Iron Mountain(IRM) - 2023 Q2 - Quarterly Report

Financial Performance - Adjusted EBITDA for the six months ended June 30, 2023, was $936.5 million, compared to$885.7 million for the same period in 2022[106] - Net income for the six months ended June 30, 2023, was $66.7 million, compared to$243.6 million for the same period in 2022[106] - Adjusted EPS for the six months ended June 30, 2023, was $0.83, compared to$0.85 for the same period in 2022[108] - Net income (loss) for the three months ended June 30, 2023 was $1.143 million, a decrease of 99.4$201.858 million in the same period in 2022[114] - Revenues for the six months ended June 30, 2023 increased by 5.3% to $2.672 billion compared to$2.538 billion in the prior year period[114] - Operating expenses for the six months ended June 30, 2023 increased by 9.8% to $2.219 billion compared to$2.022 billion in the prior year period[114] - Adjusted EBITDA for the six months ended June 30, 2023 increased by 5.7% to $936.466 million compared to$885.700 million in the prior year period[114] - FFO (Normalized) for the six months ended June 30, 2023 was $417.185 million, compared to$412.349 million in the prior year period[111] - Net income for the three months ended June 30, 2023 was $1.143 million, a 99.4$201.858 million in the same period of 2022[130] - Adjusted EBITDA for the six months ended June 30, 2023 increased by $50.766 million or 5.7$20.0 million due to foreign currency exchange rate fluctuations[118] - Service revenue decreased by $13.6 million due to foreign currency exchange rate fluctuations, despite organic growth in the Global RIM business[118] - Global RIM Business segment revenue for the six months ended June 30, 2023 increased by$167.026 million or 7.9% year-over-year[133] - Global Data Center Business segment revenue for the six months ended June 30, 2023 increased by $33.263 million or 16.9$65.584 million or 29.7% year-over-year[141] Costs and Expenses - Project Matterhorn is expected to incur approximately $150.0 million in costs annually from 2023 through 2025, focusing on global operating model transformation and growth acceleration[100] - Restructuring and other transformation costs related to Project Matterhorn were$82.5 million for the six months ended June 30, 2023[106] - Interest expense, net, for the six months ended June 30, 2023, was $281.3 million, compared to$229.5 million for the same period in 2022[106] - Depreciation and amortization expenses for the six months ended June 30, 2023, were $377.5 million, compared to$361.9 million for the same period in 2022[106] - Acquisition and integration costs for the six months ended June 30, 2023 were $3.106 million, compared to$32.539 million in the prior year period[123] - Interest expense, net increased by $51.8 million to$281.3 million in the six months ended June 30, 2023 compared to $229.5 million in the prior year period[127] - Selling, general, and administrative expenses increased by 5.2$606.3 million for the six months ended June 30, 2023, driven by a 21.8% increase in sales, marketing, and account management expenses[121] - Restructuring and other transformation costs for the six months ended June 30, 2023 were $82.5 million, primarily related to Project Matterhorn[124] - Project Matterhorn implementation costs estimated at$150.0 million annually from 2023 through 2025, with total costs of $124.4 million from inception to June 30, 2023[144] Cash Flow and Capital Expenditures - Cash flows from operating activities for the six months ended June 30, 2023 were$446.1 million, compared to $345.9 million in the same period in 2022[145] - Capital expenditures for the six months ended June 30, 2023 totaled$600.8 million, with growth investment capital expenditures at $560.4 million and recurring capital expenditures at$60.6 million[147][150] - Total capital expenditures for 2023 expected to be approximately $1,200.0 million, with$1,055.0 million allocated to growth investment and $145.0 million to recurring capital expenditures[150] - The company expects to meet cash flow requirements through operations, cash on hand, borrowings, and potential real estate monetization[143] Debt and Financing - Iron Mountain completed a private offering of$1,000.0 million in 7% Notes due 2029, with net proceeds of approximately $990.0 million used to repay borrowings under the Revolving Credit Facility[155] - Long-term debt as of June 30, 2023 totals$11,246,812 thousand, with a current portion of $102,582 thousand, resulting in a net long-term debt of$11,144,230 thousand[154] - The Revolving Credit Facility has a carrying amount of $674,168 thousand, with an unamortized deferred financing cost of$5,332 thousand[154] - The 4 7/8% Senior Notes due 2027 have a carrying amount of $993,957 thousand, with an unamortized deferred financing cost of$6,043 thousand[154] - The 5 1/4% Senior Notes due 2030 have a carrying amount of $1,289,345 thousand, with an unamortized deferred financing cost of$10,655 thousand[154] - The Term Loan B transitioned from LIBOR plus 1.75% to a synthetic LIBOR rate plus 1.75% effective July 1, 2023, due to the discontinuance of LIBOR[154] Joint Ventures and Investments - The Web Werks JV has a carrying value of $98,650 thousand and an equity interest of 53.58$59,394 thousand and an equity interest of 20.00% as of June 30, 2023[175] - The Clutter JV was discontinued, with a carrying value of $0 thousand as of June 30, 2023, compared to$54,172 thousand as of December 31, 2022[175] Foreign Currency and Tax Impact - Foreign currency transaction losses (gains), net for the six months ended June 30, 2023 were $29.487 million, compared to a gain of$68.240 million in the prior year period[128] - Effective tax rate for the three months ended June 30, 2023 was 78.8%, significantly higher than 8.2% in the same period of 2022[129] Segment Performance - Global RIM Business segment Adjusted EBITDA Margin decreased by 60 basis points for the six months ended June 30, 2023[136] - Global Data Center Business segment Adjusted EBITDA Margin increased by 250 basis points for the six months ended June 30, 2023[140] - Corporate and Other segment Adjusted EBITDA decreased by $28.077 million for the six months ended June 30, 2023[141] Other Financial Metrics - Gain on disposal/write-down of property, plant, and equipment for the six months ended June 30, 2023 was$14.6 million, including an $18.5 million gain from a sale-leaseback transaction in Singapore[125] - The weighted average interest rate was 5.4% at June 30, 2023, compared to 4.6% at June 30, 2022[127] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023[179]