IRON MOUNTAIN INC
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
IRM$106.52+1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001020569-24-000128
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001020569-24-000210
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 168 previous paragraphs and 179 current paragraphs.
120 unchanged; 47 reworded; 12 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 45 previous and 55 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
OTHER EXPENSE (INCOME), NET
Current report
CREDIT AGREEMENT
Current report
On July 2, 2024, we amended the Credit Agreement, which resulted in (i) an increase in the principal amount of the Term Loan B due 2031 from $1,194.0 million to approximately $1,806.7 million, (ii) a decrease in the interest rate of the Term Loan B due 2031 from SOFR plus 2.25% to SOFR plus 2.00% and (iii) a decrease in the principal amount of our Term Loan B due 2026 from approximately $656.3 million to approximately $53.4 million. We paid original issue discount fees of approximately $4.3 million in connection with this amendment. Quarterly principal payments of approximately $4.5 million on the Term Loan B due 2031 will commence in September 2024. All other material terms remain the same as disclosed in Note 7 to Notes to Consolidated Financial Statements included in our Annual Report.
Current report
VIRGINIA CREDIT AGREEMENTS
Current report
As our Global Data Center business continues to expand, we have entered into credit agreements in order to partially finance the construction of various data centers. During the quarter ended June 30, 2024, we entered into two new agreements. These agreements primarily consist of the following term loan facilities (in thousands):
Current report
(1)All obligations will become due on the specified maturity dates. Each agreement includes two one-year options that allow us to extend the initial maturity date, subject to the conditions specified in the agreements.
Current report
(2)On May 3, 2024, Iron Mountain Data Centers Virginia 6, LLC, a wholly-owned subsidiary of Iron Mountain Data Centers Virginia 6/7 JV, LLC, entered into a credit agreement (the "Virginia 6 Credit Agreement"). The Virginia 6 Credit Agreement consists of a term loan facility (the "Virginia 6 Term Loans") and a letter of credit facility. The Virginia 6 Credit Agreement is secured by the equity interests and assets of Iron Mountain Data Centers Virginia 6, LLC. As of June 30, 2024, the interest rate in effect under the Virginia 6 Credit Agreement was 5.3%.
Current report
(3)On April 12, 2024, Iron Mountain Data Centers Virginia 7, LLC, a wholly-owned subsidiary of Iron Mountain Data Centers Virginia 6/7 JV, LLC, entered into a credit agreement (the "Virginia 7 Credit Agreement"). The Virginia 7 Credit Agreement consists of a term loan facility and a letter of credit facility. The Virginia 7 Credit Agreement is secured by the equity interests and assets of Iron Mountain Data Centers Virginia 7, LLC.
Current report
ACCOUNTS RECEIVABLE SECURITIZATION PROGRAM
Current report
On June 14, 2024, we amended the Accounts Receivable Securitization Program (as defined in Note 7 to Notes to Consolidated Financial Statements included in our Annual Report) to (i) increase the maximum borrowing capacity from $360.0 million to $400.0 million, with an option to increase the borrowing capacity to $450.0 million, and (ii) extend the maturity date from July 1, 2025 to July 1, 2027, at which point all obligations become due. All other material terms of the Accounts Receivable Securitization Program remain the same as disclosed in Note 7 to Notes to Consolidated Financial Statements included in our Annual Report.
Current report
WEB WERKS
Current report
On July 1, 2024, we entered into an agreement with the minority shareholders of Web Werks India Private Limited to acquire the remaining interest in the Web Werks JV (as defined in Note 5 to Notes to Consolidated Financial Statements included in our Annual Report). Pursuant to the agreement, we will acquire the remaining approximately 36.61% interest in the Web Werks JV in two separate transactions. On July 5, 2024, we completed the acquisition of an approximately 8.55% interest in the Web Werks JV (“Tranche I”) for approximately 3,000.0 million Indian rupees (or approximately $35.0 million, based upon the exchange rate between the United States dollar and Indian rupee on the closing date of Tranche I). During the third quarter of 2024, we will recognize a charge of approximately $17.0 million, which will be recorded to Other expense (income), net, representing the difference between the purchase price of Tranche I and the related liability we have recorded on our Condensed Consolidated Balance Sheet at June 30, 2024. Subsequent to the Tranche I payment, our ownership interest in the Web Werks JV is approximately 71.94%. In March 2025, we will be required to make an additional payment of approximately 9,600.0 million Indian rupees (or approximately $115.0 million, based upon the exchange rate between the United States dollar and Indian rupee as of June 30, 2024) (“Tranche II”) to acquire the remaining approximately 28.06% interest in the Web Werks JV. As part of the Tranche II payment in March 2025, we may also make an incremental payment of approximately 1,000.0 million Indian rupees (or approximately $12.0 million, based upon the exchange rate between the United States dollar and Indian rupee as of June 30, 2024) if certain infrastructure goals are achieved before December 31, 2024. Any difference between the fair value of the approximately 28.06% interest and the total consideration paid will be recorded to Other expense (income), net.
Removed paragraphs (1)
Previous report
OTHER (INCOME) EXPENSE, NET
Reworded paragraphs (47)
Previous wording
The following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2024 should be read in conjunction with our Condensed Consolidated Financial Statements and Notes thereto for the three months ended March 31, 2024, included herein, and our Consolidated Financial Statements and Notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission ("SEC") on February 22, 2024 (our "Annual Report").
Current wording
The following discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2024 should be read in conjunction with our Condensed Consolidated Financial Statements and Notes thereto for the three and six months ended June 30, 2024, included herein, and our Consolidated Financial Statements and Notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission ("SEC") on February 22, 2024 (our "Annual Report").
Previous wording
The following discussions set forth, for the periods indicated, management's discussion and analysis of financial condition and results of operations. Significant trends and changes are discussed for the three months ended March 31, 2024 within each section.
Current wording
The following discussions set forth, for the periods indicated, management's discussion and analysis of financial condition and results of operations. Significant trends and changes are discussed for the three and six months ended June 30, 2024 within each section. Trends and changes that are consistent for both the three and six month periods are not repeated and are discussed on a year to date basis only.
Previous wording
Cost of sales (excluding depreciation and amortization) and Selling, general and administrative expenses for the three months ended March 31, 2024 consists of the following:
Current wording
Cost of sales (excluding depreciation and amortization) and Selling, general and administrative expenses for the six months ended June 30, 2024 consists of the following:
Previous wording
(1)The differences between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the three months ended March 31, 2024 and 2023 are primarily due to (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Our structural tax rate for purposes of the calculation of Adjusted EPS for the three months ended March 31, 2024 and 2023 was 13.9% and 15.2%, respectively.
Current wording
(1)The differences between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the three and six months ended June 30, 2024 and 2023 are primarily due to (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Our structural tax rate for purposes of the calculation of Adjusted EPS for the three and six months ended June 30, 2024 and 2023 was 14.5% and 14.0%, respectively. The Tax impact of reconciling items and discrete tax items is calculated using the current quarter's estimate of the annual structural tax rate. This may result in the current period adjustment plus prior period reported quarterly adjustments not summing to the full year adjustment.
Previous wording
(1)Includes foreign currency transaction (gains) losses, net and other, net. See Note 2.k. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding the components of Other (income) expense, net.
Current wording
(1)Includes foreign currency transaction (gains) losses, net and other, net. See Note 2.k. to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding the components of Other expense (income), net.
Previous wording
(2)Represents the tax impact of (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Discrete tax items resulted in a provision (benefit) for income taxes of $1.1 million and $(0.4) million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
(2)Represents the tax impact of (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Discrete tax items resulted in a (benefit) provision for income taxes of ($1.6 million) and ($0.5 million) for the three and six months ended June 30, 2024, respectively, and $(5.0) million and $(5.5) million for the three and six months ended June 30, 2023, respectively.
Previous wording
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2024 TO THE THREE MONTHS ENDED MARCH 31, 2023 (IN THOUSANDS):
Current wording
COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 (IN THOUSANDS):
Previous wording
For the three months ended March 31, 2024, the increase in reported revenue was driven by reported storage rental revenue growth and reported service revenue growth.
Current wording
For the six months ended June 30, 2024, the increase in reported revenue was driven by reported storage rental revenue growth and reported service revenue growth.
Previous wording
Primary factors influencing the change in reported storage rental revenue and reported service revenue for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 include the following:
Current wording
Primary factors influencing the change in reported storage rental revenue and reported service revenue for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 include the following:
Previous wording
Primary factors influencing the change in reported Cost of sales for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 include the following:
Current wording
Primary factors influencing the change in reported Cost of sales for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 include the following:
Previous wording
Primary factors influencing the change in reported Selling, general and administrative expenses for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 include the following:
Current wording
Primary factors influencing the change in reported Selling, general and administrative expenses for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 include the following:
Previous wording
•an increase in general, administrative and other expenses, primarily driven by recent acquisitions, professional fees, IT costs and higher bonus compensation accruals; and
Current wording
•an increase in general, administrative and other expenses, primarily driven by higher bonus compensation accruals, recent acquisitions, professional fees and IT costs; and
Previous wording
Depreciation expense increased by $23.6 million, or 19.6%, for the three months ended March 31, 2024 compared to the prior year period. See Note 2.i. to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding the useful lives over which our property, plant and equipment is depreciated.
Current wording
Depreciation expense increased by $48.2 million, or 18.9%, for the six months ended June 30, 2024 compared to the prior year period. See Note 2.i. to Notes to Consolidated Financial Statements included in our Annual Report for additional information regarding the useful lives over which our property, plant and equipment is depreciated.
Previous wording
Amortization expense increased by $3.9 million, or 6.3%, for the three months ended March 31, 2024 compared to the prior year period.
Current wording
Amortization expense increased by $8.4 million, or 6.8%, for the six months ended June 30, 2024 compared to the prior year period.
Previous wording
Acquisition and Integration Costs for the three months ended March 31, 2024 and 2023 were approximately $7.8 million and $1.6 million, respectively.
Current wording
Acquisition and Integration Costs for the six months ended June 30, 2024 and 2023 were approximately $17.3 million and $3.1 million, respectively.
Previous wording
Restructuring and other transformation costs for the three months ended March 31, 2024 and 2023 were $40.8 million and $36.9 million, respectively, and related to operating expenses associated with the implementation of Project Matterhorn.
Current wording
Restructuring and other transformation costs for the six months ended June 30, 2024 and 2023 were $87.3 million and $82.5 million, respectively, and related to operating expenses associated with the implementation of Project Matterhorn.
Previous wording
Loss (gain) on disposal/write-down of property, plant and equipment, net for the three months ended March 31, 2024 and 2023 was approximately $0.4 million and $(13.1) million, respectively.
Current wording
Loss (gain) on disposal/write-down of property, plant and equipment, net for the six months ended June 30, 2024 and 2023 was approximately $3.2 million and $(14.6) million, respectively.
Previous wording
Interest expense, net increased by $27.4 million to $164.5 million in the three months ended March 31, 2024 from $137.2 million in the prior year period. The increase is primarily due to higher average debt outstanding during the three months ended March 31, 2024 compared to the prior year period as well as an increase in our weighted average interest rate. Our weighted average interest rate, inclusive of the fees associated with our outstanding letters of credit, was 5.7% and 5.3% at March 31, 2024 and 2023, respectively. See Note 6 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our indebtedness.
Current wording
Interest expense, net increased by $59.7 million to $341.0 million in the six months ended June 30, 2024 from $281.3 million in the prior year period. The increase is primarily due to higher average debt outstanding during the six months ended June 30, 2024 compared to the prior year period as well as an increase in our weighted average interest rate. Our weighted average interest rate, inclusive of the fees associated with our outstanding letters of credit, was 5.7% and 5.4% at June 30, 2024 and 2023, respectively. See Note 6 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our indebtedness.
Previous wording
Other (income) expense, net for the three months ended March 31, 2024 and 2023 consists of the following (in thousands):
Current wording
Other expense (income), net for the three and six months ended June 30, 2024 and 2023 consists of the following (in thousands):
Previous wording
We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our effective tax rates for the three months ended March 31, 2024 and 2023 are as follows:
Current wording
We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our effective tax rates for the three and six months ended June 30, 2024 and 2023 are as follows:
Previous wording
The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended March 31, 2024 were the benefits derived from the dividends paid deduction and the differences in the tax rates to which our foreign earnings are subject.
Current wording
The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended June 30, 2024 were the lack of tax benefits recognized for the year to date ordinary losses of certain entities, the benefits derived from the dividends paid deduction and the differences in the tax rates to which our foreign earnings are subject.
Previous wording
THREE MONTHS ENDED YEAR OVER YEAR SEGMENT ANALYSIS: GLOBAL RIM BUSINESS (IN MILLIONS)
Current wording
SIX MONTHS ENDED YEAR OVER YEAR SEGMENT ANALYSIS: GLOBAL RIM BUSINESS (IN MILLIONS)
Previous wording
Primary factors influencing the change in revenue and Adjusted EBITDA Margin in our Global RIM Business segment for the three months ended March 31, 2024 compared to the prior year period include the following:
Current wording
Primary factors influencing the change in revenue and Adjusted EBITDA Margin in our Global RIM Business segment for the six months ended June 30, 2024 compared to the prior year period include the following:
Previous wording
•a 110 basis point increase in Adjusted EBITDA Margin primarily driven by ongoing cost containment measures and revenue management.
Current wording
•a 100 basis point increase in Adjusted EBITDA Margin primarily driven by ongoing cost containment measures and revenue management.
Previous wording
THREE MONTHS ENDED YEAR OVER YEAR SEGMENT ANALYSIS: GLOBAL DATA CENTER BUSINESS (IN MILLIONS)
Current wording
SIX MONTHS ENDED YEAR OVER YEAR SEGMENT ANALYSIS: GLOBAL DATA CENTER BUSINESS (IN MILLIONS)
Previous wording
Primary factors influencing the change in revenue and Adjusted EBITDA Margin in our Global Data Center Business segment for the three months ended March 31, 2024 compared to the prior year period include the following:
Current wording
Primary factors influencing the change in revenue and Adjusted EBITDA Margin in our Global Data Center Business segment for the six months ended June 30, 2024 compared to the prior year period include the following:
Previous wording
•organic storage rental revenue growth from leases that commenced during the first three months of 2024 and in prior periods, improved pricing and higher pass-through power costs, partially offset by churn of approximately 90 basis points;
Current wording
•organic storage rental revenue growth from leases that commenced during the first six months of 2024 and in prior periods, improved pricing and higher pass-through power costs, partially offset by churn of approximately 210 basis points;
Previous wording
Primary factors influencing the change in revenue and Adjusted EBITDA in Corporate and Other (as defined in Note 9 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report) for the three months ended March 31, 2024 compared to the prior year period include the following:
Current wording
Primary factors influencing the change in revenue and Adjusted EBITDA in Corporate and Other (as defined in Note 9 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report) for the six months ended June 30, 2024 compared to the prior year period include the following:
Previous wording
•an increase in service revenue of $32.7 million due to our recent acquisition of Regency Technologies;
Current wording
•an increase in service revenue of $67.4 million due to our recent acquisition of Regency Technologies;
Previous wording
As disclosed above, in September 2022, we announced Project Matterhorn. We estimate that the implementation of Project Matterhorn will result in costs of approximately $150.0 million per year from 2023 through 2025. During the three months ended March 31, 2024 and 2023, and from the inception of Project Matterhorn through March 31, 2024, we incurred approximately $40.8 million, $36.9 million, and $257.9 million, respectively, of Restructuring and other transformation costs related to Project Matterhorn, which are comprised of (1) restructuring costs, which include (i) site consolidation and other related exit costs, (ii) employee severance costs and (iii) certain professional fees associated with these activities and (2) other transformation costs, which include professional fees such as project management costs and costs for third party consultants who are assisting in the enablement of our growth initiatives.
Current wording
As disclosed above, in September 2022, we announced Project Matterhorn. We estimate that the implementation of Project Matterhorn will result in costs of approximately $150.0 million per year from 2023 through 2025. Total costs related to Project Matterhorn for the six months ended June 30, 2024 and from the inception of Project Matterhorn through June 30, 2024, were approximately $87.3 million and $304.4 million, respectively, which are comprised of (1) restructuring costs, which include (i) site consolidation and other related exit costs, (ii) employee severance costs and (iii) certain professional fees associated with these activities and (2) other transformation costs, which include professional fees such as project management costs and costs for third party consultants who are assisting in the enablement of our growth initiatives.
Previous wording
The following is a summary of our cash balances and cash flows (in thousands) as of and for the three months ended March 31,
Current wording
The following is a summary of our cash balances and cash flows (in thousands) as of and for the six months ended June 30,
Previous wording
For the three months ended March 31, 2024, net cash flows provided by operating activities increased by $1.2 million compared to the prior year period, primarily due to an increase in net income (excluding non-cash charges) of $12.7 million, partially offset by a decrease in cash from working capital of $11.5 million, driven by the timing of accrued expenses.
Current wording
For the six months ended June 30, 2024, net cash flows provided by operating activities increased by $66.1 million compared to the prior year period, primarily due to an increase in net income (excluding non-cash charges) of $34.0 million and an increase in cash from working capital of $32.1 million, driven by the timing of accrued expenses.
Previous wording
Our significant investing activity during the three months ended March 31, 2024 included:
Current wording
Our significant investing activity during the six months ended June 30, 2024 included:
Previous wording
•Cash paid for capital expenditures of $381.1 million. Additional details of our capital spending are included in the "Capital Expenditures" section below.
Current wording
•Cash paid for capital expenditures of $777.9 million. Additional details of our capital spending are included in the "Capital Expenditures" section below.
Previous wording
•Cash paid for acquisitions, net of cash acquired, of $122.5 million, primarily funded by borrowings under the Revolving Credit Facility (as defined below).
Current wording
•Cash paid for acquisitions, net of cash acquired, of $123.3 million, primarily funded by borrowings under the Revolving Credit Facility (as defined below).
Previous wording
Our significant financing activities during the three months ended March 31, 2024 included:
Current wording
Our significant financing activities during the six months ended June 30, 2024 included:
Previous wording
•Net proceeds of approximately $749.1 million primarily associated with borrowings under the Revolving Credit Facility.
Current wording
•Net proceeds of approximately $946.9 million primarily associated with borrowings under the Revolving Credit Facility.
Previous wording
•Payment of dividends in the amount of $198.0 million on our common stock.
Current wording
•Payment of dividends in the amount of $388.7 million on our common stock.
Previous wording
The following table presents our capital spend for the three months ended March 31, 2024 and 2023, organized by the type of the spending as described in our Annual Report (in thousands):
Current wording
The following table presents our capital spend for the six months ended June 30, 2024 and 2023, organized by the type of the spending as described in our Annual Report (in thousands):
Previous wording
See Note 8 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for a listing of dividends that we declared during the first three months of 2024 and fiscal year 2023.
Current wording
See Note 8 to Notes to Condensed Consolidated Financial Statements included in this Quarterly Report for a listing of dividends that we declared during the first six months of 2024 and fiscal year 2023.
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