thanks.
Speaker Change: The next question will come from George Tong with Goldman Sachs. Please go ahead.
Speaker Change: Hi, Thanks, Good morning, I wanted to stick on the topic of data centers. You mentioned you were very pleased with our leasing activity you feel good about hyperscale or <unk>, but I wanted to take a step back and so if you if you look at.
Speaker Change: Data center demand at the industry level, certainly has been evolving.
Speaker Change: Has there been any place within your business, where you've seen any changes in demand.
Speaker Change: And data centers from any part of your customer set.
George Tong: Good morning, George So thanks for the question.
Speaker Change: Actually no I mean in the <unk>.
Speaker Change: Conversations that you know Mark and now Gerry have been having.
Speaker Change: Tag along on some of those conversations we havent seen anything thats changed.
Speaker Change: 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.
Speaker Change: And I think the others side, but there is also what you see there even their announcements and they've been pretty rock solid in fact, some of them are even increase their guidance around capex expected capex expenditure over the next you know.
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 outsource. Some are more some are less but so we haven't seen any real change in that that macro environment.
Speaker Change: And the scarcity of power and locations continues to give us a very strong pipeline.
Tobey Sommer: The next question will come from Tobey Sommer with the Truest. Please go ahead.
Speaker Change: Thanks.
Tobey Sommer: With respect to your sales strategy and initiative 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 into next.
Speaker Change: Yes, no. Thanks, Toby for the question here at the core and you're putting your finger on what really is the core behind the Matterhorn strategy. So if you use the and I know you're catching up to the story, but the the big shift that we made as part of Matterhorn is we created a chief commercial officer, Greg Mcintosh and we have a central point.
Speaker Change: Which is that drives our relationships with our customers. So it's critical to what Matterhorn is all about is not just the products in our portfolio that we are 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 is how we get at.
Speaker Change: After that in terms of offering our customers a single point of contact for Iron Mountain and the cross selling across those businesses.
Speaker Change: That's really what's taken us from a single digit growth company to a consistently double digit growth company because.
Speaker Change: 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 kept macro tailwind that typically grow more than 20%, so but you're spot on that the big part of the transformation story around Matterhorn was.
Speaker Change: That single customer point of contact into Iron Mountain, where we can sell the whole range Mountain range. If you will.
Speaker Change: Products.
Speaker Change: The next question will come from Kevin Mcveigh with UBS. Please go ahead.
Kevin Mcveigh: Great. Thanks, so much hey.
Barry Heightening: Barry can you maybe disaggregate the $90 million of a 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 a the additional $80 million or so was FX as opposed to other things.
Kevin Mcveigh: Yes.
Speaker Change: Hey, Kevin Good morning. Thanks, Good morning, the increase was $90 million and of that 97.
Speaker Change: $75 million of that just maybe just under that is the change in the FX rates.
Speaker Change: And then we've got $10 million from Premier and then the remainder so between five and $10 million, depending upon how you cut the FX between five and $10 million is just pure operating performance and you know honestly.
Speaker Change: It's still early in the year, Kevin So I would tell you that we feel extraordinarily good about wave businesses trend.
Speaker Change: Trending and you know as we mentioned on the call I didn't include the reason yes.
Speaker Change: Yesterday contract win that we had with the U S government. So I feel good about where we are in terms of that guide and it's a continue.
Speaker Change: Continue to update the market on how we're trending through the year yeah. So thanks for that question.
Speaker Change: The next question will come from Jonathan Atkin with RBC capital markets. Please go ahead.
Jonathan Atkin: Thanks, a lot on data centers and more on a L. M. So for data centers.
Jonathan Atkin: Just interested in kind of where you see the opportunity set by region where might be.
Jonathan Atkin: The deal volumes are the deal sizes, the the most meaningful relative to your portfolio.
Jonathan Atkin: Okay.
Speaker Change: Thanks. Thanks for the question I think the if we let's start with the U S and the U S. We continue to have a lot of pipeline as you would expect in northern Virginia, and now also enrichment kind of the new Northern Virginia.
Speaker Change: But that for that region. We also see strong pipeline and interest in our Chicago location is relatively new to the portfolio.
Speaker Change: Miami, We just broke ground on that facility just recently, that's a smaller facility. So its more kind of edge deployment, but also strong pipeline. So those three markets. I mean, we continue to see strong pipeline also in Arizona, but we're almost completely full in Arizona, So, but so I'd say right now, it's northern Virginia, including.
Speaker Change: Our Manassas campus as well as Richmond, which we've added capacity to masses.
Speaker Change: Richard 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 Hyperscale, There's and there's limited capacity in in Europe broadly in Amsterdam, and Amsterdam in particular, so we feel really good about the <unk>.
Speaker Change: Why that we have associated with Amsterdam, and now Madrid right. So.
Speaker Change: So those are the probably the biggest markets for us were sold out in Frankfurt and London at this point. So then if we go to India, which is relatively new newer to our portfolio and you might have noticed that we actually bought out the remaining stake in web works, that's a 100% owned but.
Speaker Change: We have really strong pipeline across their sites, but specifically I would say as you would expect Mumbai.
Speaker Change: We're expanding nicely in Mumbai in the Mumbai market and as well as Chennai.
Speaker Change: On the a L M. Maybe Barry you might want to call. John did you have in a L. M question. There I know you said you did.
Speaker Change: Breast if you were going to answer it before I asked it.
Bye now.
Speaker Change: I'm not doing my question impersonation. This morning, John So we'll take the question.
Speaker Change: I was interested just the mix.
Speaker Change: And how you see it evolving across cloud Hyperscale and enterprise international versus the U S. And then the lens with which you kind of evaluate potential further.
Speaker Change: Further M&A in that segment.
Speaker Change: Maybe I'll start with the the mix and then Barry you can talk comment a little bit to the question on the on the M&A on the mix is I think we might have mentioned this on the last call because of the I T. Renew acquisition is our mix has been historically more skewed towards the hyperscale or decommissioning data center asset.
Speaker Change: That is starting to shift because of the acquisitions, whether it's wife's Tac premier a regency for that matter have been more on the enterprise in the market itself is more enterprise. So if you think about the market is more like maybe.
Speaker Change: 70, 30, 70% enterprise.
Speaker Change: End user devices.
Speaker Change: The other.
Speaker Change: It assets within enterprise customers and 30% datacenter decommissioning hours was almost the opposite it was more like 60%.
Speaker Change: 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 the you can imagine with also the cross selling our cross selling ability and to almost 250000 customers on the enterprise side is building out that footprint.
Speaker Change: This 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.
Speaker Change: 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 wife's tech, 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 mark.
Speaker Change: That we are continuing to look at in terms of acquisitions, we have a small presence in India, but I think it's fair to say in India and the Middle East we have more work to do we go further into Asia Pacific in terms of major markets. We also I think it was the last call, we announced an acquisition in Australia, and I actually visited that acquisition.
Speaker Change:
Speaker Change: Maybe about a month ago, and that's off to a really really nice start.
It's a key market. So I think you know.
Speaker Change: The short answer to your question is youre going to see our business to reflect more like the macros of the industry that will start shifting to be more of a natural mix of let's say, 60%, 70% enterprise, 30%, 40%.
Speaker Change: Datacenter decommissioning and then geographically I think we're in really we're really well covered I would say in North America I would say in Europe, we're pretty well covered but I mean, there's still some things that we're looking at to fill in some countries on that we can always do more in eastern Europe, and then India.
Speaker Change: We're looking at some acquisitions as well as the Middle East and Australia, where we're well covered now they are there are other markets that we continue to look at like Latin America's you expected some locations in eastern Europe.
Barry Heightening: John It's Barry just a couple more thoughts there to add on.
Speaker Change: Yeah.
Bill Meaney: 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 sixty's as bill was suggesting and trending higher.
Bill Meaney: We like both parts of the business, obviously enterprise and Hyperscale and Hyperscale side Theres, a high visibility of a massive amount of volume that continues to grow in light of datacenter decommissioning needs in light of the fleets of Datacenters out there that have been growing and continue to grow at a as you know very well.
Bill Meaney: Very fast rates and so that that brings with it a considerable amount of volume and you've also talked about before though the margins on that business. It's more of a ramp in new share model. Some margins are are lower.
Bill Meaney: But high degree of volume on the enterprise side, where it's much more of a flow business and continuous.
Bill Meaney: Business.
Bill Meaney: Somewhat annuity like the margins are better it's more of a service offering and we are 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 creates more opportunity for <unk>.
Bill Meaney: Operating leverage and scale efficiencies across our network and to be able as we serve 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 a L. M. Profitability is continued improvement the team is doing great job there and that's thanks to acquisition synergies is just well.
Bill Meaney: Improved operating leverage and just one last point on on acquisitions in the <unk> space and we continue to be.
Bill Meaney: Be on the lookout in actively working on incremental tuck ins here and there with.
Bill Meaney: But generally continue to see.
Bill Meaney: Multiple is in that mid to high single digit of our EBITDA and on our 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.
Bill Meaney: Just echo that one of the points, we made the team delivered 22% organic growth in the quarter and a L. M.
Bill Meaney: Very strong performance.
Bill Meaney: And ticking up meaningfully from the fourth quarter.
Bill Meaney: And as we said earlier, we've got a strong trajectory for that organic growth to continue to accelerate John so thanks for that question.
Again, if you have a question. Please press Star then one our next question will come from Brendan Lynch with Barclays. Please go ahead.
Bill Meaney: Mr. Lynch Your line is open.
Bill Meaney: And then if you're on mute.
Speaker Change: We can't hear you.
Bill Meaney: Sorry about that.
Bill Meaney: Yes, we got you Brendan.
Bill Meaney: Sorry about that yes, sticking with the <unk> theme.
Bill Meaney: The volume was up.
Bill Meaney: Quite a bit in the quarter could you talk about what triggered that did downstream pricing or something else changed in the market that allows you or your customers to accelerate the pace of selling inventory.
Speaker Change: Yes, so brendan it 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.
Speaker Change: 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 <unk>.
Speaker Change: <unk> 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 were winning have a habit of existing means for recycle reuse. So the enterprise volume continues to come through and then on the datacenter decommissioning as we mentioned last year, we continue to win.
Speaker Change: The additional accounts and win more share within the accounts that we're already servicing pricing just I'll reiterate something I made a 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.
Speaker Change: Opportunity.
Speaker Change: 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.
Speaker Change: Could prove conservative, but we just felt like that was the right way to do it in light of what we're seeing in the quarter. So we feel very well positioned.
Speaker Change: 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.
Speaker Change: Okay.
Speaker Change: [music].
Yeah.
Speaker Change: [music].
Speaker Change: Okay.