Welcome to the afternoon fireside chat. If you have any conversations going on, you might want to take it to the hallway. So, I'm Jonathan Atkin with RBC, and I'm pleased to conduct the next 30 minutes of Q&A with Iron Mountain Chief Financial Officer, Barry Hytinen. Welcome. Thanks, John. Great to be here. And what I'd like to do is maybe give you an opportunity to kind of introduce the company. A lot of the people in the audience are familiar with your legacy business and obviously some of your investments in data centers, but just kind of bring us up to speed to kind of level set us, and then I'll dive into some operating, strategic, and financial questions during the time together. Okay, sure. Well, again, thanks for having us, and appreciate the coverage. Iron Mountain is a business that has a very strong core. It's a very durable offering. We are the market leader in storage of paper and various other elements of business storage, like tapes. We do a tremendous amount of service for those clients, and we have a very large client base. It's 225,000 client relationships around the world. We operate in about 60 countries around the world, and in our core, in that storage section, we are the, as I said, the undisputed leader, but we're also have the most reach by far. Most of the competition that we have is market driven or in a specific region in a country, as opposed to being able to service multinationals. When we talk to our clients about the reason that they've standardized with us, it's around things like chain of custody, trust, making sure there's consistent process, that the value is there, and fundamentally, the assets they entrust to us are going to be there when they need them in the future. On average, in that core, we store boxes for clients that stay on our shelves for between 15 years and 20 years. We have very high retention rates, and what we found over the last few years is we have been. We had started about 6 years ago, testing a revenue management project in which we have been systematically trying to move the average price of our service up, consistent with the value that we deliver clients. That has been a very strong project for us over the last several years, and we see a very good horizon going forward on a systematic basis to continue to have revenue management be a nice tailwind to our growth going forward in the core. There are several businesses within ours that are emerging and growing very rapidly over the last several years. The team started investing in several areas of secular growth about five to seven years ago, depending upon the offering. One of those is digital solutions, and that's usually for us starts with scanning. We scan both inventory that we have been storing for clients for a project or for a specific use case. The vast majority of that then goes back on the shelf for storage after we've scanned it, and we ingest that into, typically, our own content management platform, so that clients can use data tools to analyze and get access to information that they've never had before, because so much of the content that we store for them is, in fact, just on our shelves. And so that makes it a real treasure trove of analysis for them. But we have been doing digitization and content management applications, even for inventory that we don't store, which is, I think, speaks to the competitiveness of our offering. And we have a whole host of other digital solutions that we're building out, and that business for us is growing at about 20+% compound rate for the last several years, and that's within our core. Another area that the team started investing in some years ago, which I'm sure we'll spend a lot of time on today, is data center. Where we operate a portfolio that ultimately, if we didn't buy any additional land, would be ultimately 800 MW, but we'll continue to aggregate more land and power and build that out. And I'll go into more detail, I'm sure, in the Q&A, but that is a business that's growing for us, again, on a new bookings basis, I think 20%-30% compounded for some time. We have both a colo business, which is where we started on the data center side, but the last few years, we've gotten a lot of traction with large cloud hyperscalers. We have started with a relatively small point deployment, maybe 500 kW, and now we're after multiple contracts and testing us out essentially over the last four years or five years, they've started making us a strategic partner in this area. We're signing, you know, in the first quarter, as we talked about, we signed a 40-MW contract with a client. Last year, we signed a 72-MW deployment. So we've been getting a lot of traction in data center and seeing that become a larger and larger portion of our business. It's accretive to our total company EBITDA margin as well. And then another area that we've been investing in for about five years or six years now is in the IT asset disposition space, which we refer to as Asset Lifecycle Management. And in that space, we have, in that series of markets, which is a very big market. Asset Lifecycle Management is about a $15 billion a year served market, probably $30 billion total addressable market. We think it cross-sells exceptionally well with our core, because when you think about our largest clients, large financial and services companies, large insurers, healthcare companies, except multinationals, they all have needs for records where most of them are standardized with us, and for similar reasons, they have needs for a secure and enterprise-level IT asset disposition in the form of privacy concerns about laptops that have been written to or servers that have been written to. They want to make sure that the privacy elements of those are addressed appropriately, that they're sustainably recycled or disposed of. You know, there are concerns with large clients about greenwashing and the like. And so we think enterprise IT asset disposition is another major growth opportunity for us over the next few years, and it is a business that, for us. On the enterprise side, that's been growing at the 20%-30%+ compound rate for several years now. Still a relatively small portion of our business, but one that is got a lot of opportunity. And within Asset Lifecycle Management, we also have a hyperscale data center decommissioning portion of the business, that's actually the larger of the parts of our ALM business. And while we are seeing good trends with clients as it relates to volume and improving win rates, and we've got really important client relationships in that space with some of the largest cloud hyperscalers, component pricing has been a challenge, which I'm sure we'll talk about, but that's been a challenge for everyone in the industry. And we anticipate that in the future, it will improve, but we haven't assumed that for this year. So, John, we've got a business that is growing. We have systematically increased the growth rate of the company. If you look at it over the last, say, nine or 10 quarters, we've been growing much faster than the prior, let's say, 10 years' worth of growth on an organic basis. And that's because we've got stable volume in our core. The revenue management activities have been driving good growth. Digital solutions have been growing fast and complementing that growth in our core. And then in our growth areas of Asset Lifecycle Management and data center have been growing quite rapidly for some time and becoming more of a meaningful slug of the company. EBITDA has also been growing quite nicely, and, we generate a lot of profit out of that and a lot of cash out of that core, which we've been deploying into building out data center development. Data center is our most capital-intense portion of the business, and really, as a practical matter, the rest of the company is not particularly capital intense. And then from a capital allocation standpoint, and then I'll hand it back to you. A couple of things to note: we have a leverage target range of 4.5x-5.5 x. That's on a lease-adjusted basis. If you go back three or four years ago, we were cresting about 6 x against that metric and been outside the range for some time because we were growing our data center business somewhat through acquisition, among other reasons. We said intentionally, that we were going to lower the leverage while continuing to grow the business, and as of the last few quarters, we've been at 5.1x, which is really the lowest leverage level the company's had in years. We aim to operate inside our leverage range of that 4.5x-5.5 x. Together with that, we have an AFFO payout ratio target range of low-to-mid 60s%. If I go back to the same time frame, about three or four or five years ago, we were well above that payout ratio range, and we said, as part of our leverage plan to get the leverage down, as well as to invest in data center, you should expect us to kind of have the stack closer to the payout range before we raise the dividend again, because we wanted to get back into the range, and we've done that. As you know, we recently entered that target range of low- to mid-60s%. We announced that the board had authorized us to increase the dividend on our last call for the first time in several years. And now, as you think about that range, because we aim to operate inside that range, generally speaking, you should be expecting the dividend to grow pretty much in line with the growth in AFFO. Otherwise, we'd fall out of the range, and that's obviously not the aim that we have. So we're deploying more and more of our capital into data center development to build out our pipeline. And I think we have a really good balanced approach as it relates to maintaining leverage in this relative level, and you'll see the dividend rise over time. So you said, more and more, data center development CapEx. So as we think about the next couple of years versus where you are on kind of a 2023 run rate, what does that mean in terms of? So if you look back over the last couple of years, we've been systematically rising our data center development, think $100 million-$200 million a year. In fact, on the last call, I raised our total CapEx for the company this year by about $200 million. So we'll spend about $1.2 billion all in on CapEx in the year, with the majority of that, the vast majority of that, going into data center on the growth side. You should expect that to continue to rise at probably the $100-$200 kind of level. We gave some view at our last Investor Day last year, that over the next few years, we'd spend increasing levels of capital on data center. The reason that we're doing that, frankly, and this is a little bit of, I think, a little unique as it relates to our story, is we're very pre-leased. You know, if you think about our data center portfolio, as I said earlier, if we didn't buy any additional land, and that's not a reasonable assumption, but just to kind of freeze us today, we would be operating, after we build it all out, about 800 MW worth of power. That's what our total land and power portfolio could support. Today, against that 800, we're operating a little over 200 MW, and we're about 95% leased in our operating capacity. So we don't have a lot to lease right now in terms of what's operational and constructive. But we're also under construction currently on about 200 MW, so 200 operating, 200 under construction. The interesting thing about what we have under construction is we're about 93%-94% pre-leased on all of that. So we're increasing our spend on development, John, simply because we need to stay ahead of the demand. Our pipeline's been growing very fast. Our pipeline is, for data center, is larger than it's ever been. It also has more large deals than it's ever had in the past. So both our colo business is growing nicely and our hyperscale business is growing quite fast. And we will be allocating more capital just to construct. So we're not a situation where we're like building to spec. We know what returns we've written to, and we're going to continue to escalate the investment in data center because we're seeing such good traction with our clients. What is being, you know, cash generative in your core business imply in terms of how you underwrite your some of your hyperscale contracts around- Sure. -pricing? So ours is I think that's another part of that question alludes to another part of our unique story, which is that in our core, which is, as you said, and as I said earlier, very cash generative, it is not particularly capital intense. It is growing largely off of revenue management activity, and we got very strong margins. So think in our core box business, the incremental margins are like 80%+ or more. And while that's not a particularly fast-growing volume business, we've been keeping the volume quite steady to slightly up, and that's our forward expectation, is for volume to continue to grow at slightly up on an annual basis, and then have revenue management of at least, say, mid-single digit, something of that nature. We've been running a little bit ahead of that. And while I don't see much of any elasticity in that business, we don't intend to significantly go beyond that level of revenue management each year, principally because we have such a much larger now book of business that we can cross-sell our clients into. So we want to both have a very robust, durable business on the core storage and sell those clients enterprise IT asset disposition, information governance, digital solutions, the various offerings we've been investing in over years, as well as data center that we've been investing in to get more share of wallet from our existing clients, where we already have those trusted relationships. What that affords us is the ability to take that cash that that business is generating, where it's a really strong margin business, and then deploy it into data center and supplement our growth through that cash flow, as well as through maintaining our leverage ratio of around this level, and with growth in EBITDA, continuing to escalate debt some year to year. So we are not, we have not been one to use equity financing to finance our growth, and you shouldn't you know, never say never, but you shouldn't anticipate that at all. We have done some. Just a couple of site-level joint ventures on the data center side, where we've seen the opportunity to get a really nice return and not have to invest incremental capital to build out a specific building. For example, when we get a relatively long duration contract with a major hyperscaler, that is clearly a market that's very attractive to certain would-be equity partners. And so that, you know, on the margin, is something that we've used to finance, but principally, our growth is right out of the core, having that really strong cash generation that helps us fuel incremental data center development. So you, you gave us, you probably answered the question, but as we think about, you know, not 9% revenue growth at the midpoint for your, for your guidance, how much would that be revenue management? How much would that be, you know, services, which is maybe a little bit more, more, more of a headwind? How much of that is volume growth? But maybe the piece parts that underlie the, the revenue guide for this year. Sure. So the algorithm for, for this year in our core, on the box side, is really to have our total volume to be flat to slightly up, so think something like 0.5%-1%. And then our revenue management, all-in revenue, has been growing in the core business, on the storage side, like high single-digit, low double-digit. And so most of that is revenue management, but, and there's a little bit of mix in there that interplays as well. On the services side, in our core, we've been growing quite appreciably, and that's due to both services that go along with our core offerings, but also the digital solutions that I mentioned, which is now a $several hundred million business, and it's growing pretty quickly. and I think from when you look at what clients need and the desire for more information and more analysis, and the amount of competitive projects that we're winning, we are likely to see that business continue to grow for a long period of time at above average rate. And then, when you click down into our other segments, take data center, you know, it's growing over 20% on a revenue basis. New bookings are growing even faster, but as I described earlier, we need to construct the data centers some, so we're very pre-leased. And so that's a business where I have very high visibility on the data center side for additional, you know, growth over the next few years, because as you would see in our supplemental report, we show you what's been pre-leased and when we anticipate the construction and going into service, and we've got a healthy amount of megawatts coming into service over the course of, you know, the next several quarters and even into 2025. As I mentioned, and I'll just reiterate, the pipeline's really strong on the data center side. So in 2024 and 2025, in your supplemental, it does mention a step up in lease expirations for core data centers, and what is your sense around renewal spreads and where's the market headed? Yeah. So when you look at our lease expiration table, because we've got a colo business, you would see that there's every year we've got some book of business that renews. We've had very low churn, relatively speaking. In fact, it's been trending down, and our expectation is for it to be pretty low for this year, based on looking at the book of business that's there. On the hyperscale side, what you would see if you looked at my expiration table over the last few years and compared it, is our lease expiration is becoming more weighted to many years out because the hyperscale contracts tend to be more like on the vicinity of 10-15-year type deployments. But on the colo business, it's one, two, three-year kind of renewals. Pricing trends are really good on data center at this point, at least in the markets that we operate in. Obviously, I can't speak to markets where we aren't, but in places like Phoenix and Northern Virginia, Frankfurt, London, some of those other key markets that we operate in, I'm seeing pricing be very favorable. You would have seen in my Mark-to-Market most recent quarter, Mark-to-Market was up 7%. Of course, that's a lagging indicator, and it's been trending up for about 7 quarters now in a row. And when I look at, let's say, triple-net leasing and just compare that over the last 12-18 months, like for like, you're probably talking 20%-40% increases, John. So it's big increases. So the pricing environment is strong, but I will say, as everyone that's following data center would know, you know, costs have also been up. Supply chain has been challenging over the last few years, so there is an element of supply and demand there. ... even to grow 7% at the midpoint, as we think about, you know, what that implies for incremental margins, you talked about high, high flow-through margins, in some of, some of your business segments. But, is it expansion drag around your data center development pipeline, or what is it that's, you know, adding, adding to your cost base the most? Sure. So there's a couple things at work. First of all, we're investing in the company to grow the business that much faster. So we are, as we would have talked about before at some of the other conferences in our Investor Day, we have been reorienting the operating model of our company. So historically, this business was very general manager oriented, where, let's say, in a given market, let's take the U.K., for example, there would have been a general manager of the U.K. That person would have been responsible for sales, customer support, services, everything, back functions, what have you. In light of the much bigger opportunity we have in terms of products and solutions to offer to clients, and after testing some iterations of this, we have very recently put in place a new operating model that includes, for the first time, a dedicated global commercial team, which is essentially a sales force. That organization is being designed to be implemented in terms of, for our largest accounts, think 300-400 accounts, on a vertical basis. And we have been adjusting new talent into that area from major sellers of software and very large ticket price deployments, to bring in expertise of how to sell at a more solution level within those dedicated verticals, because we've got so much more product and solution to sell going forward. And then the rest of our commercial organization is serving the other 200+ thousand clients, and that is more geographically represented. Similarly, we have created a global operations function, and we're building out a global shared services function. So there's a level of investment we're making in the business, which is part of that. And then secondly, John, is in some of our growth areas, naturally, the margin is a little bit lower, so there's a little bit of mix shift in terms of the business. So in our core storage business, which is growing nicely, as we discussed, but it is growing a little bit. It's growing fast, but not as fast as, let's say, digital solutions or some of the enterprise IT asset disposition business. Those are a little bit lower margin, but, you know, frankly, we take dollars to the bank, and they're not. Those Those parts of our business are not in any way cannibalistic to our core. We feel very good about the ability to serve our clients with a more robust offering and generate very, very good returns. So for ITAD, is the growth coming from new logos? Are you displacing other ITAD vendors as you grow, or is it the fact that the opportunity is growing, and you're kind of taking advantage of new shots on goal, as opposed to displacing your peers? Yeah, it is definitely some of all of those. Mm-hmm. And so when we think about our Asset Lifecycle Management, you're asking about the enterprise side, which is where there's the distinct, very substantial cross-sell opportunity into our existing client base. And so, first and foremost, we kind of start with a lead because we know we have those trusted relationships with so many of them, and especially on the larger side of our client base, they really do have a compelling need for a partner that they can standardize with on IT asset disposition, because as we would have all seen so many times in the news, but major, major companies getting tagged with issues related to IT gear getting out there and having privacy concerns or things falling into the wrong hands or frankly, being recycled in the wrong ways. So that having a consistency of process and having those client relationships is one. We are definitely expanding new logos within that book of business, John, but that's more of a cross-sell because as you would appreciate, in light of the size of the number of client relationships we have, it's mostly like winning more share of wallet with clients as opposed to truly new clients in our total company. And then we are definitely seeing a rising tide because lifting us and others in the Asset Lifecycle Management space, as this is a secular growing portion of the economy, there's more IT gear to be disposed of and recycled and reused, and we benefit from that. On the hyperscale side, that is where we have very distinct relationships. The vast majority of the business is with large cloud hyperscalers, where we are decommissioning their data centers for them. The really nice part of that business is we've got strong, long-standing relationships. In some cases, they're multiyear contracts, in some cases, they're exclusive or semi-exclusive relationships. And there's high visibility in that market from a standpoint of the gear that needs to be refreshed. Because when you think about the cloud players that are operating very large data centers, generally speaking, on average, they would be renewing the gear in those data centers about every 5 years. Some as quickly as 3-4 years, some might be as long as 6 or 7, but average is about 5. And so they'll put up a data center, they might expect to be in that data center for decades, but they'll renew the gear about every 5 years. And they're renewing for reasons of they want better efficiency on power draw, they want more, maybe they're converting from CPU to GPU, what have you. But they're not usually renewing because the gear has gone obsolete, because there's still inherent benefit and value in the gear at the five-year timeframe. That's where we come in. We provide a service of wiping gear that's been written to, making sure that it's very handled appropriately, and then we literally disassemble those servers or other gear and sell it in a revenue share model, whereby we get a percentage of the sell through. We don't take possession of the inventory, so I don't have inventory markdown risk in that business, but we do have exposure to what is the selling price, and that has been...... A real challenge for the whole industry, because as folks in this conference particularly probably would know, a lot of new and used technology gear has seen prices come way down last year and early this year. We've seen a floor in component pricing as of since February, and there are a lot of industry prognosticators that say that pricing will start to rise later this year, and certainly there are some that are calling for really significant increases next year, like 50%-70% increases year on year. We have not assumed in our guidance any change in pricing. We assumed it would stay at this really low level, just from a prudent standpoint. And the reason that they are calling for those increases in prices, first and foremost, most people are expecting a level of demand to improve. But secondly, a lot of the original OEMs, suppliers of new gear, production of new gear, kind of started really reducing their production levels early this year as they saw the pricing come in so significantly. The pricing for used gear that we are selling for our clients generally follows in a very tight correlation with the newer generation gear in terms of where is its pricing. Audience questions. So historically, regulation has probably been, if not a tailwind, at least a big demand driver for paper volumes. I'd like to hear your perspective on any possible changes in either the regulatory landscape or your customers' willingness to sort of forego paper and go straight to digital for some of the stuff that they may have missed it with. So the question was impact of regulation on paper volumes or perhaps digitization. Sure. So, first of all, I think actually, the vast majority of our clients are not storing for specific regulatory reasons. They may have something that might be akin to that, like litigation holds at a client or various elements, but, you know, the vast majority of what we're storing is not specifically related to a regulatory. There are clients that store patent work with us that would be in that sort of zone that you're asking about. There are trademark elements, but the vast majority of it is because they need it for some potential future use, whether it be, whether it be in litigation or, as I described, trademark work, or we do a lot with pharmaceutical and healthcare providers, et cetera. We have not seen any significant change in, for those clients where regulatory is a reason. We haven't seen that be anything on the horizon that we're aware of that would change those impetuses. And as it relates to the second part of your question on digitization, we certainly have seen over, and we've been seeing this for decades, the level of digital transformation evolve with our client base, and we've often talked about some verticals. The one that comes to mind right now for me is the legal vertical. If you go back 30, 40 years ago, most contracts were born on paper with a pen and a piece of paper that a partner would be writing out the original elements of a contract, and then that would be word processed or put into a computer to then spit out contracts to be signed. Today, and what that results in, is they would have been sending us boxes of contracts and various other paper years ago at a higher level than they send them to us today. And what that resulted in is, if you think about the duration of boxes that stay with us, on average, a box stays with us for about 15, 20 years, you get a situation where if 30 years ago, they were sending us one level of volume, and then fast forward 20 years later, they're sending us less, it can be a situation where we are destroying more boxes than we're intaking from that specific vertical. But once we get through that, if you will, second derivative effect, we start to grow again with a vertical. And in fact, that's what we've seen and we talked about before with the legal vertical, where it went through a digital transformation, we're actually starting to see growth. Fundamentally, and if I broaden this out, we have a very solid and favorable view for our volume. We expect, and, our volume in total to be slightly up. That's our algorithm. If you look at the performance of the company over the last several years, we've been achieving that level, even during COVID. The trends on volume have improved over the years as we become more commercially focused on winning new volume. And we win new volume a few different ways. One, by, getting a bigger share of wallet from our existing clients, helping them with, across the world and winning competitively within those client bases. We do still have some markets where we're particularly competitive in winning. We also have some pretty large markets emerging, where the market has not yet outsourced to the level of other markets. Like in the U.S., it's a fairly robust outsourced record management volume. In India, which is a market that is big and very, fast-growing for us, there is a lot of volume that's still held by the clients or by the government. And so in generally every market we operate in, we're continuing to see opportunities to aggregate new volume to offset the level of digitization that may be affecting. But I, I would say, our model is more born off of continuing to, monetize the existing inventory, drive revenue management, and then drive more compelling offerings that we can cross-sell into clients. We're in stoppage time, so maybe just a quick question. High pre-commit percentage for hyperscale on the data center side, how much of that would be directly attributable to AI versus conventional, you know, cloud or SaaS or social networking or whatnot? Sure. Any way to guesstimate that? I'm certainly getting that question a lot lately. I would say, if we look at the 200 or so MW that I mentioned, that we're already 95% or so pre-leased on, that we're under construction, relatively very small amount of that, John, is AI-driven. Because most of that volume we signed over, let's say, the last six to 12 months as we were constructing it to build it out. We do see in our pipeline, as we said on the last call, of some incremental AI, but, I, I will just note that the vast majority of the growth in the pipeline that we've been talking about is from us becoming a much more dedicated vendor and, you know, key partner to major hyperscalers. Whereas you go back two years, three years, four years ago, we weren't nearly on the scene, so to speak. We were still doing relatively small deployments with those, with those key hyperscalers. We delivered on our commitments. We've, we've given them a, I think, a very quality product and on time, on budget, and that has yielded us the benefit of working in a deeper way with them, and I expect that that's gonna be the primary driver of our growth in data center for the next few years. We are out of time. Appreciate your, your comments. Yeah, thanks, John. Appreciate you for having us.