UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 28, 2015
IRON MOUNTAIN INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-13045 |
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23-2588479 |
(Commission File Number) |
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(IRS Employer Identification No.) |
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One Federal Street, Boston, Massachusetts |
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02110 |
(Address of Principal Executive Offices) |
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(Zip Code) |
(617) 535-4766
(Registrants Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On April 28, 2015, Iron Mountain Incorporated, or the Company, issued earnings commentary and supplemental information for the quarter ended March 31, 2015. A copy of the Companys earnings commentary and supplemental information is furnished as Exhibit 99.1 hereto and posted on the Companys website, www.ironmountain.com, under Company Investors.
Item 7.01 Regulation FD Disclosure.
On April 28, 2015, the Company posted on its website, www.ironmountain.com, under Company Investors, at http://investors.ironmountain.com/company/for-investors/events-and-presentations/events/event-details/2015/Q1-2015-Iron-Mountain-Incorporated-Earnings-Conference-Call, an investor presentation, or the Investor Presentation, and issued a press release that include, among other matters, information related to the proposed transaction with Recall Holdings Limited, or Recall, as further described under Item 8.01 of this Current Report on Form 8-K. Copies of the Investor Presentation posted by the Company and the press release issued by the Company are furnished as Exhibits 99.2 and 99.3 hereto and are incorporated into this Item 7.01 by reference.
Item 8.01. Other Events.
On April 28, 2015, the Company issued a press release announcing that it has reached an agreement in principle with Recall to acquire 100% of the issued share capital of Recall by way of a recommended court approved Scheme of Arrangement, pursuant to which Recall shareholders would be entitled to receive 0.1722 of a share of the Companys common stock for each Recall share and would have the option to elect to receive a cash alternative of A$8.50 per Recall share in cash, subject to a pro-ration mechanism that would cap the total amount of cash consideration to be paid to Recall shareholders at A$225 million, or the Proposed Transaction. The agreement in principle has been unanimously approved by the board of directors of the Company and Recall.
The Proposed Transaction contemplated by the agreement in principle remains subject to the Company and Recall conducting confirmatory due diligence and negotiating and executing definitive merger documentation, including entering into a Scheme Implementation Agreement. The Scheme Implementation Agreement, if entered into, would contain customary representations, warranties and covenants for a transaction of this nature. Conditions precedent to the closing of the Proposed Transaction would include, among other things, receipt of antitrust/competition and other requisite regulatory approvals, Recall and the Company shareholder approval and Australian Court approvals.
A copy of the Preliminary Non-Binding Term Sheet setting forth the agreement in principle is attached hereto as Exhibit 99.4 and is incorporated into this Item 8.01 by reference.
Important Information and Where to Find It
In the event the Company and Recall enter into a Scheme Implementation Agreement, the Company intends to file with the Securities and Exchange Commission (the SEC) a registration statement on Form S-4, which will contain a prospectus relating to the securities the Company intends to issue to Recall shareholders in the potential acquisition and a proxy statement in connection with the potential acquisition of Recall. Also in the event that the Company and Recall enter into a Scheme Implementation Agreement, equivalent information would be included in the scheme booklet that Recall would prepare and, following approval from the Court, dispatch to its shareholders in connection with the scheme meeting at which Recall shareholders would consider whether or not to support the proposed acquisition of Recall by the Company by way of scheme of arrangement. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS IF AND WHEN
THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, RECALL AND THE SCHEME IMPLEMENTATION AGREEMENT AND SCHEME OF ARRANGEMENT. Investors and security holders will be able to obtain these materials (if and when they are available) and other documents filed by the Company with the SEC free of charge at the SECs website, www.sec.gov and those documents released by Recall to the Australian Securities Exchange (ASX) announcements platform free of charge at ASXs website, www.asx.com.au. In addition, stockholders will be able to obtain copies of the registration statement and proxy statement/prospectus (if and when they become available) and other documents filed with the SEC from the Companys website at www.ironmountain.com or by directing such request to the Company at Iron Mountain Incorporated, One Federal Street, Boston, Massachusetts 02110, Attention: Investor Relations.
Participants in Potential Solicitation
In the event the Company and Recall enter into a Scheme Implementation Agreement, the Company, Recall and certain of their respective directors, executive officers and other persons may be deemed to be participants in the potential solicitation of proxies in respect of the vote that would be required by Recalls shareholders to approve the terms of the Scheme of Arrangement as contemplated by the Scheme Implementation Agreement. Information regarding the Companys directors and executive officers is available in the Companys proxy statement filed with the SEC on April 13, 2015 in connection with its 2015 annual meeting of stockholders, and information regarding Recalls directors and executive officers is available in Recalls latest annual report. Other information regarding persons who may be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the registration statement and proxy statement/prospectus and other relevant materials to be filed with the SEC and announced to the ASX if and when they become available.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 First Quarter 2015 Earnings Commentary and Supplemental Information. (Furnished herewith.)
99.2 Investor Presentation dated April 28, 2015. (Furnished herewith.)
99.3 Press Release dated April 28, 2015. (Furnished herewith.)
99.4 Preliminary Non-Binding Term Sheet. (Filed herewith.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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IRON MOUNTAIN INCORPORATED | |
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By: |
/s/ Roderick Day |
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Name: |
Roderick Day |
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Title: |
Executive Vice President and Chief Financial Officer |
Date: April 28, 2015
Exhibit 99.1
Earnings Commentary and Supplemental Information First Quarter 2015 Unaudited |
Safe Harbor Statement 2 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 laws and is subject to the safe-harbor created by such Act. Forward-looking statements include our financial performance outlook and statements regarding our operations, economic performance, financial condition, goals, beliefs, future growth 2015 strategies and investment objectives, plans and current expectations. These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors. When we use words such as "believes," "expects," "anticipates," "estimates" or similar expressions, we are making forward-looking statements. You should not rely upon forward-looking statements except as statements of our present intentions and of our present expectations, which may or may not occur. Although we believe that our forward-looking statements are based on reasonable assumptions, our expected results may not be achieved, and actual results may differ materially from our expectations. Important factors that could cause actual results to differ from our other expectations include, among others: (i) the cost to comply with current and future laws, regulations and customer demands relating to privacy issues; (ii) the impact of litigation or disputes that may arise in connection with incidents in which we fail to protect our customers' information; (iii) changes in the price for our storage and information management services relative to the cost of providing such storage and information management services; (iv) changes in customer preferences and demand for our storage and information management services; (v) the adoption of alternative technologies and shifts by our customers to storage of data through non-paper based technologies; (vi) the cost or potential liabilities associated with real estate necessary for our business; (vii) the performance of business partners upon whom we depend for technical assistance or management expertise outside the United States; (viii) changes in the political and economic environments in the countries in which our international subsidiaries operate; (ix) claims that our technology violates the intellectual property rights of a third party; (x) changes in the cost of our debt; (xi) changes in the amount of our capital expenditures; (xii) the impact of alternative, more attractive investments on dividends; (xiii) our ability to qualify or remain qualified for taxation as a real estate investment trust (REIT); (xiv) our ability or inability to complete acquisitions on satisfactory terms and to integrate acquired companies efficiently; (xv) other trends in competitive or economic conditions affecting our financial condition or results 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 Factors in our periodic reports, or incorporated therein. Except as required by law, we undertake 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. |
All figures except per share and facility counts in 000s unless noted All figures in reported dollars unless noted Figures may not foot due to rounding Table of Contents 3 Investor Relations Contacts: Faten Freiha, 617-535-8404 Director, Investor Relations faten.freiha@ironmountain.com Melissa Marsden, 617-535-8595 Senior Vice President, Investor Relations melissa.marsden@ironmountain.com Earnings Commentary 4 Company Profile 7 Financial Highlights 8 Year-over-Year Revenue Growth 9 Records Management Volume Growth 10 Guidance Summary 12 Operating Performance 13 Consolidated Balance Sheets 14 Consolidated Statements of Operations 15 Reconciliation of Operating Income to Adjusted OIBDA 16 Reconciliation of Reported Earnings per Share to Adjusted Earnings per Share 17 Reconciliation of Net Income Attributable to IRM to FFO & AFFO 18 Quarterly Total Revenue Growth Bridge 19 Quarterly Normalized Adjusted OIBDA Bridge 20 Quarterly Normalized Adjusted Earnings per Share Bridge 21 Storage Net Operating Income (NOI) 22 Global Real Estate Portfolio 23 Revenue from Rental Activities and Storage NOI per Racked Square Foot 24 Portfolio Utilization 25 Gross Book Value of Real Estate Assets 26 Service Business Detail 27 Customer Data 28 Debt Schedule 29 Capitalization 30 Lease Obligations 31 Investments 32 Components of Value 33 Appendix 34 |
Earnings Commentary 4 Reconciliation of Non-GAAP Measures: Throughout this document, Iron Mountain will discuss (1) Adjusted Operating Income Before Depreciation, Amortization, Intangible Impairments, (Gain) Loss on Disposal / Write-down of Property, Plant and Equipment (Excluding Real Estate), Net and REIT Costs (Adjusted OIBDA), (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 generally accepted in the United States (GAAP). The reconciliations of these measures to the appropriate GAAP measure, as required by Regulation G under the Securities Exchange Act of 1934, as amended, are included later in this document (see Table of Contents). Iron Mountain First Quarter 2015 Financial Results Strong Operating Performance Driven by Solid Constant Dollar Storage Rental Growth and Continued Volume Gains Constant Dollar Results in Line with Company Expectations; Maintaining Full-Year Guidance Total reported revenues for the first quarter were $749 million in 2015, compared with $770 million in 2014. On a constant dollar (C$) basis, total revenue growth for the quarter was 2.2%, reflecting solid storage rental revenue gains of 4.6% and service revenue declines of 1.4%. Adjusted OIBDA for the first quarter was $231 million, compared with $229 million in 2014. On a C$ basis, Adjusted OIBDA growth for the quarter was 5.7%. Adjusted EPS for the first quarter was $0.32 per diluted share, compared with $0.35 per diluted share in 2014. Adjusted EPS for 2015 reflects a structural tax rate of 16.2%, while 2014 results have been restated to reflect a structural tax rate of 15.0% for comparability with 2015 and to reflect the companys election of REIT status effective January 1, 2014. Adjusted EPS for 2015 also reflects a 10% increase in weighted average shares outstanding following the distribution of shares in November 2014, associated with the companys conversion to a REIT. GAAP EPS for the first quarter was $0.20 per share, primarily due to Other Expense associated with foreign currency exchange losses. GAAP EPS for the first quarter of 2014 was $0.22 per share, reflecting REIT Costs and the tax impact of discrete items, partially offset with gain on sale of real estate. FFO (Normalized) per share was $0.50 and AFFO was $128 million. New Segment Disclosure Beginning in the first quarter of 2015, the company consolidated executive leadership of its North America and Western Europe markets to provide better focus and alignment within developed and emerging markets and more closely tie performance to the companys strategic plan. As a result, the company now reports five business segments (please refer to detailed segment descriptions in the Appendix, page 36): North American Records and Information Management (unchanged), North American Data Management (unchanged), Western Europe, which consists of operations in Austria, Belgium, France, Germany, Ireland, the Netherlands, Norway, Spain, Switzerland and the United Kingdom (together with North America, formerly referred to as Developed Markets), |
Earnings Commentary 5 Other International, which consists of operations in the Latin American markets of Argentina, Brazil, Chile, Colombia, Mexico and Peru; the Asia Pacific markets of Australia, Hong Kong-SAR, India, Singapore, and China; and the European markets of Czech Republic, Denmark, Greece, Hungary, Poland, Romania, Russia, Serbia, Slovakia, Turkey and Ukraine (formerly referred to as Emerging Markets, excluding Australia), and Corporate and Other (unchanged). In support of its strategic plan, during the first quarter of 2015, the company: Maintained strong customer retention and increased positive worldwide records management net volume growth by 3.5% (1.9% internal volume growth). Volume growth by segment was: 1.2% in North America (0.5% internal volume growth, or one million cubic feet); 5.4% in Western Europe (3.4% internal volume growth); and 12.9% in the Other International segment (7.4% internal volume growth) Expanded revenue from Emerging Markets (now Other International excluding Australia) to 13.6% of total revenue in the quarter on a constant dollar basis, demonstrating progress toward the companys goal to increase revenue from these markets to 16% by the end of 2016, Acquired the record and tape inventory of six storage companies and one acquisition of a small records management company in the United Kingdom for total investment of approximately $7.7 million, and Expanded the companys underground and Boston Data Center operations to support its multiyear plan and grew storage revenue in this emerging business by 21.4% over the first quarter of 2014. Our first quarter results reflect the solid underlying business fundamentals that support the continued durability of our storage rental business, said William L. Meaney, Iron Mountains president and chief executive officer. We achieved strong internal storage rental growth in both developed and emerging markets with consistent storage volume increases across all our market segments. The business is healthy and performing in line with our expectations and long-range plan. Operations Review C$ total storage rental growth of 4.6% reflected: Strong increases of 17.9% in the companys Other International segment, 4.2% in the Western Europe segment, and 1.5% and 5.5% in North American Records and Information Management (RIM) and North American Data Management (DM) , respectively. Operating performance continued to demonstrate resilience, with worldwide internal storage rental growth of 3.0% in the first quarter compared with 1.4% in the first quarter of 2014. By segment, internal storage rental gains were: 11.1% in the Other International segment, 3.7% in the Western Europe segment 0.5% in North American RIM and 5.2% in North American DM Foreign currency rate changes reduced reported worldwide storage rental revenue growth rates by 4.6% in the first quarter compared with the prior year. |
Earnings Commentary 6 As the company has previously noted, total service revenues reflect a continuation of a trend toward reduced retrieval/re-file activity and related transportation revenues. In the records management business, the contribution from these core activities has begun to stabilize in recent periods while in the data management business, service declines are reflecting more recent reductions in activity levels. Internal service revenue in North American RIM and Western Europe were down slightly due to lower levels of transportation, handling and retrieval/refile fees and the sale of the shredding business in the UK and Australia, partially offset by higher revenue from non-recurring projects. Similar trends were seen in the Other International segment. Recycled paper pricing increased approximately 7% compared with the prior year. Financial Review Consolidated Adjusted OIBDA margin for the quarter was 30.9%, reflecting continued strong Adjusted OIBDA margins of 41% in North American RIM, 52.7% in North American DM, 29.2% in Western Europe and 20.0% in Other International. In the first quarter, real estate investment, including racking, totaled $45 million, acquisition spending was $8 million and other investments totaled $11 million. Maintenance capital expenditures were $15 million, or 2.0% of revenues for the quarter. The company had liquidity of more than $780 million, primarily under its revolving credit facility, and a net total lease adjusted leverage ratio of 5.5x at quarter end, as compared to a maximum allowable ratio of 6.5x. The calculation for this ratio is net debt including the capitalized value of lease obligations divided by EBITDAR, as defined in the companys credit agreement. 2015 Guidance The company is maintaining its guidance for 2015, with C$ Total Reported Revenues and Adjusted OIBDA expected to be generally in line with its strategic plan. Adjusted EPS, FFO (NAREIT) per share, and FFO (Normalized) per share are expected to grow roughly in line with growth in Adjusted OIBDA, or 1% to 5% on a C$ basis. Details are available on page 12. |
Company Profile Iron Mountain is a global leader in enterprise storage with a high-return, real estate-based, business model, yielding revenues over $3 billion per annum. The company provides storage and information management services to a high-quality, diversified customer base across numerous industries and government organizations. Iron Mountain serves over 155,000 customers, including more than 92% of the Fortune 1000, and no single customer accounts for more than 2% of revenues. Iron Mountain provides storage and information management services in 36 countries on five continents, storing 530 million cubic feet of records in a portfolio of approximately 1,100 facilities containing more than 67 million square feet of space. The company employs over 20,000 people. Iron Mountain is organized as a REIT and its financial model is based on the recurring nature of its storage rental revenues and the resulting storage net operating income (NOI). Supported by its consistent, predictable storage rental revenues, which have increased for 26 consecutive years, the company generates predictable, low volatility growth in key metrics such as storage NOI and AFFO. This fundamental financial characteristic provides stability through economic cycles. Iron Mountain has the opportunity to invest capital at attractive returns both domestically and internationally. The company believes that there remains a large un-vended opportunity that can support sustained storage volumes in developed markets such as North America and high growth opportunities in emerging markets that are just beginning to outsource their storage of physical documents. Diversification of Total Revenue (As of 3/31/2015) 7 Countries Served (1) Includes Fulfillment Services, Document Management Services, Intellectual Property Management, Data Center, Consulting, Entertainment Services and other ancillary services 3.0% 7.7% 16.7% 72.7% 68.8% 7.6% 7.7% 15.9% Asia Pacific Latin America Europe North America Records Mgmt Other Shredding Data Protection 2014 C$ Storage Rental Growth 5.4% 25-year Compound Annual Growth Rate 17.2% 26 YEARS OF STORAGE RENTAL GROWTH 11 14 13 10 09 08 07 06 05 04 03 02 01 00 99 98 97 96 12 95 94 93 92 91 90 89 (1) Product Region $1,860 |
Financial Highlights 8 (1) Excludes $2.2 million of CapEx in Q1 2014 related to the companys conversion to a REIT (2) Includes Land, Buildings, Improvements, and Racking Structures (3) Includes CapEx related to service-related businesses, as well as corporate overhead support and office outfitting Q1 2014 Q1 2015 % Change Storage Rental $458,889 $458,872 (0.0)% Service 311,237 290,414 (6.7)% Total Revenues $770,126 $749,286 (2.7)% Gross Margin $434,981 $427,632 (1.7)% Gross Margin % 56.5% 57.1% 60 bps Adjusted OIBDA $228,524 $231,218 1.2% Adjusted OIBDA % 29.7% 30.9% 120 bps Adjusted EPS $0.35 $0.32 (8.6)% FFO (Normalized) per Share $0.56 $0.50 (10.7)% Ordinary Dividends per Share $0.27 $0.48 75.9% Special Dividends per Share $0.00 $0.00 0.0% Weighted Average Fully-diluted Shares Outstanding 193,069 212,249 9.9% Storage Net Operating Income (NOI) $365,819 $373,534 2.1% Capital Expenditures (1) and Investments Real Estate: Investment (2) $34,241 $45,080 31.7% Maintenance 5,851 9,205 57.3% 40,093 54,285 35.4% Non-Real Estate: Investment (3) 10,514 11,234 6.8% Maintenance 10,733 5,882 (45.2)% 21,247 17,116 (19.4)% Business and Customer Acquisitions 46,131 7,688 (83.3)% Total Capital Expenditures and Investments $107,471 $79,088 (26.4)% |
Year-over-Year Revenue Growth 9 Revenue Growth Rates Reported (0.0)% (6.7)% (2.7)% Less: Impact of FX Rate Changes and Adjustments (4.6)% (5.3)% (4.9)% Constant Currency 4.6% (1.4)% 2.2% Less: Impact of Acquisitions and Dispositions 1.6% (0.4)% 0.8% Internal Growth Rate 3.0% (1.0)% 1.4% Q1 2015 Storage Rental Revenue Service Revenue Total Revenue |
Records Management Volume Growth 10 -2.6% -4.6% 6.3% 2.2% 2.0% Q2-13 1.4% -2.6% -4.6% 6.3% 2.1% 6.7% -2.3% -4.5% 6.2% 2.3% 5.0% Q4-13 5.8% -2.5% -4.6% 6.3% 2.4% 4.2% -4.4% 5.9% 2.4% 1.6% Q4-14 3.6% -1.9% -4.4% 5.9% 2.4% 1.5% Q3-14 5.5% Q3-13 3.2% 0.2% Q1-15 3.5% -2.0% -1.9% -4.5% 6.1% 2.4% 3.4% Q2-14 7.6% -2.0% -4.7% 6.1% 2.5% 5.5% Q1-14 Outperm/Terms Destructions New Volume from Existing Customers New Sales Business Acquisitions Total Iron Mountain (520 CuFt MM) North America (372 CuFt MM) Net Volume Growth Rate Q2-14 4.1% -1.8% -4.8% 5.3% 1.7% 3.7% Q1-14 3.8% -2.2% -4.7% 5.4% 5.5% 1.7% 3.6% Q3-13 0.6% -2.5% -4.7% 1.7% 3.6% Q4-13 3.7% -2.4% Q1-15 1.2% -1.7% -4.6% 5.1% 1.7% 0.7% Q4-14 0.5% -1.6% -4.6% 5.1% 1.7% -0.1% Q3-14 3.3% -1.6% -4.7% 5.2% 1.7% 2.7% -4.8% 5.6% 1.5% 0.8% Q2-13 -0.2% -2.4% -4.7% 5.6% 1.4% 0.0% (1) (1) Customer acquisitions are now included in new sales as the nature of these transactions is similar to new customer wins |
Records Management Volume Growth 11 -3.0% -4.1% 6.0% 4.6% 0.0% Q2-13 3.1% -3.3% -4.3% 6.4% 4.3% 4.4% -2.6% -4.0% 5.7% 4.3% 1.0% Q4-13 4.7% -2.6% -4.1% 5.9% 4.7% 0.8% -4.5% 5.6% 4.6% 2.0% Q4-14 5.6% -2.3% -4.1% 5.5% 4.8% 1.8% Q3-14 5.4% Q3-13 3.6% 0.0% Q1-15 5.4% -2.3% -2.4% -4.2% 5.5% 4.6% 1.8% Q2-14 6.2% -2.6% -3.9% 5.4% 5.5% 1.8% Q1-14 Outperm/Terms Destructions New Volume from Existing Customers New Sales Business Acquisitions Western Europe (61 CuFt MM) Other International (87 CuFt MM) Net Volume Growth Rate Q2-14 28.2% -2.7% -4.4% 11.6% 4.4% 19.2% Q1-14 24.8% -2.6% -4.2% 11.4% 11.3% 4.1% 10.7% Q3-13 18.3% -2.9% -4.1% 4.2% 15.9% Q4-13 18.9% -3.0% Q1-15 12.9% -3.2% -3.5% 9.9% 4.1% 5.5% Q4-14 17.6% -3.0% -3.6% 10.3% 4.5% 9.5% Q3-14 16.8% -2.8% -3.8% 10.8% 4.4% 8.3% -3.8% 10.5% 4.0% 10.4% Q2-13 9.6% -2.9% -3.9% 10.6% 4.4% 1.4% (1) (1) Customer acquisitions are now included in new sales as the nature of these transactions is similar to new customer wins |
Guidance Summary 12 Financial Performance Outlook (1) YOY growth compared to 2014 constant dollar (C$) budget rates; includes 0% - 2% internal revenue growth (2) Assumes 212 million shares outstanding (3) AFFO (New Definition) is defined in the appendix (page 34) and further adjusts for Non-Real Estate Investment $MM 2015 Guidance C$ YOY Growth 2015 Guidance Operating Performance Estimated Capital Allocation Revenue $3,030 - $3,150 1% - 5% (1) Real Estate Investment $230 - $270 Adjusted OIBDA $905 - $945 1% - 5% (1) Non-Real Estate Investment $70 - $90 Adjusted EPS Fully Diluted $1.15 - $1.30 (2) Real Estate and Non-Real Estate Maintenance $70 - $90 FFO (Normalized) $425 - $465 Business and Customer Acquisitions $150 - $250 FFO (Normalized) per share $2.00 - $2.20 (2) Total Capital Expenditures and Investments (excluding Dividends) $550 - $650 AFFO (Old Definition) $550 - $590 AFFO (New Definition) (3) $480 - $520 |
Operating Performance 13 (1) FY 2014 excludes certain costs and expenditures associated with the companys conversion to a REIT Q1 Results (1) % Growth Q1 2014 Q1 2015 Reported - Impact of FX Rate Changes and Adjustments = Constant Currency - Impact of Acquisitions and Dispositions = Internal Growth NA Records and Information Management Storage Revenue $268,523 $269,626 0.4% (1.1)% 1.5% 1.0% 0.5% Service Revenue 177,609 173,061 (2.6)% (1.6)% (1.0)% 0.8% (1.8)% Total Revenue $446,132 $442,687 (0.8)% (1.3)% 0.5% 0.9% (0.4)% Adjusted OIBDA 169,209 181,480 Adjusted OIBDA Margin % 37.9% 41.0% NA Data Management Storage Revenue $60,984 $63,852 4.7% (0.8)% 5.5% 0.3% 5.2% Service Revenue 35,740 33,383 (6.6)% (0.7)% (5.9)% 0.0% (5.9)% Total Revenue $96,724 $97,235 0.5% (0.8)% 1.3% 0.2% 1.1% Adjusted OIBDA 54,668 51,288 Adjusted OIBDA Margin % 56.5% 52.7% Western Europe Storage Revenue $65,252 $60,175 (7.8)% (12.0)% 4.2% 0.5% 3.7% Service Revenue 51,879 40,637 (21.7)% (10.9)% (10.8)% (8.2)% (2.6)% Total Revenue $117,131 $100,812 (13.9)% (11.5)% (2.4)% (3.5)% 1.1% Adjusted OIBDA 34,563 29,453 Adjusted OIBDA Margin % 29.5% 29.2% Other International Storage Revenue $61,322 $61,637 0.5% (17.4)% 17.9% 6.8% 11.1% Service Revenue 45,977 42,354 (7.9)% (17.8)% 9.9% 3.1% 6.8% Total Revenue $107,299 $103,991 (3.1)% (17.6)% 14.5% 5.2% 9.3% Adjusted OIBDA 24,200 20,835 Adjusted OIBDA Margin % 22.6% 20.0% Corporate and Other Storage Revenue $2,808 $3,582 27.6% 0.0% 27.6% 0.0% 27.6% Service Revenue 32 979 2959.4% 0.0% 2959.4% 0.0% 2959.4% Total Revenue $2,840 $4,561 60.6% 0.0% 60.6% 0.0% 60.6% Adjusted OIBDA (54,116) (51,838) |
Consolidated Balance Sheets 14 ASSETS 12/31/2014 3/31/2015 Current Assets: Cash and Cash Equivalents $125,933 $119,605 Restricted Cash 33,860 20,000 Accounts Receivable, Net 604,265 590,026 Other Current Assets 153,661 157,842 Total Current Assets 917,719 887,473 Property, Plant and Equipment: Property, Plant and Equipment at Cost 4,668,705 4,597,207 Less: Accumulated Depreciation (2,117,978) (2,120,405) Property, Plant and Equipment, Net 2,550,727 2,476,802 Other Assets, Net: Goodwill 2,423,783 2,358,561 Other Non-Current Assets, Net: 678,113 648,618 Total Other Assets, Net 3,101,896 3,007,179 Total Assets $6,570,342 $6,371,454 LIABILITIES AND EQUITY Current Liabilities: Current Portion of Long-Term Debt $52,095 $54,483 Other Current Liabilities 804,641 665,848 Total Current Liabilities 856,736 720,331 Long-Term Debt, Net of Current Portion 4,611,436 4,667,359 Other Long-term Liabilities 232,215 227,262 Total Long-term Liabilities 4,843,651 4,894,621 Total Liabilities $5,700,387 $5,614,952 Equity Total Stockholders' Equity $856,355 $742,855 Noncontrolling Interests 13,600 13,647 Total Equity 869,955 756,502 Total Liabilities and Equity $6,570,342 $6,371,454 |
Consolidated Statements of Operations 15 Q1 2014 Q1 2015 % Change Revenues: Storage Rental $458,889 $458,872 (0.0)% Service 311,237 290,414 (6.7)% Total Revenues $770,126 $749,286 (2.7)% Operating Expenses: Cost of Sales (excluding Depreciation and Amortization) $335,145 $321,654 (4.0)% Selling, General and Administrative 214,780 196,414 (8.6)% Depreciation and Amortization 86,433 85,951 (0.6)% (Gain) Loss on Disposal/Write-Down of PP&E (excluding Real Estate), Net 1,152 333 (71.1)% Total Operating Expenses $637,510 $604,352 (5.2)% Operating Income (Loss) $132,616 $144,934 9.3% Interest Expense, Net 62,312 64,898 4.2% Other Expense (Income), Net 5,317 22,349 n/a Income (Loss) from Continuing Operations before Provision (Benefit) 64,987 57,687 (11.2)% for Income Taxes and (Gain) Loss on Sale of Real Estate Provision (Benefit) for Income Taxes 29,734 15,948 (46.4)% (Gain) Loss from Sale of Real Estate, Net of Tax (7,468) - (100.0)% Income (Loss) from Continuing Operations 42,721 41,739 (2.3)% Income (Loss) from Discontinued Operations, Net of Tax (612) - (100.0)% Net Income (Loss) 42,109 41,739 (0.9)% Less: Net Income (Loss) Attributable to Noncontrolling Interests 442 643 45.5% Net Income (Loss) Attributable to Iron Mountain Incorporated $41,667 $41,096 (1.4)% Earnings (Losses) per Share - Basic: Income (Loss) from Continuing Operations $0.22 $0.20 (9.1)% Total Income (Loss) from Discontinued Operations - - 0.0% Net Income (Loss) Attributable to Iron Mountain Incorporated $0.22 $0.20 (9.1)% Earnings (Losses) per Share - Diluted: Income (Loss) from Continuing Operations $0.22 $0.20 (9.1)% Total (Loss) Income from Discontinued Operations - - 0.0% Net Income (Loss) Attributable to Iron Mountain Incorporated $0.22 $0.19 (13.6)% Weighted Average Common Shares Outstanding - Basic 191,879 210,237 9.6% Weighted Average Common Shares Outstanding - Diluted 193,069 212,249 9.9% |
16 Reconciliation of Operating Income to Adjusted OIBDA (1) Includes realized and unrealized FX (gains) losses (2) Excludes realized and unrealized FX (gains) losses Q1 2014 Q1 2015 % Change Net Income (Loss) Attributable to Iron Mountain Incorporated $41,667 $41,096 (1.4)% Add: Net Income (Loss) Attributable to Noncontrolling Interests 442 643 45.5% Loss (Income) from Discontinued Operations, Net of Tax 612 - (100.0)% (Gain) Loss from Disposition of Real Estate, Net of Tax (7,468) - (100.0)% Provision (Benefit) for Income Taxes 29,734 15,948 (46.4)% FX (Gains) Losses (1) 6,438 22,266 n/a Other (Income) Expense (2) (1,121) 83 (107.4)% Interest Expense, Net 62,312 64,898 4.2% Operating Income (Loss) $132,616 $144,934 9.3% Depreciation and Amortization 86,433 85,951 (0.6)% (Gain) Loss on Disposal/Write-Down of PP&E (excluding Real Estate), Net 1,152 333 (71.1)% REIT Costs 8,323 - (100.0)% Adjusted OIBDA $228,524 $231,218 1.2% |
17 Reconciliation of Reported Earnings per Share to Adjusted Earnings per Share(1) (1) Adjusted EPS for 2015 reflects a structural tax rate of 16.2%, while 2014 results have been restated to reflect a structural tax rate of 15.0% for comparability with 2014, the year in which the companys conversion to a REIT became effective Q1 2014 Q1 2015 % Change Reported EPS - Fully Diluted from Continuing Operations $0.22 $0.20 (9.1)% Add: Gain (Loss) on Disposal/Write-Down of PP&E (excluding Real Estate), Net 0.01 - (100.0)% REIT Costs 0.04 - (100.0)% Other (Income) Expense, Net 0.03 0.11 n/a Gain (Loss) on Sale of Real Estate, Net of Tax (0.04) - (100.0)% Tax Impact of Reconciling Items and Discrete Tax Items 0.09 0.01 (88.9)% Adjusted EPS - Fully Diluted from Continuing Operations $0.35 $0.32 (8.6)% |
18 Reconciliation of Net Income Attributable to IRM to FFO & AFFO (1) Includes realized and unrealized FX (gains) losses (2) Excludes realized and unrealized FX (gains) losses (3) Includes repatriation, recapture (including amended return impact) and other current tax expenses; excludes normalized cash tax expense of $15,330 in Q1 2014 and $17,922 in Q1 2015 (4) Reflects amortization of customer acquisition intangibles, transportation and permanent withdrawal fees in addition to amortization of deferred financing charges (5) Q1 2014 non-cash rent expense (income) was adjusted to exclude cash receipts and other changes in deferred rent which did not have an impact on net income in such period (6) Represents total maintenance capital expenditures, including maintenance capital expenditures related to real estate and non-real estate assets; includes REIT-related costs Q1 2014 Q1 2015 % Change Net Income Attributable to Iron Mountain $41,667 $41,096 (1.4)% Add: Real Estate Depreciation 46,264 44,309 (4.2)% (Gain) Loss from Disposition of Real Estate, Net of Tax (7,468) - (100.0)% FFO (NAREIT) $80,463 $85,405 6.1% Add: (Gain) Loss on Disposal/Write-Down of PP&E (excluding Real Estate), Net 1,152 333 (71.1)% FX (Gains) Losses (1) 6,438 22,266 n/a Other (Income) Expense (2) (1,121) 83 (107.4)% Deferred Taxes and Current REIT Tax Adjustments (3) 14,404 (1,974) (113.7)% Income (Loss) from Discontinued Operations, Net of Tax (612) - (100.0)% REIT Costs 8,323 - (100.0)% FFO (Normalized) $109,047 $106,113 (2.7)% Add: Non-Real Estate Depreciation 28,449 30,482 7.1% Amortization Expense (4) 13,626 13,252 (2.7)% Non-Cash Rent Expense (Income) (5) (426) (2,857) n/a Non-Cash Equity Compensation Expense (Income) 7,141 6,856 (4.0)% Less: Non-Real Estate Investment 10,514 11,234 6.8% Real Estate and Non-Real Estate Maintenance CapEx (6) 16,585 15,087 (9.0)% AFFO $130,739 $127,525 (2.5)% Per Share Amounts (Fully Diluted Shares) FFO (NAREIT) $0.42 $0.40 (4.8)% FFO (Normalized) $0.56 $0.50 (10.7)% Weighted Average Common Shares Outstanding - Basic 191,879 210,237 9.6% Weighted Average Common Shares Outstanding - Diluted 193,069 212,249 9.9% |
19 $MM Quarterly Total Revenue Growth Bridge 2.2% C$ Growth (2.7)% R$ Decline $770 $733 $749 $37 $16 Q1 2014 Revenue - Reported $ FX Impact at Q1 2015 FX Rates Q1 2014 Revenue at Q1 2015 FX Rates YoY Growth Excluding FX Impact Q1 2015 Revenue - Reported $ |
20 $MM Quarterly Normalized Adjusted OIBDA Bridge 4.5% Normalized C$ Growth 1.2% Reported R$ Growth Q1 2014 Adjusted OIBDA included restructuring charges that are not related to our core operations. In addition, Q1 2015 Adjusted OIBDA was impacted by the strengthening of the U.S. dollar. The graph above adjusts for anomalies to calculate Normalized Adjusted OIBDA growth for Q1 2015. $228.5 $221.3 $231.2 $2.5 $9.8 $9.9 Q1 2014 Adj. OIBDA Q1 2014 Restructuring Charges FX impact Normalized Q1 2014 Adj. OIBDA at Q1 2015 FX Rates YoY Growth Q1 2015 Adj. OIBDA |
21 $MM Quarterly Normalized Adjusted Earnings per Share Bridge ($0.03) Decline or (8.6%) Q1 2014 Adjusted EPS included restructuring charges that are not related to our core operations. In addition, Q1 2015 Adjusted EPS was impacted by an incremental increase in interest expense, related to higher average level of borrowings driven by REIT conversion costs. In addition, Q1 2015 Adjusted EPS was impacted by an incremental increase in tax rate resulting from higher income from foreign jurisdictions. The graph above adjusts for anomalies to calculate a Normalized Adjusted EPS growth for Q1 2015. $0.35 $0.33 $0.32 $0.34 $0.01 $0.03 $0.01 $0.01 Q1 2014 Adj. EPS Q1 2014 Restrucutring Charges Impact of Additional Shares Outstanding Normalized Q1 2014 Adj. EPS Reported Q1 2015 Adj. EPS Q1 2015 Incremental Increase in Interest Expense Q1 2015 Incremental Increase in Tax Rate Normalized Q1 2015 Adj. EPS $0.008 Growth or 2.4% |
22 Storage Net Operating Income (NOI) (1) Includes Fulfillment Services, Document Management Services, Intellectual Property Management, Data Center, Entertainment Services and other ancillary services (2) Includes Building Maintenance, Property Taxes, Utilities and Insurance costs (3) Year over year change reflects true-up of accruals for incentive compensation and workers compensation claims (4) Refer to Components of Value and appendix for overhead allocations and definitions Effective July 1, 2013, in preparation for electing REIT status, we established taxable REIT subsidiaries (TRSs) in our identified REIT countries and transferred the designation of employees who perform services in our warehouses and were previously categorized as storage-related. The transfer of these employees in REIT countries resulted in a shift of labor expenses previously categorized as storage rental labor to services labor. We expect to transfer additional storage rental labor costs in the future as we establish TRS service entities in future REIT countries. Q1 2014 Q1 2015 % Change Revenue from Storage Rental Activities Records Management $367,029 $363,328 (1.0)% Data Protection 73,902 74,757 1.2% Other (1) 17,958 20,787 15.8% Total Storage Rental 458,889 458,872 (0.0)% Terminations/Permanent Withdrawal Fees 5,297 6,342 19.7% Total Revenue from Storage Rental Activities $464,186 $465,214 0.2% Less: Storage Rental Expenses Facility Costs (2) 107,839 104,605 (3.0)% Storage Rental Labor (3) 1,971 42 (97.9)% Other Storage Rental Expenses 3,629 2,369 (34.7)% Allocated Overhead (4) 35,024 33,392 (4.7)% Total Storage Rental Expenses 148,463 140,408 (5.4)% Storage Rent 50,096 48,728 (2.7)% Storage Rental Expenses (excluding Storage Rent) $98,367 $91,680 (6.8)% Storage Net Operating Income $365,819 $373,534 2.1% Storage Net Operating Income Margin 78.8% 80.3% 150 bps |
Global Real Estate Portfolio(1) 23 (1) Includes real estate held in joint ventures (2) Adjustments to previous periods due to refinements to real estate basis and reclassification of multiple adjoining facilities into single buildings (3) Out of the 23 leased buildings additions and expansions, 3 were the result of acquiring leases in acquisitions and 8 were the result of short-term leases associated with customer acquisitions As of 12/31/2014 Adjusted (2) Total Buildings Sq. Ft. Buildings Sq. Ft. Buildings Sq. Ft. North America 177 19,739 496 30,399 673 50,137 Europe 53 2,776 197 7,411 250 10,186 Latin America 27 1,551 73 3,670 100 5,221 Asia Pacific 2 51 69 2,165 71 2,216 International 82 4,378 339 13,246 421 17,624 Total 259 24,116 835 43,644 1,094 67,761 Q1 2015 Additions & Expansions Total Buildings Sq. Ft. Buildings Sq. Ft. Buildings Sq. Ft. North America 3 214 10 107 13 321 Europe - - 6 215 6 215 Latin America 2 32 3 (88) 5 (56) Asia Pacific - - 4 138 4 138 International 2 32 13 264 15 296 Total 5 246 23 372 28 618 Q1 2015 Dispositions & Move Outs Total Buildings Sq. Ft. Buildings Sq. Ft. Buildings Sq. Ft. North America - - (9) (170) (9) (170) Europe - - (13) (255) (13) (255) Latin America - - (1) (24) (1) (24) Asia Pacific - - (2) (5) (2) (5) International - - (16) (284) (16) (284) Total - - (25) (453) (25) (453) As of 3/31/2015 Total Buildings Sq. Ft. Buildings Sq. Ft. Buildings Sq. Ft. North America 180 19,952 497 30,336 677 50,289 Europe 53 2,776 190 7,370 243 10,146 Latin America 29 1,583 75 3,558 104 5,141 Asia Pacific 2 51 71 2,298 73 2,350 International 84 4,410 336 13,226 420 17,636 Total 264 24,362 833 43,562 1,097 67,925 Total % 24.1% 35.9% 75.9% 64.1% Owned Facilities Leased Facilities Leased Facilities Leased Facilities (3) Owned Facilities Owned Facilities Owned Facilities Leased Facilities |
Revenue from Rental Activities and Storage NOI per Racked Square Foot 24 (1) Includes loading docks, unracked space, office space, common areas, as well as space in service-related facilities (2) Excludes Revenue and NOI associated with Intellectual Property Management, Fulfillment Services, Data Center, Entertainment Services and other ancillary services Square Footage by Region North America Europe Latin America Asia Pacific Total Records Management Racked Space 38,869 6,896 3,530 1,441 50,737 Data Protection Racked Space 754 127 44 23 948 Other (1) 10,665 3,123 1,567 886 16,241 Total 50,289 10,146 5,141 2,350 67,925 Annualized Revenue from Rental Activities and Storage NOI per Racked Square Foot (2) Revenue NOI Revenue NOI North America Records Management $ per Sq Ft $27.21 $21.81 $27.21 $21.81 Data Protection $ per Sq Ft $311.99 $272.33 $311.99 $272.33 Europe $42.19 $33.95 $42.19 $33.95 Latin America $38.18 $33.56 $38.18 $33.56 Asia Pacific $35.59 $27.74 $35.59 $27.74 Total $33.90 $27.60 $33.90 $27.60 Q1 2015 Annualized YTD 2015 As of March 31, 2015 |
Portfolio Utilization Records Management Storage Portfolio (CuFt MM) As of 3/31/2015 450 550 500 400 50 0 +3.5% +1.4% +8.4% +9.6% +11.0% Total IRM 531 513 Asia Pacific Latin America Europe North America 384 379 650 600 550 500 450 100 50 0 Total IRM 638 83% 91% Asia Pacific 21 583 17 78% 93% Latin America 55 48 78% 89% Europe 111 97 79% 91% North America 451 421 85% 91% Q1 2015 Total Potential Building Capacity Q1 2015 Total Installed Racking Capacity Capacity and Utilization(2) (%) 80 70 60 10 0 Total IRM 77 74 Asia Pacific Latin America +10.3% +2.7% +20.9% +4.4% +10.4% Europe North America 61 60 120 110 100 90 80 20 10 0 Total IRM 114 95 68% 81% Asia Pacific 3 1 53% 99% Latin America 7 7 71% 75% Europe 23 15 43% 68% North America 81 73 75% 84% Data Protection Storage Portfolio (DPUs MM) As of 3/31/2015 Q1 2015 Q3 2014 Q4 2014 Q2 2014 Q1 2014 (1) RM units stored includes cubic feet of storage in dedicated space leased to customers on a square foot basis; these dedicated space storage units are excluded from our RM volume growth chart on page 10 (2) Iron Mountain operates its storage business to achieve a desired utilization of between 94% 98% to attain maximum operating efficiency 25 Units Stored(1) 15 38 81 16 43 88 1 4 9 1 5 10 |
Gross Book Value of Real Estate Assets 26 (1) Includes warehouse equipment, vehicles, furniture, fixtures, computer hardware and software Real Estate Assets Storage Operations Land $196,595 Buildings & Building Improvements 1,379,716 Leasehold Improvements 424,734 Racking 1,424,898 Construction In Progress 108,515 Total Storage Gross Book Value $3,534,458 Service Operations Land $7,188 Buildings & Building Improvements 15,956 Leasehold Improvements 35,540 Racking 108,722 Construction In Progress 6,610 Total Service Gross Book Value $174,016 Total Real Estate Gross Book Value $3,708,473 Non-Real Estate Assets All Other Non-Real Estate Assets Gross Book Value (1) 888,734 Total PP&E Gross Book Value $4,597,207 As of 3/31/2015 |
Service Business Detail 27 (1) Includes Fulfillment Services, Document Management Services, Intellectual Property Management, Data Center, Consulting, Entertainment Services and other ancillary services (2) Includes Building Maintenance, Property Taxes, Utilities and Insurance costs for shredding, imaging and other services (3) Refer to Components of Value and appendix for overhead allocations and definitions Q1 2014 Q1 2015 % Change Service Operations Revenue by Product Line Records Management $158,314 $152,073 (3.9)% Data Protection 50,503 44,457 (12.0)% Shredding 63,773 58,007 (9.0)% Other (1) 38,647 35,876 (7.2)% Total Service Revenue $311,237 $290,414 (6.7)% Q1 2014 Q1 2015 % Change Service Revenues $311,237 $290,414 (6.7)% Less: Terminations/Permanent Withdrawal Fees 5,297 6,342 19.7% Adjusted Service Revenue $305,939 $284,072 (7.1)% Less: Service Expenses Facility Costs (2) 6,754 6,620 (2.0)% Service Labor 162,648 157,602 (3.1)% Other Service Expenses 52,304 50,416 (3.6)% Allocated Overhead (3) 27,097 23,822 (12.1)% Total Service Expenses 248,804 238,460 (4.2)% Total Service Adjusted OIBDA $57,136 $45,612 (20.2)% Total Service Adjusted OIBDA % 18.7% 16.1% -260 bps Service Rent 2,275 1,876 (17.5)% Total Service Adjusted OIBDAR $59,411 $47,488 (20.1)% Total Service Adjusted OIBDAR % 19.4% 16.7% -270 bps |
Customer Data 28 (1) No single vertical within Other comprises greater than 1% of North America Revenue Federal Healthcare Financial Legal Insurance Life Sciences Energy Business Services 37% Other 18% 3% 9% 15% 8% 4% 4% 3% North America Q1 2015 Trailing Twelve Months Revenue by Vertical Iron Mountain provides storage and information management services to more than 155,000 customers in 36 countries around the world. This high quality, diversified customer base comprising numerous industries and government organizations includes more than 92% of the Fortune 1000. No single customer represents more than 2% of revenues and our Top 20 customers have historically represented between 6% to 7% of consolidated revenues. Customer retention is consistently high with annual losses of roughly 3% (on a volume basis), attributable to customer terminations. (1) YTD 2015 FY 2014 FY 2013 FY 2012 Customer Quality Metrics Volume Retention Rate (RM Global) 93.6% 93.7% 92.9% 92.7% Bad Debt Expense as a % of Consolidated Revenues 0.2% 0.5% 0.4% 0.3% Turnover Expenditures (Storage Only) Q1 2015 Sales, Marketing & Account Management 32,049 Customer Acquisition Costs 6,431 |
Debt Schedule 29 (1) Includes letters of credit of $12 million and FX related variances of $1 million Thereafter 2025 $600 2024 $1,000 2023 $264 2022 2021 2020 2019 $592 2018 2017 2016 2015 $275 $400 $1,086 Floating Rate Debt Fixed Rate Debt 26% 74% Senior, Unsecured & Subordinated Fixed vs. Floating Rate Debt Senior, Unsecured & Subordinated Debt Maturity Schedule ($MM) Floating Rate Debt Fixed Rate Debt (1) S&P Moody's Corporate B+ Ba3 Senior BB Ba2 Unsecured B+ Ba2 Subordinated B- B2 Credit Ratings |
Capitalization 30 6.0 5.0 0.0 5.4x 5.0x 5.5x Net Lease Adjusted Leverage Ratio (1) Debt net of cash is calculated as total debt, including: total senior and subordinated notes of $4,217 million, capital leases of $229 million, A/R securitization of $221 million, other long-term debt of $54 million and short-term portion of long-term debt of $15 million, less cash and cash equivalents of $120 million. Debt net of cash excludes letters of credit of $12 million and FX related variances of $1 million. # of Shares Outstanding at 3/31/2015 210,527 Share Price at 3/31/2015 $36.48 Total Equity Value $7,680,034 Total Debt, Net of Cash (1) $4,602,237 Total Market Capitalization $12,282,271 Net Debt to Total Market Capitalization 37% Adj. OIBDA to Interest Expense 3.6x Total Market Capitalization to Adjusted OIBDA 13.3x Total Market Capitalization 2013 2014 2015 Type of Note Subordinated Subordinated Unsecured Subordinated Unsecured Unsecured Subordinated Issuance Date 1/15/07 9/20/11 8/13/13 8/10/09 9/18/14 8/13/13 8/7/12 Denomination EUR USD CAD USD GBP USD USD Original Principal Amount (FX Rate on Issue Date) $329,792 $400,000 $193,720 $550,000 $654,960 $600,000 $1,000,000 Exchange Rate at 3/31/2015 1.0773 1.0000 0.7874 1.0000 1.4804 1.0000 1.0000 Principal Amount at 3/31/2015 $274,712 $400,000 $157,470 $106,250 $592,160 $600,000 $1,000,000 Yield (on Issue Date) 6.750% 7.750% 6.125% 8.375% 6.125% 6.000% 5.750% Maturity Date 10/15/18 10/1/19 8/15/21 8/15/21 9/15/22 8/15/23 8/15/24 Current Call Price 100.000 107.750 N/A 104.188 N/A N/A N/A Next Call Date N/A 10/1/15 8/15/17 8/15/15 9/15/17 10/15/18 8/15/17 Next Call Price 100.000 103.875 103.063 102.792 104.594 103.000 102.875 Senior Unsecured and Senior Subordinated Notes Interest 5.4% Maturity 5.7 years Total Debt Weighted Average Rates (as of 3/31/2015) Metric Limit Current Fixed Charge Ratio > 1.5x 2.4x Net Total Lease Adjusted Leverage Ratio < 6.5x 5.5x Net Secured Lease Adjusted Leverage Ratio < 4.0x 2.7x Revolving Credit Facility Debt Covenant Analysis Revolving Credit and Term Loan Facility (as of 3/31/2015) Capacity $1,748,750 Outstanding $1,073,760 Letters of Credit $12,219 Remaining Capacity $662,971 Interest Rate Spread (Prime) 1.25% Interest Rate Spread (LIBOR) 2.25% Weighted Average Interest Rate 2.76% Maturity Date 6/27/16 |
Lease Obligations(1) (1) Includes capital and operating lease obligations Weighted Average Remaining Lease Obligations (no exercise of extension options): 5.4 years Weighted Average Remaining Lease Obligations (exercise of all extension options): 12.3 years 2015 7.7% Thereafter 7.6% 2026 0.2% 2025 2.7% 2024 3.6% 2023 5.5% 2022 5.1% 2021 8.5% 2020 7.8% 2019 14.1% 2018 12.3% 2017 12.0% 2016 12.7% 2026 4.3% Thereafter 2.5% 3.7% 2024 57.4% 2025 2023 2.2% 2022 2.1% 2021 4.3% 2020 4.2% 2019 4.5% 2018 2.5% 2017 2.9% 2016 3.8% 2015 5.7% Assuming No Exercise of Extension Options Facility Lease Expirations (% of total square feet subject to lease) Assuming Exercise of All Extension Options 31 |
Investments 32 (1) Racking Installations excludes consolidation spend in Total Expected Investment, Investment in Current Period and Cumulative Investment to Date of $34.8 million, $8.1 million and $21.9 million respectively (2) Building Development Projects excludes consolidation spend in Total Expected Investment, Investment in Current Period and Cumulative Investment to Date of $36.5 million, $0.8 million and $17.4 million respectively (3) Includes a large building development project with a longer than average stabilization period (4) Not related to M&A Total Expected Investment in Estimated Historical Average Investment Current Period CuFt / DPUs NOI/CuFt or DPU Racking Installations (1) North America 23,332 4,758 13,524 5,322 $2.13 Europe 32,103 3,691 23,138 9,927 $2.13 Latin America 17,431 1,283 10,252 4,645 $2.19 Asia Pacific 6,773 869 3,774 2,208 $2.19 Worldwide $79,639 $10,600 $50,688 22,102 $2.14 8 - 12 months Total Expected Investment in Total Potential Historical Average Investment Current Period CuFt / DPUs NOI/CuFt or DPU Building Development Projects (2) North America 11,028 2,551 7,770 1,054 88 $2.13 Europe 2,609 361 361 403 22 $2.13 Latin America (3) 10,683 884 8,294 2,741 275 $2.19 Asia Pacific 1,600 16 16 200 16 $2.19 Worldwide $25,921 $3,812 $16,441 4,398 400 $2.14 24 - 36 months Purchase Building Building Building Building Expected Price CuFt Capacity CuFt Utilization DPU Capacity DPU Utilization IRRs FY 2015 Building Acquisitions (4) North America 15,728 301 2,444 96% 309 66% 9% - 11% Europe - - - - - - - Latin America - - - - - - - Asia Pacific - - - - - - - Worldwide $15,728 301 2,444 96% 309 66% 9% - 11% Net Proceeds FY 2015 Building Dispositions (4) North America - - Europe - - Latin America - - Asia Pacific - - Worldwide - - Total Sq Ft Average Stabilization Period Average Stabilization Period Region Cumulative Investment to Date Region Cumulative Investment to Date Region Total Sq Ft Region Total Sq Ft |
Components of Value 33 (1) Trailing four quarter prior to rental expense (2) Includes Cash, Cash Equivalents, Restricted Cash, Accounts Receivable, Other Tangible Current Assets, Deferred Income Taxes and Prepaid Expenses (3) Includes Storage and Service Components Annualized NOI $ North America Records Management 847,708 Data Protection 205,415 Other 44,819 Europe 239,538 Latin America 116,479 Asia Pacific 40,184 Total Portfolio Storage NOI $1,494,143 Service Adjusted OIBDAR (1) 212,660 Balance at 3/31/2015 Cash, Cash Equivalents & Other Tangible Assets (2) 887,473 Building & Racking Investment 106,399 Business and Customer Acquisition Consideration 7,688 Less: Debt, Gross Book Value 4,721,842 Non-Controlling Interests 13,647 Annualized Rental Expense (3) 202,417 Estimated Tax Liability 34,612 Components of Overhead Total overhead costs have been allocated as follows: Q1 2015 Storage $33,392 Service 23,822 Corporate 86,868 Sales, Marketing, & Account Management 52,333 Total Overhead $196,414 |
Appendix 34 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 addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the Unites States of America (GAAP), such as operating or net income (loss) or cash flows from operating activities from continuing operations (as determined in accordance with GAAP). Adjusted Earnings Per Share, or Adjusted EPS Adjusted EPS is defined as reported earnings per share from continuing operations excluding: (1) (gain) loss on the disposal/write-down of property, plant and equipment, net; (2) intangible impairments; (3) other (income) expense, net; (4) REIT Costs; and (5) the tax impact of reconciling items and discrete tax items. We do not believe these excluded items to be indicative of our ongoing operating results, and they are not considered when we are forecasting our future results. We believe Adjusted EPS is of value to our current and potential investors when comparing our results from past, present and future periods. Adjusted Funds From Operations, or AFFO AFFO is defined as FFO (Normalized) excluding non-cash rent expense or income, plus depreciation on non-real estate assets, amortization expense (including amortization of deferred financing costs) and non-cash equity compensation expense, less maintenance capital expenditures. We believe AFFO is a useful measure in determining our ability to generate excess cash that may be used for reinvestment in the business, discretionary deployment in investments such as real estate or acquisition opportunities, returning of capital to our stockholders and voluntary prepayments of indebtedness. 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 equipment (excluding real estate), net and REIT Costs. These measures are an integral part of the internal reporting system we use to assess and evaluate the operating performance of our business. We use multiples of current or projected Adjusted OIBDA in conjunction with our discounted cash flow models to determine our overall enterprise valuation and to evaluate acquisition targets. We believe Adjusted OIBDA provides our current and potential investors with relevant and useful information regarding our ability to generate cash flow to support business investment. |
Appendix Non-GAAP Measures (continued) Funds From Operations, or FFO (NAREIT), and FFO (Normalized) FFO is a non-GAAP financial measure commonly used in the REIT industry. FFO is defined by the National Association of Real Estate Investment Trusts (NAREIT) and us as net income excluding gains and losses on the sale or write-down of real estate assets plus depreciation on real estate assets. FFO does not give effect to real estate depreciation and amortization because these amounts are computed, under GAAP, to allocate the cost of a property over its useful life. Because values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, we believe that FFO (Normalized) provides investors with a clearer view of our operating performance. Our most directly comparable GAAP measure to FFO (Normalized) is net income attributable to Iron Mountain. Although NAREIT has published a definition of FFO, modifications to the NAREIT calculation of FFO are common among REITs as companies seek to provide financial measures that most meaningfully reflect their business. Our definition of FFO (Normalized) excludes other items that we believe do not appropriately reflect our underlying operations such as intangible impairment charges, other income and expense (including foreign exchange gains and losses), income and losses from discontinued operations, provision or benefit from deferred taxes and REIT Costs. 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 excluded from this calculations as they are included in the Storage NOI calculation. Service Adjusted OIBDAR Service Adjusted OIBDA as defined above, excluding rent expense associated with the service business. This is provided to enable valuation of Service Adjusted OIBDA irrespective of whether the companys properties are leased or owned. Related rent expense is provided in the Components of Value slide. Storage Net Operating Income, or Storage NOI Storage NOI is defined as revenue from rental activities (storage rental revenue, termination fees and permanent withdrawal fees) less storage rental costs. Storage rental costs include facility costs (excluding rent), storage rental labor, other storage costs and allocated overhead. Storage NOI is commonly used in the REIT industry and enables investors to understand and value the income generated from the companys real estate. Rent expense is excluded to enable valuation of this income irrespective of whether the companys properties are leased or owned. Related rent expense is provided in the Components of Value slide. 35 |
Appendix Definitions Average Stabilization Period For racking projects, the stabilization period is 8 to 12 months. For new buildings it is 24 to 36 months, assuming phased racking installations over three years. For business acquisitions it is 12 to 24 months, depending on the size of the transaction. Building Development Projects The construction of new facilities, or three-wall additions, including all initial and future racking installations. Business Segments North American Records and Information Management Business (RIM) Storage and information management services throughout the United States and Canada, including the storage of paper documents, as well as other media such as microfilm and microfiche, master audio and videotapes, film, X-rays and blueprints, including healthcare information services, vital records services, service and courier operations, and the collection, handling and disposal of sensitive documents for corporate customers (Records Management); information destruction services (Destruction); DMS; Fulfillment Services; and Intellectual Property Management. North American Data Management Business (DM) Storage and rotation of backup computer media as part of corporate disaster recovery plans throughout the United States and Canada, including service and courier operations (Data Protection & Recovery), server and computer backup services, digital content repository systems to house, distribute, and archive key media assets, and storage, safeguarding and electronic or physical delivery of physical media of all types, primarily for entertainment and media industry clients. Western Europe Records Management, Data Protection & Recovery and DMS throughout the United Kingdom, Ireland, Norway, Austria, Belgium, France, Germany, Netherlands, Spain and Switzerland. Prior to December 2014, our Western European Business segment offered Destruction in the United Kingdom and Ireland. Other International Business Storage and information management services throughout the remaining European countries in which we operate, Latin America and Asia Pacific, including Records Management, Data Protection & Recovery and DMS. Our European operations included within the Other International Business segment provide Records Management, Data Protection & Recovery and DMS. Our Latin America operations provide Records Management, Data Protection & Recovery and DMS throughout Argentina, Brazil, Chile, Colombia, Mexico and Peru. Our Asia Pacific operations provide Records Management, Data Protection & Recovery and DMS throughout Australia, with Records Management and Data Protection & Recovery also provided in certain cities in India, Singapore, Hong Kong-SAR and China. Prior to December 2014, our Other International Business segment offered Destruction in Australia. Corporate and Other Consists of our data center business in the United States, the primary product offering of our Emerging Businesses segment, as well as costs related to executive and staff functions, including finance, human resources and information technology, which benefit the enterprise as a whole. These costs are primarily related to the general management of these functions on a corporate level and the design and development of programs, policies and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. 36 |
Appendix 37 Definitions (continued) Business Segments (continued) Corporate and Other Our Corporate and Other segment also includes stock-based employee compensation expense associated with all Employee Stock-Based Awards. Capacity Measures Building Capacity The maximum number of cubic feet of records or standard DPUs that can be stored in a given facility. Building Capacity Utilization The number of cubic feet of records or standard DPUs in storage divided by the Building Capacity. Installed Racking Capacity The storage capacity of the racking installed in a given facility. Capacity is generally measured in cubic feet or standard DPUs. Installed Racking Capacity Utilization The number of cubic feet of records or standard DPUs in storage divided by the Installed Racking Capacity. 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 line growth and our ongoing operations. Additionally, we invest capital to acquire or construct real estate. We also expend capital to support the development and improvement of products and services and projects designed to increase our profitability. These expenditures are generally relatively small and discretionary in nature. We categorize our capital expenditures as follows: Real Estate: Investment These expenditures are primarily related to investments in land, buildings, building improvements, leasehold improvements and racking structures that expand our revenue capacity in existing or new geographies, replace a long-term operational obligation or create operational efficiencies. Maintenance These expenditures are primarily related to the purchase or replacement of real estate assets such as buildings, building improvements, leasehold improvements and racking structures. |
Appendix 38 Definitions (continued) Capital Expenditures and Investments (continued) Non-Real Estate: Investment These expenditures support either (i) the growth of our business and/or increase our profitability by investing in either supporting assets such as carton storage systems, tape storage systems and containers, shredding plants and bins, and technology service storage and processing capacity, or (ii) they are directly related to the development of new products or services in support of our integrated value proposition and enhancements that support our leadership position in the industry, including items such as increased feature functionality, security upgrades or system enhancements. Maintenance These expenditures are primarily related to the purchase or replacement of customer-facing assets such as containers and shred bins, warehouse equipment, fixtures, computer hardware, or third-party or internally-developed software assets. This category also includes operational support initiatives such as sales and marketing and information technology projects to support infrastructure requirements. Components of Overhead Allocated Overhead Includes overhead expenses directly associated with storage and service business operations allocated as follows: Field Operation Costs Allocated to storage and service operations based on percent of revenue. Bad Debt Expenses Allocated to storage and service operations based on percent of revenue. Transportation Costs Allocated fully to service operations. Corporate Overhead Includes all other overhead expenses associated with business support functions, including: Executive, Legal, Real Estate/Facilities, Accounting, Financial Performance & Analysis, Treasury, Tax, Internal Audit, M&A, Security, Procurement, HR, REIT, Other G&A, Integration Costs, IT, Product Engineering and Product Management. Customer Turnover Overhead Overhead associated with customer acquisition and retention including Sales, Marketing and Account Management expenses. Constant Dollar Growth (C$) The year-over-year growth rate excluding the impact of changes to foreign currency exchange rates. Constant currency growth rates are calculated by translating the 2014 results at the 2015 constant dollar budget rates. Cumulative Investment to Date Total spend to date since project approval. |
Appendix 39 Definitions (continued) Destruction Rate Calculated by dividing the total number of cubic feet of records removed from inventory due to destructions in a one-year period divided by the total number of cubic feet of records in storage at the beginning of the period. DPUs Data protection units, a unit of measurement specific to our Data Protection storage services. Estimated CuFt / DPUs Estimated based on expected growth and consolidation, resulting from moving boxes from one facility to another. Historical Average NOI / CF or DPU The quarterly annualized Storage NOI for a specific region (NA, Europe, Latin America, Asia Pacific) and product (Records Management or Data Protection). Internal Revenue Growth Internal revenue growth represents the year-over-year growth rate of revenues excluding the impacts of changes to foreign currency exchange rates, acquisitions and other unusual items. In general, only acquisitions that have been in our results for the full calendar year prior to the quarter of measurement are included in internal revenue growth. Investment in Current Period Spend within the quarter being reported. Lease Adjusted Leverage Ratio The calculation for this ratio is EBITDA plus rent expense divided by net debt including the capitalized value of lease obligations. Net Volume Growth New Records Management storage volume from existing customers, plus volume from new customers and volume from acquisitions, offset by volume related to destructions, permanent withdrawals and customer terminations. Quarterly percentages are calculated by dividing the trailing four quarters total activity by the ending balance of the same prior-year period. Non-Cash Rent Expense Calculated as rent expense less cash paid for rent. Permanent Withdrawal Rate Calculated by dividing the total number of cubic feet of records removed from inventory due to permanent withdrawals in a one-year period divided by the total number of cubic feet of records in storage at the beginning of the period. Permanent withdrawals occur when records are permanently removed from inventory by customers for reasons other than the customer terminating its relationship. Racking Installations Defined as any incremental racking spend on buildings constructed or operated prior to January 1, 2014. Racking projects are tracked from first dollar spent until completion, which is defined as when the first box is entered into storage. Racking spend on buildings constructed subsequent to January 1, 2014 is included in Building Development Projects. REIT Costs Includes costs associated with our 2011 proxy contest, the previous work of the former Strategic Review Special Committee of the board of directors and costs associated with the Companys conversion to a REIT, excluding REIT compliance costs beginning January 1, 2014 which we expect to recur in future periods. |
Appendix 40 Definitions (continued) REIT Countries Countries where we operate that have been converted into a Qualified REIT Subsidiary and Taxable REIT Subsidiary structure, the group includes the following: Australia, Canada, Germany, Ireland, Mexico, Netherlands, Spain, United Kingdom and the United States. Tangible Assets Includes PP&E, cash and cash equivalents, restricted cash, accounts receivable, deferred income taxes, and prepaid expenses. Total Expected Investment Is defined as follows: Total Expected Investment for Racking Installations The sum of expected investments for all approved racking projects. Total Expected Investment for Building Development Projects The sum of expected investments for all approved building projects, including the expected costs to fully outfit the building with racking. Volume Retention Rate One minus the result of dividing the total number of cubic feet of records removed from inventory due to customer terminations in a one-year period by the total number of cubic feet of records in storage at the beginning of the period. |
Exhibit 99.2
Iron Mountain Reaches Agreement in Principle to Acquire Recall April 28, 2015 |
Forward Looking Statements Certain statements contained in this communication may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the expected timing of the proposed transaction, the entering into of the Scheme Implementation Agreement and the completion of the potential Scheme of Arrangement, the benefits of the potential Scheme of Arrangement, including future financial and operating results, the combined companys plans, objectives, expectations and other statements that are not historical facts. Such statements are based on the views and assumptions of the management of Iron Mountain and are subject to significant risks and uncertainties. Actual future events or results may differ materially from these statements. Such differences may result from the following factors: the ability to enter into a Scheme Implementation Agreement and close the proposed transaction on the proposed terms and within the anticipated time period, or at all, which is dependent on the parties ability to satisfy certain closing conditions, including the receipt of governmental approvals; the risk that the benefits of the potential transaction, including potential cost synergies and other synergies (including tax synergies) may not be fully realized or may take longer to realize than expected; the impact of the proposed transaction on third-party relationships; actions taken by either of the companies; changes in regulatory, social and political conditions, as well as general economic conditions. Additional risks and factors that may affect results are set forth in Iron Mountains filings with the SEC and Recalls filings with ASX, including Iron Mountains Annual Report on Form 10-K for the fiscal year ending December 31, 2014 and Recalls Annual Report for the fiscal year ending June 30, 2014. The forward-looking statements speak only as of the date of this communication. Neither Iron Mountain nor Recall undertakes any obligation to update these statements. |
Summary of Agreement in Principle Fixed Exchange Ratio of 0.1722 of an IRM Common Share for Each REC Share 100% stock consideration Shareholders may elect alternative consideration of A$8.50 per share in cash Total cash consideration capped at A$225MM Exchange ratio will not be adjusted for ordinary course dividends prior to closing Transaction to be executed by Court approved Scheme of Arrangement Customary conditions including REC and IRM shareholder approval, antitrust/competition, and other regulatory approvals, Australian Court approval Standard exclusivity arrangements, including no shop, no talk, notification requirement and matching right Fixed exchange ratio of 0.1722 IRM common shares per REC share Revised offer reflects change in A$:US$ exchange rate and other favorable changes Consideration Pricing Additional Terms |
Summary of Agreement in Principle (contd) Fixed Exchange Ratio of 0.1722 of an IRM Common Share for Each REC Share REC will pay a termination fee of 1.0% of equity value if RECs Board changes its recommendation or terminates transaction for a superior proposal IRM will pay a termination fee of 1.0% of equity value if IRMs Board changes its recommendation IRM and REC to conduct limited confirmatory due diligence and execute definitive merger documentation over the next three to four weeks Anticipated closing by late 2015 / early 2016 Commit to undertake limited divestments, if required for regulatory clearance Agree to pay a reverse break fee of 3.0% of equity value if antitrust /competition approval is not obtained Termination Fee Antitrust Timing |
Acquisition of Recall Expected to Create Significant Value Compelling Opportunity Accelerates Successful Strategy Broader geographic footprint, enhanced growth profile and economies of scale drive significant cost synergies Run-rate currently estimated at $125-$140 million Includes potential tax synergies to be achieved via REIT conversion Compelling value creation Material accretion With 50% of synergies achieved in Year 2 (2017), transaction is expected to generate high single-digit Adjusted EPS, FFO and AFFO accretion To be confirmed with due diligence Supports medium term de-levering strategy |
Enhances International Presence in Core Businesses Source: Company filings, Recall data is based on fiscal year ending June 30, 2014 Geographic Mix Business Mix Iron Mountain Recall 75% 17% 8% 63% 37% 76% 11% 13% 42% 58% |
Compelling Offer for Recall Shareholders Stock consideration affords Recall shareholders exposure to Iron Mountains already successful business and the ability to participate in the material upside/synergies from the combination Secondary listing on ASX allows trading of IRM shares locally in form of CHESS Depository Interests (CDIs) Option to elect to receive alternative consideration of A$8.50 in cash, subject to proration Cash to be capped at A$225MM Attractive Premium and Participation in the Combined Business |
Estimated Annual Net Synergies $125 - $140 One-time Costs to Achieve(1) $145 - $165 One-time Integration Costs(2) $ 90 - $110 Total Costs $235 - $275 Attractive Synergy Opportunities (US$ in millions) Preliminary Assessment of Potential Stabilized Savings and Costs Sources: Recall 2014 Annual Report - June 30 2014. Internal IRM estimates ¹ Includes moving, racking, and severance costs. ² Includes Facilities Upgrade Program, REIT conversion costs and systems. Estimated net synergies of $125mm-$140mm; subject to confirmation through due diligence Expected to be dilutive in 2016 due to transaction costs, but accretive on an adjusted basis Expected to be accretive in Year 2 |
Conduct customary due diligence Negotiate and sign a definitive Scheme of Implementation Agreement Follow Scheme of Arrangement process (respective shareholder approvals and Court approval) Timing and Next Steps Available capacity to fund cash costs including refinancing of Recall debt, taxes and transaction fees, and maximum cash consideration |
Important Information and Where to Find It In the event Iron Mountain and Recall enter into a Scheme Implementation Agreement, Iron Mountain intends to file with the Securities and Exchange Commission (the SEC) a registration statement on Form S-4, which will contain a prospectus relating to the securities Iron Mountain intends to issue to Recall shareholders in the potential acquisition and a proxy statement in connection with the potential acquisition of Recall. Also in the event that Iron Mountain and Recall enter into a Scheme Implementation Agreement, equivalent information would be included in the scheme booklet that Recall would prepare and, following approval from the Court, dispatch to its shareholders in connection with the scheme meeting at which Recall shareholders would consider whether or not to support the proposed acquisition of Recall by Iron Mountain by way of scheme of arrangement. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT IRON MOUNTAIN, RECALL AND THE SCHEME IMPLEMENTATION AGREEMENT AND SCHEME OF ARRANGEMENT. Investors and security holders will be able to obtain these materials (if and when they are available) and other documents filed by Iron Mountain with the SEC free of charge at the SECs website, www.sec.gov and those documents released by Recall to the Australian Securities Exchange (ASX) announcements platform free of charge at ASX's website, www.asx.com.au. In addition, stockholders will be able to obtain copies of the registration statement and proxy statement/prospectus (if and when they become available) and other documents filed with the SEC from Iron Mountains website at www.ironmountain.com or by directing such request to Iron Mountain at Iron Mountain Incorporated, One Federal Street, Boston, Massachusetts 02110, Attention: Investor Relations. |
Exhibit 99.3
FOR IMMEDIATE RELEASE
Iron Mountain Announces Agreement in Principle to Acquire Recall Holdings Limited for 0.1722 of an Iron Mountain Share for Each Recall Share; Partial Cash Alternative of A$8.50 per Recall Share
Iron Mountain Accelerating Release of First Quarter Results
BOSTON Iron Mountain (NYSE: IRM), the storage and information management company, today announced that it has reached an agreement in principle with Recall Holdings Limited (ASX: REC) to acquire Recall by way of a recommended court approved Scheme of Arrangement for 0.1722 of an Iron Mountain common share for each Recall share (the proposed transaction). The proposed transaction between the companies is contingent on Iron Mountain and Recall conducting confirmatory due diligence and negotiating and executing mutually acceptable merger documentation and other terms and conditions. This agreement in principle does not assure that a definitive agreement regarding the proposed transaction will be reached or that any transaction between the companies will actually occur.
Iron Mountain president and CEO William L. Meaney said, Our proposed transaction with Recall represents a compelling value proposition that we expect will generate significant synergies and be highly accretive after year one for both companies shareholders. In addition, Recall shareholders will directly benefit from the upside in future performance of the combined company and from any share appreciation of Iron Mountain common stock if the merger occurs.
The revised offer for Recall reflects the strengthening of the U.S. dollar and other favorable changes since our last proposal, particularly regarding transaction-related tax assumptions, Meaney added. This proposed transaction represents compelling value for Recall shareholders, and we look forward to reaching a definitive agreement quickly.
Recall president and CEO Doug Pertz said, Recall is pleased to have reached an agreement with Iron Mountain on the key commercial terms of a transaction that we believe is in the best interest of the company, our shareholders and our customers. The combined industry expertise of Recall and Iron Mountain will benefit customers and employees of both organizations, bringing the potential to produce material improvements in operations, enhanced quality of service and new product innovation for the information management industry.
An acquisition of Recall will accelerate Iron Mountains already successful strategy, Meaney noted. The combined companys broader footprint, stronger infrastructure and increased economies of scale will enable us to better serve our customers and address unmet document storage and information management needs around the globe. In addition, both companies shareholders stand to benefit from potential significant synergies, and tax synergies to be achieved by way of REIT conversion, currently estimated at $125 million to $140 million.
Under the terms of the proposed transaction, Recall shareholders will receive 0.1722 of an Iron Mountain common share for each Recall share, with Iron Mountain to establish a secondary listing on the Australian Securities Exchange to allow Recall Shareholders to trade Iron Mountain shares locally, if the Scheme of Arrangement is approved and implemented.
In addition, Recall shareholders will be offered the option to elect to receive alternative consideration of A$8.50 per Recall share in cash, subject to a proration mechanism that will cap the total amount of cash consideration to be paid to Recall shareholders at A$225 million.
The terms of the proposed transaction will not be adjusted for any dividends which Recall or Iron Mountain pay in the ordinary course or any dividends which Iron Mountain is required to pay to maintain compliance with its REIT status obligations between now and closing of the proposed transaction.
The proposed transaction remains subject to each party conducting confirmatory due diligence and execution of definitive merger documentation, including entering into a Scheme Implementation Agreement. Conditions precedent to the closing of the proposed transaction will include, among other things, receipt of antitrust/competition and other requisite regulatory approvals, no material adverse event affecting either party, Recall shareholder approval, Iron Mountain shareholder approval, Australian Court approvals and other customary conditions for a transaction of this nature. The parties are working towards completing their confirmatory due diligence and negotiating and entering into definitive merger documentation within three to four weeks.
The terms of the proposed transaction have been unanimously approved by Iron Mountains and Recalls Boards, and Iron Mountains and Recalls Boards have indicated that they will recommend to their respective shareholders that they approve the proposed transaction.
Iron Mountain is being advised by Goldman Sachs, as financial advisor, and Weil, Gotshal & Manges LLP and Minter Ellison as legal counsel.
First Quarter 2015 Financial Results and Webcast Information
In connection with the announcement of the proposed transaction with Recall, Iron Mountain has released first quarter 2015 financial and operating results. Iron Mountain will host a conference call today, April 28, 2015, at 8:30 am ET. The earnings commentary, financial statements, related supplemental information and webcast details are available on the companys Investor Relations website at investors.ironmountain.com or by clicking: http://investors.ironmountain.com/company/for-investors/events-and-presentations/events/event-details/2015/Q1-2015-Iron-Mountain-Incorporated-Earnings-Conference-Call or HERE.
Important Information and Where to Find It
In the event Iron Mountain and Recall enter into a Scheme Implementation Agreement, Iron Mountain intends to file with the Securities and Exchange Commission (the SEC) a registration statement on Form S-4, which will contain a prospectus relating to the securities Iron Mountain intends to issue to Recall shareholders in the potential acquisition and a proxy statement in connection with the potential acquisition of Recall. Also in the event that Iron Mountain and Recall enter into a Scheme Implementation Agreement, equivalent information would be included in the scheme booklet that Recall would prepare and, following approval from the Court, dispatch to its shareholders in connection with the scheme meeting at which Recall shareholders would consider whether or not to support the proposed acquisition of Recall by Iron Mountain by way of scheme of arrangement. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT IRON MOUNTAIN, RECALL AND THE SCHEME IMPLEMENTATION AGREEMENT AND SCHEME OF ARRANGEMENT. Investors and security holders will be able to obtain these materials (if and when they are available) and other documents filed by Iron Mountain with the SEC free of charge at the SECs website, www.sec.gov and those documents released by Recall to the Australian Securities Exchange (ASX) announcements platform free of charge at ASXs website, www.asx.com.au. In addition, stockholders will be able to obtain copies of the registration statement and proxy statement/prospectus (if and when they become available) and other documents filed with the SEC from Iron Mountains website at www.ironmountain.com or by directing such
request to Iron Mountain at Iron Mountain Incorporated, One Federal Street, Boston, Massachusetts 02110, Attention: Investor Relations.
Participants in Potential Solicitation
In the event Iron Mountain and Recall enter into a Scheme Implementation Agreement, Iron Mountain, Recall and certain of their respective directors, executive officers and other persons may be deemed to be participants in the potential solicitation of proxies in respect of the vote that would be required by Recalls shareholders to approve the terms of the Scheme of Arrangement as contemplated by the Scheme Implementation Agreement. Information regarding Iron Mountains directors and executive officers is available in Iron Mountains proxy statement filed with the SEC on April 13, 2015 in connection with its 2015 annual meeting of stockholders, and information regarding Recalls directors and executive officers is available in Recalls latest annual report. Other information regarding persons who may be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the registration statement and proxy statement/prospectus and other relevant materials to be filed with the SEC and announced to the ASX if and when they become available.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Forward-looking Statements
Certain statements contained in this communication may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the expected timing of the proposed transaction, the entering into of the Scheme Implementation Agreement and the completion of the potential Scheme of Arrangement, the benefits of the potential Scheme of Arrangement, including future financial and operating results, the combined companys plans, objectives, expectations and other statements that are not historical facts. Such statements are based on the views and assumptions of the management of Iron Mountain and are subject to significant risks and uncertainties. Actual future events or results may differ materially from these statements. Such differences may result from the following factors: the ability to enter into a Scheme Implementation Agreement and close the proposed transaction on the proposed terms and within the anticipated time period, or at all, which is dependent on the parties ability to satisfy certain closing conditions, including the receipt of governmental approvals; the risk that the benefits of the potential transaction, including potential cost synergies and other synergies (including tax synergies) may not be fully realized or may take longer to realize than expected; the impact of the proposed transaction on third-party relationships; actions taken by either of the companies; changes in regulatory, social and political conditions, as well as general economic conditions. Additional risks and factors that may affect results are set forth in Iron Mountains filings with the SEC and Recalls filings with ASX, including Iron Mountains Annual Report on Form 10-K for the fiscal year ending December 31, 2014 and Recalls Annual Report for the fiscal year ending June 30, 2014.
The forward-looking statements speak only as of the date of this communication. Neither Iron Mountain nor Recall undertakes any obligation to update these statements.
Contacts
US Media: |
Australian Media: |
Abernathy MacGregor Group |
Cato Counsel |
Chuck Burgess / Ian Campbell |
David Symons |
212.371.5999 / 213.630.6550 |
61.410559184 |
clb@abmac.com / idc@abmac.com |
david@catocounsel.com.au |
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or |
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Investors: |
Media: |
Melissa Marsden |
Christian Potts |
SVP, Investor Relations |
Senior Manager, Corporate Communications |
617.535.8595 |
617.535.8721 |
melissa.marsden@ironmountain.com |
christian.potts@ironmountain.com |
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Exhibit 99.4
Confidential
Preliminary Non-Binding Term Sheet
Structure |
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Members Scheme of Arrangement. Parties to execute a Scheme Implementation Agreement |
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Consideration |
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Exchange ratio
· All stock consideration of 0.1722 of an Iron Mountain common share for each Recall share
Cash Alternative
· Iron Mountain will provide Recall shareholders with the option to elect to receive consideration in cash, subject to a pro-ration mechanism which will cap the total amount of cash consideration to be paid to Recall shareholders at A$225 million
· The value of consideration for shareholders receiving the cash alternative will be A$8.50 cash per share
· Cash alternative structured to provide preferential access for any shareholders first 5,000 shares should they make a cash election; provided that in no event shall such structure result in a separate class of members for purposes of the Scheme
· Iron Mountain will establish a secondary listing on the Australian Securities Exchange to allow Recall Shareholders to trade Iron Mountain shares locally in the form of CHESS Depository Interests
(CDIs) Dividends
· The Proposal will not be adjusted for any dividends which Recall or Iron Mountain pay in the ordinary course or any dividends which Iron Mountain is required to pay to maintain compliance with its REIT status obligations between the date of this term sheet and close of the transaction. Neither party will pay any special or out of the ordinary dividends between the date of this term sheet and close of the transaction
· Should Iron Mountain issue primary shares (or securities convertible into primary shares) at a discount to the prevailing market price between the date of this term sheet and closing of the transaction, the share exchange ratio shall be adjusted mechanically using the same calculation method as that used in the context of rights issues at a discount
· Iron Mountain will not issue more than 10% (in the aggregate) of its existing share capital between the date of this term sheet and the closing of the transaction, without prior approval of Recall |
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Timing |
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· Term Sheet to be agreed to prior to market open on 28 April 2015 (NY time).
· Iron Mountain would first announce the transaction prior to market open on 28 April 2015, with Recall to announce to ASX on the following trading day
· Each partys announcements are to be in agreed form, with the initial announcement solely stating in relation to the value of consideration an exchange ratio of 0.1722 and a headline value per share of A$8.50 (reflecting the value of the cash alternative subject to the A$225 million cap at A$8.50 per share), to the exclusion of any other metric of headline value
· The possible transaction is contingent on the parties conducting confirmatory due diligence and negotiating and executing definitive documentation. The agreement in principle does not assure that a definitive agreement will be reached or that any |
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transaction between the companies will occur |
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HSR / Anti-Trust |
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· With respect to the Records and Information Management business in the U.S. and Canada, Iron Mountain commits to undertake divestments accounting for up to US$30 million in revenues, in the aggregate, as are necessary to obtain antitrust/competition clearance
· With respect to the Records and Information Management business in Australia, Iron Mountain commits to undertake divestments in Australia as are necessary to address competition issues which the transaction raises under Australian law
· With respect to (i) all other business lines (including Data Protection) worldwide and (ii) the Records and Information Management business in all jurisdictions other than the U.S., Canada and Australia, Iron Mountain commits to undertake divestments as are necessary to obtain required antitrust/competition clearance
· Iron Mountain commits to litigate any regulatory attempt to restrain the deal
· In addition, Iron Mountain will pay a reverse break fee equal to 3.0% of the transaction equity value as of the signing of the Scheme Implementation Agreement in the event that any antitrust/competition approval condition is not satisfied or waived and all other conditions (other than final Court approval) are satisfied or waived, as of the outside date, which shall be 12 months from the date of execution of the Scheme |
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Iron Mountain Shareholder Approval / Reverse Break Fee |
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· Iron Mountain shareholder approval, in the form of a simple majority shareholder vote, will be required in connection with the transaction
· Iron Mountain to obtain shareholder approval shortly in advance of Recall scheme meeting
· Both parties to use reasonable best efforts to hold their respective shareholder meetings and obtain their respective shareholder approvals as promptly as reasonably practicable
· Termination fee equal to 1.0% of the transaction equity value as of the signing of the Scheme Implementation Agreement payable by Iron Mountain if Iron Mountains Board changes its recommendation to its shareholders; no termination fee payable by Iron Mountain if Iron Mountain is unable to obtain shareholder approval for the share issuance |
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Recall Shareholder Approval / Break Fee |
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· Both parties to use reasonable best efforts to hold their respective shareholder meetings and obtain their respective shareholder approvals as promptly as reasonably practicable
· Termination fee equal to 1.0% of the transaction equity value as of the signing of the Scheme Implementation Agreement payable by Recall if Recalls Board changes its recommendation or if Recall terminates the transaction to enter into a superior proposal; no termination fee payable by Recall if Recall is unable to obtain shareholder approval for the transaction |
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Board Recommendation |
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· Recall Board to unanimously approve and recommend approval of transaction to its shareholders, subject to there being no superior proposal and subject to an Independent Expert concluding that the transaction is in the best interests of Recalls shareholders
· Iron Mountain Board to unanimously approve and recommend approval of transaction to its shareholders |
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Iron Mountain Board of Directors |
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· Iron Mountains Board to appoint two of Recalls current directors to the Iron Mountain Board, effective as of the closing of the Scheme and nominate such designees for election at the first Iron Mountain annual meeting following closing of the Scheme |
Conditions |
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· Standard exclusivity arrangements, including no shop, no talk, notification requirement and matching right
· Mutual no material adverse change condition, subject to customary exclusions (including carve out from the MAC of any impact of any divestments or other actions required to obtain antitrust/competition approvals)
· Customary conditions to the implementation of the Scheme, for example Recall and Iron Mountain shareholder approvals, Court approvals and antitrust/competition and other requisite regulatory approvals; no financing or REIT condition |
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Due Diligence |
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· Iron Mountain to provide to Recall, promptly following the signing of the NDA, a draft of Mountains Q1 2015 financial results release and, as soon as practicable following the signing of the NDA and in any event by 27 April 2015, a draft of Iron Mountains prepared remarks
· Both parties to use reasonable best efforts to complete confirmatory due diligence and negotiate and enter into a Scheme Implementation Agreement within three to four weeks after being given access to Recall information. Recall to prepare first draft of Scheme Implementation Agreement and provide that draft to Iron Mountain as soon as practicable after announcement
· IRM will provide necessary due diligence access to Recall during this period as well
· Scope of the confirmatory due diligence review to be limited on both sides to high level financial diligence of recent results and near term outlook; group structure; tax considerations (FIRPTA and REIT); HSR /Anti-Trust / Competition and confirmatory legal issues |
This preliminary non-binding term sheet is accepted and agreed to as of April 28, 2015
IRON MOUNTAIN INCORPORATED |
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By: |
/s/ William L. Meaney |
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Name: William L. Meaney |
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Title: President and CEO |
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RECALL HOLDINGS LIMITED |
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By: |
/s/ Doug Pertz |
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Name: Doug Pertz |
April 28, 2015 |
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Title: President and Chief Executive Officer |
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