IRON MOUNTAIN INC
For the period ended Sep 30, 2024. Filed Nov 6, 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.
Sep 30, 2024 · Filed Nov 6, 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 2024-06-30; filed 2024-08-01.
0001020569-24-000210
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001020569-24-000255
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 179 previous paragraphs and 194 current paragraphs.
124 unchanged; 53 reworded; 16 added; 2 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 55 previous and 56 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 (16)
Current report
•an increase in transportation expenses in our ALM business primarily driven by our recent acquisition of Regency Technologies; and
Current report
(1)The losses for the three and nine months ended September 30, 2024 primarily consist of the impact of changes in the exchange rate of the British pound sterling and the Euro against the United States dollar on our intercompany balances with and between certain of our subsidiaries.
Current report
(2)Other, net for the three and nine months ended September 30, 2024 primarily consists of approximately $29.2 million in charges associated with the agreement to purchase the remaining interest in the Web Werks JV (as defined and discussed below) as well as losses on our equity method investments and the change in value of our deferred purchase obligations.
Current report
•Equity contributions from noncontrolling interests of $178.6 million.
Current report
•Payment of deferred purchase obligation of $158.7 million.
Current report
NONCONTROLLING INTERESTS
Current report
Our data center operations include two joint ventures which are consolidated within our Global Data Center Business segment as we have concluded we have control over the joint ventures.
Current report
During the quarter ended September 30, 2024, a put option available to our partner in our Iron Mountain Data Centers Virginia 4/5 JV, LP joint venture expired, triggering a change in the presentation of the related noncontrolling interest. The noncontrolling interest of approximately $53.4 million was previously presented as Redeemable noncontrolling interests in our Consolidated Balance Sheets and is now presented as Noncontrolling interests within stockholders’ equity in our Condensed Consolidated Balance Sheet at September 30, 2024.
Current report
During the quarter ended September 30, 2024, we entered into an agreement with a partner to form our Iron Mountain Data Centers Virginia 6/7 JV, LLC joint venture, which resulted in Noncontrolling interests of approximately $103.1 million in our Condensed Consolidated Balance Sheet at September 30, 2024.
Current report
As a result of these amendments, we recorded a charge to Other expense (income), net related to the extinguishment of this debt.
Current report
UK BILATERAL REVOLVING CREDIT FACILITY
Current report
Iron Mountain (UK) PLC and Iron Mountain (UK) Data Centre Limited (collectively, the "UK Borrowers") have a British pounds sterling Revolving Credit Facility (the "UK Bilateral Revolving Credit Facility") with Barclays Bank PLC. The maximum amount permitted to be borrowed under the UK Bilateral Revolving Credit Facility is 140,000 British pounds sterling, which was fully drawn as of September 30, 2024. We have the option to request additional commitments of up to 125,000 British pounds sterling, subject to conditions specified in the UK Bilateral Revolving Credit Facility.
Current report
On September 10, 2024, the UK Borrowers amended the UK Bilateral Revolving Credit Facility to extend the maturity date from September 24, 2025 to September 24, 2026. All other material terms of the UK Bilateral Revolving Credit Facility remain consistent with what was disclosed in Note 7 to Notes to Consolidated Financial Statements included in our Annual Report.
Current report
WISETEK
Current report
On September 20, 2024, in order to further expand our ALM business, we acquired 100% of Wisetek Solutions Limited ("Wisetek"), an IT asset disposition services provider offering services across the globe with operations facilities in the United States, Ireland, the United Kingdom and Thailand, for (i) cash consideration of approximately 46.6 million Euros (or approximately $51.9 million, based upon the exchange rate between the Euro and the United States dollar on the closing date of this acquisition), subject to adjustments, and (ii) up to 4.2 million Euros (or approximately $4.7 million, based upon the exchange rate between the Euro and the United States dollar as of September 30, 2024) of additional consideration, payable based on the achievement of certain gross profit targets through September 2026.
Current report
PRIOR YEAR ACQUISITION UPDATE
Removed paragraphs (2)
Previous report
•Payment on deferred purchase obligations of $158.7 million.
Reworded paragraphs (53)
Previous 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").
Current wording
The following discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2024 should be read in conjunction with our Condensed Consolidated Financial Statements and Notes thereto for the three and nine months ended September 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 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.
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 nine months ended September 30, 2024 within each section. Trends and changes that are consistent for both the three and nine month periods are not repeated and are discussed on a year to date basis only.
Previous wording
•Our organic service revenue growth is primarily due to increases in our service activity. We expect organic service revenue growth in 2024 to benefit from our new and existing digital offerings and asset lifecycle management ("ALM") business, as well as our traditional services.
Current wording
•Our organic service revenue growth is primarily due to increases in our service activity. We expect organic service revenue growth for the remainder of 2024 and into 2025 to benefit from our new and existing digital offerings and asset lifecycle management ("ALM") business, as well as our traditional services.
Previous wording
•We expect continued total revenue and Adjusted EBITDA growth in 2024 as a result of our focus on new product and service offerings, innovation, customer solutions and market expansion in line with our Project Matterhorn objectives.
Current wording
•We expect continued total revenue and Adjusted EBITDA growth for the remainder of 2024 and into 2025 as a result of our focus on new product and service offerings, innovation, customer solutions and market expansion in line with our Project Matterhorn objectives.
Previous 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:
Current wording
Cost of sales (excluding depreciation and amortization) and Selling, general and administrative expenses for the nine months ended September 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 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.
Current wording
(1)The differences between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the three and nine months ended September 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 nine months ended September 30, 2024 and 2023 was 15.1% and 13.3%, 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
(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.
Current wording
(2)Represents the tax impact of (i) the reconciling items above, which impact our reported net (loss) income 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 $0.4 million and ($0.1 million) for the three and nine months ended September 30, 2024, respectively, and $(7.2) million and $(12.7) million for the three and nine months ended September 30, 2023, respectively.
Previous wording
COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 (IN THOUSANDS):
Current wording
COMPARISON OF THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 (IN THOUSANDS):
Previous 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.
Current wording
For the nine months ended September 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 six months ended June 30, 2024 compared to the six months ended June 30, 2023 include the following:
Current wording
Primary factors influencing the change in reported storage rental revenue and reported service revenue for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 include the following:
Previous 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:
Current wording
Primary factors influencing the change in reported Cost of sales for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 include the following:
Previous wording
•an increase in facilities expenses driven by increases in rent expense, utilities and building maintenance costs; and
Current wording
•an increase in facilities expenses driven by increases in rent expense, utilities, real estate taxes and building maintenance costs;
Previous wording
•an increase in product cost of sales in our ALM business as a result of component price increases and our recent acquisition of Regency Technologies.
Current wording
•an increase in product cost of sales in our ALM business as a result of higher product volumes and our recent acquisition of Regency Technologies.
Previous 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:
Current wording
Primary factors influencing the change in reported Selling, general and administrative expenses for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 include the following:
Previous 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.
Current wording
Depreciation expense increased by $79.6 million, or 20.5%, for the nine months ended September 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 $8.4 million, or 6.8%, for the six months ended June 30, 2024 compared to the prior year period.
Current wording
Amortization expense increased by $10.5 million, or 5.6%, for the nine months ended September 30, 2024 compared to the prior year period.
Previous 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.
Current wording
Acquisition and Integration Costs for the nine months ended September 30, 2024 and 2023 were approximately $28.6 million and $13.0 million, respectively.
Previous 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.
Current wording
Restructuring and other transformation costs for the nine months ended September 30, 2024 and 2023 were $124.6 million and $121.4 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 six months ended June 30, 2024 and 2023 was approximately $3.2 million and $(14.6) million, respectively.
Current wording
Loss (gain) on disposal/write-down of property, plant and equipment, net for the nine months ended September 30, 2024 and 2023 was approximately $8.3 million and $(19.0) million, respectively.
Previous 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.
Current wording
Interest expense, net increased by $93.0 million to $527.1 million in the nine months ended September 30, 2024 from $434.1 million in the prior year period. The increase is primarily due to higher average debt outstanding during the nine months ended September 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 5.5% at September 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 expense (income), net for the three and six months ended June 30, 2024 and 2023 consists of the following (in thousands):
Current wording
Other expense (income), net for the three and nine months ended September 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 and six months ended June 30, 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 nine months ended September 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 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.
Current wording
The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three and nine months ended September 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. In addition, we recorded gains and losses in Other expense (income), net during the period, for which there was no tax impact.
Previous wording
SIX MONTHS ENDED YEAR OVER YEAR SEGMENT ANALYSIS: GLOBAL RIM BUSINESS (IN MILLIONS)
Current wording
NINE 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 six months ended June 30, 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 nine months ended September 30, 2024 compared to the prior year period include the following:
Previous wording
•a 100 basis point increase in Adjusted EBITDA Margin primarily driven by ongoing cost containment measures and revenue management.
Current wording
•a 120 basis point increase in Adjusted EBITDA Margin primarily driven by ongoing cost containment measures and revenue management.
Previous wording
SIX MONTHS ENDED YEAR OVER YEAR SEGMENT ANALYSIS: GLOBAL DATA CENTER BUSINESS (IN MILLIONS)
Current wording
NINE 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 six months ended June 30, 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 nine months ended September 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 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;
Current wording
•organic storage rental revenue growth from leases that commenced during the first nine months of 2024 and in prior periods, improved pricing and increased usage of pass-through power, partially offset by churn of approximately 260 basis points;
Previous wording
•a 230 basis point decrease in Adjusted EBITDA Margin reflecting higher pass-through power costs and higher overhead costs.
Current wording
•a 90 basis point decrease in Adjusted EBITDA Margin reflecting increased usage of pass-through power and higher overhead costs.
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 six months ended June 30, 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 nine months ended September 30, 2024 compared to the prior year period include the following:
Previous wording
•an increase in service revenue of $67.4 million due to our recent acquisition of Regency Technologies;
Current wording
•an increase in service revenue of $103.0 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. 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.
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 nine months ended September 30, 2024 and from the inception of Project Matterhorn through September 30, 2024, were approximately $124.6 million and $341.7 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 six months ended June 30,
Current wording
The following is a summary of our cash balances and cash flows (in thousands) as of and for the nine months ended September 30,
Previous 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.
Current wording
For the nine months ended September 30, 2024, net cash flows provided by operating activities increased by $98.8 million compared to the prior year period, primarily due to an increase in net income (excluding non-cash charges) of $72.6 million and an increase in cash from working capital of $26.2 million, primarily driven by the timing of accounts payable.
Previous wording
Our significant investing activity during the six months ended June 30, 2024 included:
Current wording
Our significant investing activity during the nine months ended September 30, 2024 included:
Previous wording
•Cash paid for capital expenditures of $777.9 million. Additional details of our capital spending are included in the "Capital Expenditures" section below.
Current wording
•Cash paid for capital expenditures of $1,174.0 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 $123.3 million, primarily funded by borrowings under the Revolving Credit Facility (as defined below).
Current wording
•Cash paid for acquisitions, net of cash acquired, of $174.4 million, primarily funded by borrowings under the Revolving Credit Facility (as defined below).
Previous wording
Our significant financing activities during the six months ended June 30, 2024 included:
Current wording
Our significant financing activities during the nine months ended September 30, 2024 included:
Previous wording
•Net proceeds of approximately $946.9 million primarily associated with borrowings under the Revolving Credit Facility.
Current wording
•Net proceeds of approximately $1,273.3 million primarily associated with borrowings under the Revolving Credit Facility.
Showing the first 40 of 53 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Quarterly principal payments of approximately $4.7 million on the Term Loan B due 2031 commenced 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.