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Iron Mountain(IRM) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION ITEM 1. Unaudited Condensed Consolidated Financial Statements Unaudited condensed consolidated financial statements for Q2 2025 reflect revenue growth but a net loss, driven by increased operating expenses and foreign currency losses, with accompanying notes detailing key accounting policies and segment performance Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,897,248 | $1,691,222 | | Total Assets | $20,176,789 | $18,717,115 | | Total Current Liabilities | $2,998,772 | $3,087,275 | | Long-term Debt, net | $14,818,175 | $13,003,977 | | Total Liabilities | $20,747,654 (Calculated) | $19,043,618 (Calculated) | | Total (Deficit) Equity | $(568,867) | $(304,674) | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,711,948 | $1,534,409 | $3,304,477 | $3,011,272 | | Operating Income | $259,896 | $230,294 | $514,190 | $475,917 | | Net (Loss) Income Attributable to Iron Mountain | $(44,921) | $35,783 | $(28,969) | $109,844 | | Diluted (Loss) Income Per Share | $(0.15) | $0.12 | $(0.10) | $0.37 | Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Cash Flows from Operating Activities | $572,425 | $512,215 | | Cash Flows from Investing Activities | $(1,350,810) | $(959,748) | | Cash Flows from Financing Activities | $882,868 | $369,291 | | Increase (Decrease) in Cash | $62,276 | $(78,533) | | Cash and Cash Equivalents, End of Period | $217,992 | $144,256 | Notes to Condensed Consolidated Financial Statements - Goodwill increased from $5.08 billion at year-end 2024 to $5.23 billion as of June 30, 2025, primarily due to currency effects of $129.8 million34 - Foreign currency transaction losses were a significant component of Other Expense (Income), Net, totaling $87.2 million for Q2 2025 and $116.8 million for the six months ended June 30, 2025, primarily due to the impact of changes in the British pound sterling and Euro exchange rates on intercompany balances49 Segment Revenue (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Global RIM Business | $2,579,740 | $2,460,734 | | Global Data Center Business | $362,598 | $296,639 | | Corporate and Other | $362,139 | $253,899 | | Total Consolidated | $3,304,477 | $3,011,272 | - Under its "Project Matterhorn" transformation program, the company incurred $105.1 million in restructuring and other transformation costs in the first six months of 2025, with total costs reaching approximately $483.6 million since inception in September 2022, and the program is expected to be completed by the end of 20258384 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses a 9.7% revenue increase for H1 2025, noting a net loss due to foreign currency, but strong Adjusted EBITDA growth of 13.6% and margin expansion, alongside segment performance, liquidity, and debt modifications Results of Operations Revenue Growth Analysis (Six Months Ended June 30, 2025 vs 2024) | Revenue Type | Actual Growth | Constant Currency Growth | Organic Growth | | :--- | :--- | :--- | :--- | | Storage Rental | 8.5% | 9.0% | 9.0% | | Service | 11.6% | 12.0% | 8.4% | | Total Revenues | 9.7% | 10.2% | 8.8% | - For the six months ended June 30, 2025, the company reported a Net Loss of $27.1 million, a significant decrease from a Net Income of $111.6 million in the prior-year period, largely driven by a $117.1 million negative swing in 'Other Expense (Income), Net', primarily from foreign currency losses108121 - Despite the net loss, Adjusted EBITDA for the first six months of 2025 increased by 13.6% to $1.21 billion, and the Adjusted EBITDA Margin improved by 130 basis points to 36.6%, driven by favorable overhead management126127 Segment Analysis - Global RIM Business: For the first six months of 2025, segment revenue grew 4.8% to $2.58 billion, driven by revenue management, and Segment Adjusted EBITDA Margin increased by 60 basis points to 44.3%129132 - Global Data Center Business: For the first six months of 2025, segment revenue grew 22.2% to $362.6 million, driven by new lease commencements and improved pricing, with Segment Adjusted EBITDA Margin expanding significantly by 860 basis points to 51.6%133136 - Corporate and Other: For the first six months of 2025, revenue grew 42.6% to $362.1 million, primarily driven by a $43.5 million contribution from recent acquisitions in the ALM business and organic growth from increased volume137 Liquidity and Capital Resources - Cash flow from operating activities increased by $60.2 million to $572.4 million for the first six months of 2025 compared to the prior year, mainly due to favorable working capital changes141142 Capital Expenditures (Six Months Ended June 30, in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Growth Investment Capital | $1,070,567 | $699,046 | | Recurring Capital | $62,877 | $65,713 | | Total Capital Spend (accrual) | $1,133,444 | $764,759 | - The company expects total capital expenditures of approximately $1.95 billion for the full year 2025, with $1.8 billion allocated for growth investments145 - The company amended its Credit Agreement to increase its Term Loan A principal to $500 million and amended its AUD Term Loan to increase its principal to 400 million Australian dollars and extend its maturity to 2030151152 ITEM 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures are effective164 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected or are reasonably likely to materially affect these controls166 PART II—OTHER INFORMATION ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds Iron Mountain did not sell any unregistered equity securities or repurchase common stock during the three months ended June 30, 2025 - No unregistered equity securities were sold during Q2 2025169 - No shares of common stock were repurchased during Q2 2025169 ITEM 5. Other Information No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement in Q2 2025170 ITEM 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, amendments to the stock incentive plan and credit agreement, and CEO/CFO certifications - Key exhibits filed include the Fourth Amendment to the 2014 Stock and Cash Incentive Plan and Amendment No. 6 to the Credit Agreement, dated June 18, 2025172