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Barclays reit conf (12 11 13)
1. Barclays Real Estate Conference
December 11, 2013
ยฉ 2012 Iron Mountain Incorporated. All rights reserved. Iron Mountain and the design of the mountain are registered trademarks of Iron Mountain Incorporated.
All other trademarks and registered trademarks are the property of their respective owners.
2. Key Messages
โข Global market leader with sustainable business drivers
โข Strategy extends durability of high-return business
โข Business generates significant free cash flow to support
long-term dividend growth
โข Successful REIT conversion enhances strategy
2
3. Global Market Leader
๏ง Diversified global business
โข
โข
โข
โข
$3B revenues
>155,000 customers
Serving 94% of Fortune 1000
65MM ft2 of real estate in >1,000 facilities
๏ง Compelling customer value proposition
โข
โข
โข
Reduce costs and risks of storing and
protecting information assets
Broadest range of footprint and services
Most trusted brand
๏ง Majority of revenue from storage rental
and related services
36
5
Countries
โข
โข
โข
Records management
Data protection
Shredding
73%
18%
9%
Continents
3
4. Durable, Expanding Storage Rental Stream
24 Consecutive Years of
Storage Rental Growth
Expanding Global Platform
$1,733
$2,000
Intโl
CAGR
8.5%
$1,600
$1,200
$800
NA
CAGR
2.2%
$400
2012
$0
2009
2010
2011
NA
Storage Rental ($MM)
2012
2013F
Intl
C$ Storage Rental ($MM)
4
5. Storage Rental is Sticky and Durable
โข Storage rental is key economic driver
โข Large & growing
- 58% of revenues ($1.7B)
- Trending at ~4% - 5% constant dollar growth
โข GDP correlated & inflation hedged
โข Diversified customer base โ No customer >2% of total revenues
โข Low customer turnover (~2% annually)
- Strong value proposition with related services
- High switching costs
โข Long average life of a box in storage (~15 years)
โข Highly measurable with modular capacity additions
5
6. Predictable Storage Revenue has Weathered All Storms
IRM Storage Rental Internal Growth vs. REIT Same Store NOI
Growth
(Historical and Estimated)
8%
6%
4%
2%
0%
2007
2008
2009
2010
2011
2012
2013
-2%
-4%
-6%
Industrial average
Self-storage average
IRM storage rental internal growth
Big 5 composite*
Source: Benchmark data provided by Green Street Advisors
*Composite of apartment, industrial, mall, office and strip center REITs
6
7. Large, Diversified Global Market Opportunity
Remains
$23B Global Market
North America Revenue Mix by Vertical
Market Segment
Records
Management
Shredding
Financial Services
Healthcare
Un-Vended
Government
DP
Legal & Business Services
Other Private Sector
Source: Company estimates
๏ง Substantial un-vended opportunity remains in mature markets
๏ง Emerging markets beginning first-time outsourcing wave
๏ง Diversified end-user market segments
7
8. Strategy Designed to Provide Platform for LongTerm Revenue and Profit Growth
โข Sustaining the durability of our high-return businesses in
mature markets
โข Building leadership positions in high-quality emerging
markets through acquisitions and strong internal growth
โข Identifying, incubating and scaling new business
opportunities
8
9. Acquisitions Are Key Driver of Business Strategy
Details by Segment
Mature
Number of Acquisitions
Key Markets
Purchase Price
Number of Facilities (Square Feet)
Storage Rental Revenue (current run-rate)
Impact on Financial Performance
Total Revenues
Adjusted OIBDA
Capex
Emerging
3
3
USA, France
Colombia,
Brazil, Peru
$220MM
$100MM
47 (2.2MM)
22 (0.7MM)
~$37MM
~$27MM
2013
2014
$30MM โ $35MM
$105MM โ $115MM
$3MM โ $5MM
$20MM โ $25MM
~$4MM
~$37MM
9
10. Emerging Markets Drive Enhanced Performance
โข Emerging markets represent
significant opportunity for growth
- Include Lat Am, Asia Pac,
Eastern and Central Europe and
BRIC
- Annual revenues of ~$300MM
C$ Storage Rental Growth Rates
YTD/2013 vs. YTD/2012
20%
3%
โข Strong double-digit storage rental
growth augments annuity
โข Acquisitions are a key component of
strategy to accelerate growth into
leadership positions
- 2012: Brazil, Turkey,
Switzerland, Hungary
- 2013: Brazil, Colombia (new
market), Peru
2%
Developed
Emerging
Enterprise
Emerging
10%
% of Global
Revenues
Developed
90%
10
11. Leveraging Core Competencies and Customers to
Expand Existing Rental Business
IRON MOUNTAIN DATA CENTERSTM
โข A growth opportunity that fits well with our
business
-
โข 200,000 ft2 of potential development over next
10 years
Recurring revenues tied to long-term leases
REIT-compatible
โข $10B North American market growing at
~10% per year
โข Offering a portfolio of services for
organizations seeking a secure, compliant
data center environment
โข Exploring construction of additional locations
in key markets on company-owned land
โข Majority of future capital investment will be
success based
11
12. Solid Storage Rental Growth Outlook
2014 - 2016 Storage Rental Build
$MM
(Average Annual Contribution to Growth)
2014 โ 2016 Outlook
$5MM โ
$20MM
$120
2.0%-5.0%
C$
Growth
Rates
2014-2016
Revenue
Growth
1% - 3%
1% - 3%+
Storage
Rental
3% - 4%
2% - 5%
Services
5.0%-9.0%
$90
2011 2013
(2)% - 1%
(1)% - 2%
$60
1.0%-3.0%
$30
$0
NA (Base)
Int'l (Base)
New Business
Low Range
Total
High Range
12
13. Investment Opportunities Yield Attractive ROIC
Average ROIC for Key Value-Driving Activities
Investments
Increase Network
Utilization
Expand Storage Network
New Sales &
Penetration
Acquisitions
Sales,
Marketing &
Account
Management
Racking
Building
Acquisition
Capital
Incremental
Pre-Tax
ROIC
30%+
10% - 20%
13
14. Strong Cash Flow Supports Capital Allocation Strategy
2014 Potential Cash Available for Investment
Adjusted OIBDA
$MM
$930 - $960
Add:
Other Non-Cash Items & Adjustments
Less:
Interest
Cash Taxes
Maintenance Capex
$30 - $40
~$260
~$130
~$85
$485 - $525
Acquisition Integration & RE Consolidation
Core Growth & Other Capex / CAC
FCF Before Discretionary Investments
$50
~$135
$300 - $340
Real Estate(1)
~$50MM
(1)
Including data centers
โข Committed to returning
excess FCF to shareholders
- $1.8B of cash returned to
shareholders since 2009
โข Current dividend payout is
nearly 60% of normalized
FCF
โข Growth capex generates
high, predictable returns
โข Robust pipeline of attractive
investment opportunities โ
tuck-in acquisitions & real
estate
Shareholder Payouts
Core Acquisitions
Avg $50MM - $150MM
Current Dividends
$207MM (~60% of FCF)
14
15. Successful REIT Conversion Enhances Strategy
โข Iron Mountain possesses characteristics of a strong REIT
- Aligned with business & capital allocation strategies
- Iron Mountain is effectively โEnterprise Storageโ
โข We can fund our business strategy effectively within this
structure
โข Significant opportunity to drive total returns to
shareholders, optimize WACC and create value
15
16. REIT Approach Aligns with Business & Capital
Allocation Strategies
Pro Forma REIT Metrics(1)
โข Committed to returning excess capital to
shareholders
โข Significant shareholder benefits
- Single level of US tax
- Efficient structure to repatriate foreign storage
rental income
- Disciplined mechanism for capital allocation
โข The right tool for maximizing total returns to
shareholders
- REIT structure drives higher dividends
- Higher distributable income due to lower tax
vs. book D&A (~$70MM)
โข Strong cash flows support dividend coverage
(For illustrative purposes only)
$MM (except per
share data)
2013
FFO
$510
FFO/share(2)
$2.68
AFFO
$625
AFFO/share(2)
$3.29
Dividends(3)
Dividends/share(2)
$400 - $435
$2.08 $2.27
(1) Excludes $140MM cash portion of the 2012 E&P distribution
(2) Based on 192M shares outstanding
(3) Includes ~$70MM benefit from book / tax difference for D&A
16
17. IRM is Effectively โEnterprise Storageโ
IRM = Enterprise
Self-storage = Consumer
๏ง Similarities:
โข High storage Net Operating Income/SF is primary value
driver
โข Multiple customers in each facility
โข Multimarket presence and quality brands support repeat
business
โข Low maintenance capex, customer acquisition costs and
tenant improvements
โข Low economic obsolescence of physical structures
17
18. Summary
โข Iron Mountain is a durable, high-return business that will
generate significant excess free cash flow
โข Significant opportunities exist to continue to grow cash
flow to sustain our business for a very long time
โข Successful REIT conversion will enhance returns
18