Business Wire | Nov 5, 2020 06:04AM EST

Iron Mountain Reports Third Quarter 2020 Results

Nov. 05, 2020

BOSTON--(BUSINESS WIRE)--Nov. 05, 2020--Iron Mountain Incorporated (NYSE: IRM), the storage and information management services company, announces financial and operating results for the third quarter of 2020. The conference call / webcast details, earnings call presentation and supplemental financial information, which includes definitions of certain capitalized terms used in this release, are available on Iron Mountain's Investor Relations website. Reconciliations of non-GAAP measures to the appropriate GAAP measures are included herein.

"The third quarter provided us with a great opportunity to demonstrate the significance of the measures we have taken over the last few months in response to the pandemic, and set a marker of out-performance through top-line resilience in our physical storage business, Adjusted EBITDA margin expansion, and by maintaining our strong cash generation track record," said William L. Meaney, president and CEO of Iron Mountain. "Despite lingering uncertainty related to the global COVID-19 pandemic, we are seeing improvement - albeit gradual - in key U.S. and international markets as it relates to our service activity levels whilst showing continued strong performance in both our physical storage business and our Global Data Center business. I continue to be inspired by the tireless efforts of our teams as they support and care for our customers, each other, and our communities, whilst accelerating progress on our strategic priorities."

Meaney commented on the results, "Adjusted EBITDA margins expanded 30 and 80 basis points year-over-year and sequentially, respectively. The strength for margin expansion performance is even more impactful in the context of the continued investments we are making in innovation and product development, as well as a slight top-line decline, driven entirely by our service business. I would like to thank all of our Mountaineers for this remarkable performance and for their steadfast focus on safety and execution. Whilst this has been a very difficult time, we are proving to be very resilient. We are financially healthy with strong and reliable cash flow, driven in part by our brand and customer loyalty. This is evident in how we've managed the heightened uncertainty of the past 8 months. We quickly aligned on the right mix of priorities to maintain strong near-term momentum whilst continuing our investments in innovation and new products as we execute our plan for long-term value creation. This, combined with benefits from Project Summit, has allowed us to continue to invest in transforming and modernizing our company. As demonstrated by our nine-month constant currency year-over-year Adjusted EBITDA and organic storage revenue growth, we can already see the evidence supporting our belief that we will emerge from this pandemic as a stronger company on all dimensions."

Financial Performance Highlights for the Third Quarter and Year-to-Date 2020

* Total reported Revenues for the third quarter were $1.04 billion, compared with $1.06 billion in the third quarter of 2019, a decrease of 2.4%. Excluding the impact of foreign currency exchange (FX), total reported Revenues declined 2.1% compared to the prior year, driven by a 12.2% decline in Service revenue, partially offset by a 3.8% increase in Storage revenue. Year to date, total reported Revenues decreased 3.0%, or 1.5%, excluding the impact of FX. * Income from Continuing Operations for the third quarter was $38.6 million, compared with $108.3 million in the third quarter of 2019. Income from Continuing Operations in the third quarter of 2020 included Restructuring Charges of $48.4 million associated with the implementation of Project Summit and a debt extinguishment charge of $51.3 million related to the early extinguishment of several of the Company's Notes. Income from Continuing Operations included $4.0 million of Significant Acquisition Costs in the third quarter of 2019. Year to date, Income from Continuing Operations was $96.3 million, compared with $231.1 million in 2019. Income from Continuing Operations in 2020 included Restructuring Charges of $128.7 million and Income from Continuing Operations in 2019 included Significant Acquisition Costs of $8.6 million. * Adjusted EBITDA for the third quarter was $370.0 million, compared with $375.7 million in the third quarter of 2019, a decrease of 1.5%, and includes direct and incremental costs related to COVID-19. On a constant currency basis, Adjusted EBITDA decreased by 1.3%, driven in part by the aforementioned decline in Service revenue, partially offset by the benefits of Project Summit and the flow through from revenue management. Year to date, Adjusted EBITDA was $1.08 billion, compared with $1.05 billion in 2019, an increase of 2.4%, and excludes $9.3 million of direct and incremental costs related to COVID-19 incurred in the second quarter, as previously disclosed. Excluding the impact of FX, Adjusted EBITDA increased 3.7% year to date. * Reported EPS - Fully Diluted from Continuing Operations for the third quarter was $0.13, compared with $0.37 in the third quarter of 2019. Year to date, Reported EPS - Fully Diluted from Continuing Operations was $0.33, compared with $0.80 in 2019. * Adjusted EPS for the third quarter was $0.31, compared with $0.32 in the third quarter of 2019. Year to date, Adjusted EPS was $0.80, compared with $0.71 in 2019. Iron Mountain's structural tax rate was 16.8% in the third quarter of 2020, compared with 18.6% in the third quarter of 2019. * Net Income for the third quarter was $38.6 million compared with $108.3 million in the third quarter of 2019. Net Income in the third quarter of 2020 included the aforementioned Restructuring Charges related to Project Summit and debt extinguishment charge. Year to date, Net Income was $96.3 million compared with $231.2 million in 2019. * FFO (Normalized) per share was $0.61 for the third quarter, compared with $0.62 in the third quarter of 2019, or a decrease of 1.5%. Year to date, FFO (Normalized) per share was $1.73, compared with $1.64 in 2019, an increase of 5.6%. * AFFO was $213.1 million for the third quarter, compared with $225.3 million in the third quarter of 2019, a decrease of 5.4%. Year to date, AFFO was $693.8 million, compared with $628.3 million in 2019, an increase of 10.4%.

Project Summit Update

Iron Mountain now expects Project Summit will generate $165 million in Adjusted EBITDA benefits in 2020, an increase from the previous expectation of $150 million, as some initiatives have been accelerated. Iron Mountain expects to spend approximately $200 million in 2020. There is no change to the overall scope and size of the total program. Iron Mountain continues to expect Project Summit to generate $375 million of Adjusted EBITDA benefits exiting 2021, with a cost to implement of approximately $450 million.

Dividend

On November 4, 2020, Iron Mountain's board of directors declared a quarterly cash dividend of $0.6185 per share for the fourth quarter. The fourth-quarter 2020 dividend is payable on January 6, 2021, for shareholders of record on December 15, 2020.

About Iron Mountain

Iron Mountain Incorporated (NYSE: IRM), founded in 1951, is the global leader for storage and information management services. Trusted by more than 225,000 organizations around the world, and with a real estate network of more than 90 million square feet across approximately 1,450 facilities in approximately 50 countries, Iron Mountain stores and protects billions of valued assets, including critical business information, highly sensitive data, and cultural and historical artifacts. Providing solutions that include secure records storage, information management, digital transformation, secure destruction, as well as data centers, cloud services and art storage and logistics, Iron Mountain helps customers lower cost and risk, comply with regulations, recover from disaster, and enable a more digital way of working. Visit www.ironmountain.com for more information.

Forward Looking Statements

We have made statements in this press release that constitute "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements concern our operations, economic performance, financial condition, goals, beliefs, future growth strategies, investment objectives, plans and current expectations, such as our (1) expectations and assumptions regarding the possible impact from the COVID-19 pandemic on us and our customers, including on our businesses, financial position, results of operations and cash flows and the goodwill associated with our reporting units, (2) expected benefits, costs and actions related to, and timing of, Project Summit, (3) anticipated capital expenditures and possible funding sources and (4) other forward-looking statements related to our business, results of operations and financial condition.

These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors, and you should not rely upon them except as statements of our present intentions and of our present expectations, which may or may not occur. When we use words such as "believes," "expects," "anticipates," "estimates" or similar expressions, we are making forward-looking statements. Although we believe that our forward-looking statements are based on reasonable assumptions, our expected results may not be achieved, and actual results may differ materially from our expectations. In addition, important factors that could cause actual results to differ from expectations include, among others: (i) the severity and duration of the COVID-19 pandemic and its effects on the global economy, including its effects on us, the markets we serve and our customers and the third parties with whom we do business within those markets, (ii) our ability to execute on Project Summit and the potential impacts of Project Summit on our ability to retain and recruit employees and execute on our strategic growth plan, (iii) our ability to remain qualified for taxation as a real estate investment trust for United States federal income tax purposes, (iv) changes in customer preferences and demand for our storage and information management services, including as a result of the adoption of alternative technologies and shifts to storage of data through non-paper based technologies, (v) our ability or inability to execute our strategic growth plan, including our ability to invest according to plan, expand internationally, complete acquisitions on satisfactory terms, integrate acquired companies efficiently and grow our business through joint ventures, (vi) changes in the amount of our capital expenditures, (vii) our ability to raise debt or equity capital and changes in the cost of our debt, (viii) the cost and our ability to comply with laws, regulations and customer demands, including those relating to data security and privacy issues, as well as fire and safety standards, (ix) the impact of litigation or disputes that may arise in connection with incidents in which we fail to protect our customers' information or our internal records or information technology systems and the impact of such incidents on our reputation and ability to compete; (x) changes in the price for our storage and information management services relative to the cost of providing such storage and information management services;(xii) changes in the political and economic environments in the countries in which our international subsidiaries operate and changes in the global political climate; (xiii) our ability to comply with our existing debt obligations and restrictions in our debt instruments; (xi) the impact of service interruptions or equipment damage and the cost of power on our data center operations; (xv) the cost or potential liabilities associated with real estate necessary for our business; (xvi) the performance of business partners upon whom we depend for technical assistance or management expertise; (xvii) other trends in competitive or economic conditions affecting our financial condition or results of operations not presently contemplated; and (xviii) the other risks described in our periodic reports filed with the SEC, including under the caption "Risk Factors" in Part I, Item 1A of our Annual Report and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. Except as required by law, we undertake no obligation to update any forward-looking statements appearing in this report.

Reconciliation of Non-GAAP Measures:

Throughout this release, Iron Mountain discusses (1) Adjusted EBITDA, (2) Adjusted Earnings per Share ("Adjusted EPS"), (3) Funds from Operations ("FFO Nareit"), (4) FFO (Normalized) and (5) Adjusted Funds from Operations ("AFFO"). These measures do not conform to accounting principles generally accepted in the United States ("GAAP"). These non-GAAP measures are supplemental metrics designed to enhance our disclosure and to provide additional information that we believe to be important for investors to consider in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as operating income, income (loss) from continuing operations, net income (loss) attributable to Iron Mountain Incorporated or cash flows from operating activities from continuing operations (as determined in accordance with GAAP). The reconciliation of these measures to the appropriate GAAP measure, as required by Regulation G under the Securities Exchange Act of 1934, as amended, and their definitions are included later in this release.

Consolidated Balance Sheets

(Unaudited; dollars in thousands)

9/30/2020 12/31/2019

ASSETS

Current Assets:

Cash and Cash Equivalents $ 151,972 $ 193,555

Accounts Receivable, Net 791,859 850,701

Other Current Assets 190,194 192,083

Total Current Assets $ 1,134,025 $ 1,236,339

Property, Plant and Equipment:

Property, Plant and Equipment $ 8,100,871 $ 8,048,906

Less: Accumulated Depreciation (3,641,804 ) (3,425,869 )

Property, Plant and Equipment, Net $ 4,459,067 $ 4,623,037

Other Assets, Net:

Goodwill $ 4,461,529 $ 4,485,209

Customer Relationships, Customer Inducements 1,317,399 1,393,183 and Data Center Lease-Based Intangibles

Operating Lease Right-of-use Assets 1,963,019 1,869,101

Other 347,621 209,947

Total Other Assets, Net $ 8,089,568 $ 7,957,440

Total Assets $ 13,682,660 $ 13,816,816



LIABILITIES AND EQUITY

Current Liabilities:

Current Portion of Long-term Debt $ 392,586 $ 389,013

Accounts Payable 302,618 324,708

Accrued Expenses and Other Current 951,269 961,752 Liabilities

Deferred Revenue 244,430 274,036

Total Current Liabilities $ 1,890,903 $ 1,949,509

Long-term Debt, Net of Current Portion 8,618,856 8,275,566

Long-term Operating Lease Liabilities 1,818,844 1,728,686

Other Long-term Liabilities (1) 416,811 398,828

Total Long-term Liabilities $ 10,854,511 $ 10,403,080

Total Liabilities $ 12,745,414 $ 12,352,589

Equity

Total Stockholders' Equity $ 937,359 $ 1,463,962

Noncontrolling Interests (113 ) 265

Total Equity $ 937,246 $ 1,464,227

Total Liabilities and Equity $ 13,682,660 $ 13,816,816

(1)

Includes redeemable noncontrolling interests of $63.7M and $67.7M as of September 30, 2020 and December 31, 2019, respectively.

(1) Includes redeemable noncontrolling interests of $63.7M and $67.7M as of September 30, 2020 and December 31, 2019, respectively.

Consolidated Statements of Operations

(Unaudited; dollars in thousands, except per-share data)

Q3 2020

Q3 2019

% Change

YTD 2020

YTD 2019

% Change

Revenues:

Storage Rental

$

696,294

$

673,318

3.4

%

$

2,056,797

$

2,005,580

2.6

%

Service

340,353

388,906

(12.5

)%

1,030,820

1,177,414

(12.5

)%

Total Revenues

$

1,036,647

$

1,062,224

(2.4

)%

$

3,087,617

$

3,182,994

(3.0

)%

Operating Expenses:

Cost of Sales (excluding Depreciation and Amortization) (1)

$

434,505

$

449,372

(3.3

)%

$

1,308,119

$

1,373,827

(4.8

)%

Selling, General and Administrative (2)

232,095

237,151

(2.1

)%

712,775

758,018

(6.0

)%

Depreciation and Amortization

157,252

157,561

(0.2

)%

483,686

484,375

(0.1

)%

Significant Acquisition Costs

-

3,950

n/a

-

8,597

n/a

Restructuring Charges

48,371

-

n/a

128,715

-

n/a

Intangible Impairments

-

-

n/a

23,000

-

n/a

(Gain) Loss on Disposal/Write-Down of PP&E, Net

(75,840

)

(9,284

)

n/a

(78,170

)

(17,087

)

n/a

Total Operating Expenses

$

796,383

$

838,750

(5.1

)%

$

2,578,125

$

2,607,730

(1.1

)%

Operating Income (Loss)

$

240,264

$

223,474

7.5

%

$

509,492

$

575,264

(11.4

)%

Interest Expense, Net

104,303

106,677

(2.2

)%

313,408

314,427

(0.3

)%

Foreign Currency Transaction Loss / (Gain)

29,635

(18,251

)

n/a

(6,293

)

(19,885

)

(68.4

)%

Debt Extinguishment Expense

51,260

-

n/a

68,300

-

n/a

Other Expense (Income), Net

2,570

4,836

(46.9

)%

4,432

6,488

(31.7

)%

Income (Loss) before Provision (Benefit) for Income Taxes

$

52,496

$

130,212

(59.7

)%

$

129,645

$

274,234

(52.7

)%

Provision (Benefit) for Income Taxes

13,934

21,928

(36.5

)%

33,304

43,127

(22.8

)%

Gain (Loss) on Sale of Real Estate, Net of Tax

-

-

n/a

-

-

n/a

Income (Loss) from Continuing Operations

$

38,562

$

108,284

(64.4

)%

$

96,341

$

231,107

(58.3

)%

Income (Loss) from Discontinued Operations, Net of Tax

-

-

n/a

-

104

n/a

Net Income (Loss)

$

38,562

$

108,284

(64.4

)%

$

96,341

$

231,211

(58.3

)%

Less: Net Income (Loss) Attributable to Noncontrolling Interests

168

609

(72.4

)%

1,058

1,534

(31.0

)%

Net Income (Loss) Attributable to Iron Mountain Incorporated

$

38,394

$

107,675

(64.3

)%

$

95,283

$

229,677

(58.5

)%

Earnings (Losses) per Share - Basic:

Income (Loss) from Continuing Operations

$

0.13

$

0.37

(64.9

)%

$

0.33

$

0.80

(58.8

)%

Total Income (Loss) from Discontinued Operations

-

-

n/a

-

-

n/a

Net Income (Loss) Attributable to Iron Mountain Incorporated

$

0.13

$

0.37

(64.9

)%

$

0.33

$

0.80

(58.8

)%

Earnings (Losses) per Share - Diluted:

Income (Loss) from Continuing Operations

$

0.13

$

0.37

(64.9

)%

$

0.33

$

0.80

(58.8

)%

Total Income (Loss) from Discontinued Operations

-

-

n/a

-

-

n/a

Net Income (Loss) Attributable to Iron Mountain Incorporated

$

0.13

$

0.37

(64.9

)%

$

0.33

$

0.80

(58.8

)%

Weighted Average Common Shares Outstanding - Basic

288,403

287,152

0.4

%

288,105

286,869

0.4

%

Weighted Average Common Shares Outstanding - Diluted

288,811

287,691

0.4

%

288,471

287,555

0.3

%

Consolidated Statements of Operations

(Unaudited; dollars in thousands, except per-share data)

Q3 2020 Q3 2019 % YTD 2020 YTD 2019 % Change Change

Revenues:

Storage Rental $ 696,294 $ 673,318 3.4 % $ 2,056,797 $ 2,005,580 2.6 %

Service 340,353 388,906 (12.5 ) 1,030,820 1,177,414 (12.5 ) % %

Total Revenues $ 1,036,647 $ 1,062,224 (2.4 ) $ 3,087,617 $ 3,182,994 (3.0 ) % %



Operating Expenses:

Cost of Sales(excludingDepreciation $ 434,505 $ 449,372 (3.3 ) $ 1,308,119 $ 1,373,827 (4.8 )and % %Amortization)(1)

Selling,General and 232,095 237,151 (2.1 ) 712,775 758,018 (6.0 )Administrative % %(2)

Depreciation ) )and 157,252 157,561 (0.2 % 483,686 484,375 (0.1 %Amortization

SignificantAcquisition - 3,950 n/a - 8,597 n/a Costs

Restructuring 48,371 - n/a 128,715 - n/a Charges

Intangible - - n/a 23,000 - n/a Impairments

(Gain) Loss onDisposal/ (75,840 ) (9,284 ) n/a (78,170 ) (17,087 ) n/a Write-Down ofPP&E, Net

Total ) )Operating $ 796,383 $ 838,750 (5.1 % $ 2,578,125 $ 2,607,730 (1.1 %Expenses



Operating $ 240,264 $ 223,474 7.5 % $ 509,492 $ 575,264 (11.4 )Income (Loss) %

Interest 104,303 106,677 (2.2 ) 313,408 314,427 (0.3 )Expense, Net % %

ForeignCurrency 29,635 (18,251 ) n/a (6,293 ) (19,885 ) (68.4 )Transaction %Loss / (Gain)

DebtExtinguishment 51,260 - n/a 68,300 - n/a Expense

Other Expense 2,570 4,836 (46.9 ) 4,432 6,488 (31.7 )(Income), Net % %

Income (Loss)before ) )Provision $ 52,496 $ 130,212 (59.7 % $ 129,645 $ 274,234 (52.7 %(Benefit) forIncome Taxes

Provision ) )(Benefit) for 13,934 21,928 (36.5 % 33,304 43,127 (22.8 %Income Taxes

Gain (Loss) onSale of Real - - n/a - - n/a Estate, Net ofTax

Income (Loss)from $ 38,562 $ 108,284 (64.4 ) $ 96,341 $ 231,107 (58.3 )Continuing % %Operations

Income (Loss)fromDiscontinued - - n/a - 104 n/a Operations,Net of Tax

Net Income $ 38,562 $ 108,284 (64.4 ) $ 96,341 $ 231,211 (58.3 )(Loss) % %

Less: NetIncome (Loss)Attributable 168 609 (72.4 ) 1,058 1,534 (31.0 )to % %NoncontrollingInterests

Net Income(Loss)Attributable $ 38,394 $ 107,675 (64.3 ) $ 95,283 $ 229,677 (58.5 )to Iron % %MountainIncorporated



Earnings(Losses) per Share - Basic:

Income (Loss)from $ 0.13 $ 0.37 (64.9 ) $ 0.33 $ 0.80 (58.8 )Continuing % %Operations

Total Income(Loss) from - - n/a - - n/a DiscontinuedOperations

Net Income(Loss)Attributable $ 0.13 $ 0.37 (64.9 ) $ 0.33 $ 0.80 (58.8 )to Iron % %MountainIncorporated



Earnings(Losses) per Share -Diluted:

Income (Loss)from $ 0.13 $ 0.37 (64.9 ) $ 0.33 $ 0.80 (58.8 )Continuing % %Operations

Total Income(Loss) from - - n/a - - n/a DiscontinuedOperations

Net Income(Loss)Attributable $ 0.13 $ 0.37 (64.9 ) $ 0.33 $ 0.80 (58.8 )to Iron % %MountainIncorporated



WeightedAverage CommonShares 288,403 287,152 0.4 % 288,105 286,869 0.4 %Outstanding -Basic

WeightedAverage CommonShares 288,811 287,691 0.4 % 288,471 287,555 0.3 %Outstanding -Diluted

(1)

Includes $7.6M of direct and incremental costs related to COVID-19 in YTD 2020.

(2)

Includes $1.6M of direct and incremental costs related to COVID-19 in YTD 2020.

(1) Includes $7.6M of direct and incremental costs related to COVID-19 in YTD 2020.

(2) Includes $1.6M of direct and incremental costs related to COVID-19 in YTD 2020.

Reconciliation of Income from Continuing Operations to Adjusted EBITDA

(Dollars in thousands)

Q3 2020

Q3 2019

% Change

YTD 2020

YTD 2019

% Change

Income (Loss) from Continuing Operations

$

38,562

$

108,284

(64.4

)%

$

96,341

$

231,107

(58.3

)%

Add / (Deduct):

Intangible Impairments

-

-

n/a

23,000

-

n/a

Provision (Benefit) for Income Taxes

13,934

21,928

(36.5

)%

33,304

43,127

(22.8

)%

Foreign Currency Transaction Loss / (Gain)

29,635

(18,251

)

n/a

(6,293

)

(19,885

)

n/a

Other Expense (Income), Net

2,570

4,836

(46.9

)%

4,432

6,488

(31.7

)

Debt Extinguishment Expense

51,260

-

n/a

68,300

-

n/a

Interest Expense, Net

104,303

106,677

(2.2

)%

313,408

314,427

(0.3

)%

(Gain) Loss on Disposal/Write-Down of PP&E, Net

(75,840

)

(9,284

)

n/a

(78,170

)

(17,087

)

n/a

Depreciation and Amortization

157,252

157,561

(0.2

)%

483,686

484,375

(0.1

)%

Significant Acquisition Costs

-

3,950

n/a

-

8,597

n/a

Restructuring Charges

48,371

-

n/a

128,715

-

n/a

COVID-19 Costs

-

-

n/a

9,285

-

n/a

Adjusted EBITDA

$

370,047

$

375,701

(1.5

)%

$

1,076,008

$

1,051,149

2.4

%

Adjusted EBITDA

Adjusted EBITDA is defined as income (loss) from continuing operations before interest expense, net, provision (benefit) for income taxes, depreciation and amortization, and also excludes certain items that we believe are not indicative of our core operating results, specifically: (i) (gain) loss on disposal/write-down of property, plant and equipment, net (including real estate); (ii) intangible impairments; (iii) other expense (income), net (which includes foreign currency transaction (gains) losses, net, and debt extinguishment expense); (iv) Significant Acquisition Costs; (v) Restructuring Charges; and (vi) COVID-19 Costs. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenues. We use multiples of current or projected Adjusted EBITDA in conjunction with our discounted cash flow models to determine our estimated overall enterprise valuation and to evaluate acquisition targets. We believe Adjusted EBITDA and Adjusted EBITDA Margin provide our current and potential investors with relevant and useful information regarding our ability to generate cash flows to support business investment. These measures are an integral part of the internal reporting system we use to assess and evaluate the operating performance of our business.

Adjusted EBITDA excludes both interest expense, net and the provision (benefit) for income taxes. These expenses are associated with our capitalization and tax structures, which we do not consider when evaluating the operating profitability of our core operations. Finally, Adjusted EBITDA does not include depreciation and amortization expenses, in order to eliminate the impact of capital investments, which we evaluate by comparing capital expenditures to incremental revenue generated and as a percentage of total revenues. Adjusted EBITDA and Adjusted EBITDA Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as operating income, income (loss) from continuing operations, net income (loss) or cash flows from operating activities from continuing operations (as determined in accordance with GAAP).

Reconciliation of Income from Continuing Operations to Adjusted EBITDA

(Dollars in thousands)

Q3 2020 Q3 2019 % YTD 2020 YTD 2019 % Change Change



Income (Loss)from $ 38,562 $ 108,284 (64.4 ) $ 96,341 $ 231,107 (58.3 )Continuing % %Operations



Add / (Deduct):

Intangible - - n/a 23,000 - n/a Impairments

Provision ) )(Benefit) for 13,934 21,928 (36.5 % 33,304 43,127 (22.8 %Income Taxes

ForeignCurrency 29,635 (18,251 ) n/a (6,293 ) (19,885 ) n/a TransactionLoss / (Gain)

Other Expense 2,570 4,836 (46.9 ) 4,432 6,488 (31.7 )(Income), Net %

DebtExtinguishment 51,260 - n/a 68,300 - n/a Expense

Interest 104,303 106,677 (2.2 ) 313,408 314,427 (0.3 )Expense, Net % %

(Gain) Loss onDisposal/ (75,840 ) (9,284 ) n/a (78,170 ) (17,087 ) n/a Write-Down ofPP&E, Net

Depreciation ) )and 157,252 157,561 (0.2 % 483,686 484,375 (0.1 %Amortization

SignificantAcquisition - 3,950 n/a - 8,597 n/a Costs

Restructuring 48,371 - n/a 128,715 - n/a Charges

COVID-19 Costs - - n/a 9,285 - n/a

Adjusted $ 370,047 $ 375,701 (1.5 ) $ 1,076,008 $ 1,051,149 2.4 %EBITDA %

Adjusted EBITDA

Adjusted EBITDA is defined as income (loss) from continuing operations before interest expense, net, provision (benefit) for income taxes, depreciation and amortization, and also excludes certain items that we believe are not indicative of our core operating results, specifically: (i) (gain) loss on disposal/write-down of property, plant and equipment, net (including real estate); (ii) intangible impairments; (iii) other expense (income), net (which includes foreign currency transaction (gains) losses, net, and debt extinguishment expense); (iv) Significant Acquisition Costs; (v) Restructuring Charges; and (vi) COVID-19 Costs. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenues. We use multiples of current or projected Adjusted EBITDA in conjunction with our discounted cash flow models to determine our estimated overall enterprise valuation and to evaluate acquisition targets. We believe Adjusted EBITDA and Adjusted EBITDA Margin provide our current and potential investors with relevant and useful information regarding our ability to generate cash flows to support business investment. These measures are an integral part of the internal reporting system we use to assess and evaluate the operating performance of our business.

Adjusted EBITDA excludes both interest expense, net and the provision (benefit) for income taxes. These expenses are associated with our capitalization and tax structures, which we do not consider when evaluating the operating profitability of our core operations. Finally, Adjusted EBITDA does not include depreciation and amortization expenses, in order to eliminate the impact of capital investments, which we evaluate by comparing capital expenditures to incremental revenue generated and as a percentage of total revenues. Adjusted EBITDA and Adjusted EBITDA Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as operating income, income (loss) from continuing operations, net income (loss) or cash flows from operating activities from continuing operations (as determined in accordance with GAAP).

Reconciliation of Reported Earnings per Share to Adjusted Earnings per Share

Q3 2020 Q3 2019 % Change YTD 2020 YTD 2019 % Change



Reported EPS -Fully Dilutedfrom $ 0.13 $ 0.37 (64.9 ) % $ 0.33 $ 0.80 (58.8 ) %ContinuingOperations

Add / (Deduct):

Intangible - - 0.08 - Impairments

Other Expense 0.29 (0.05 ) 0.23 (0.05 ) (Income), Net

Loss (Gain) onDisposal/ (0.26 ) (0.03 ) (0.27 ) (0.06 ) Write-Down ofPP&E, Net

SignificantAcquisition - 0.01 - 0.03 Costs

Restructuring 0.17 - 0.45 - Charges

COVID-19 Costs - - 0.03 -

Tax Impact ofReconcilingItems and (0.01 ) - (0.05 ) (0.01 ) Discrete TaxItems (1)

Net Income(Loss)Attributable - - - 0.01 toNoncontrollingInterests

Adjusted EPS -Fully Dilutedfrom $ 0.31 $ 0.32 (3.1 ) % $ 0.80 $ 0.71 12.7 %ContinuingOperations

(1)

The difference between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the nine months ended September 30, 2020 and 2019, respectively, is primarily due to (i) the reconciling items above, which impact our reported income (loss) from continuing operations 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 was 16.8% for the nine months ended September 30, 2020 and 18.6% for the nine months ended September 30, 2019. The Tax Impact of Reconciling Items and Discrete Tax Items is calculated using the current quarter's estimate of the annual structural tax rate for both the three month and YTD periods. This may result in the current period adjustment plus prior reported quarterly adjustments to not sum to the full year adjustment.

Adjusted Earnings Per Share, or Adjusted EPS

Adjusted EPS is defined as reported earnings per share fully diluted from continuing operations excluding: (i) (gain) loss on disposal/write-down of property, plant and equipment, net (including real estate); (ii) intangible impairments; (iii) other expense (income), net (which includes foreign currency transaction (gains) losses, net, and debt extinguishment expense); (iv) Significant Acquisition Costs; (v) Restructuring Charges; (vi) COVID-19 Costs; and (vii) the tax impact of reconciling items and discrete tax items. Adjusted EPS includes income (loss) attributable to noncontrolling interests. We do not believe these excluded items to be indicative of our ongoing operating results, and they are not considered when we are forecasting our future results. We believe Adjusted EPS is of value to our current and potential investors when comparing our results from past, present and future periods.

The difference between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the nine months ended September 30, 2020 and 2019, respectively, is primarily due to (i) the reconciling items above, which impact our reported income (loss) from continuing operations before provision (benefit) for income taxes but(1) 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 was 16.8% for the nine months ended September 30, 2020 and 18.6% for the nine months ended September 30, 2019. The Tax Impact of Reconciling Items and Discrete Tax Items is calculated using the current quarter's estimate of the annual structural tax rate for both the three month and YTD periods. This may result in the current period adjustment plus prior reported quarterly adjustments to not sum to the full year adjustment.

Adjusted Earnings Per Share, or Adjusted EPS

Adjusted EPS is defined as reported earnings per share fully diluted from continuing operations excluding: (i) (gain) loss on disposal/write-down of property, plant and equipment, net (including real estate); (ii) intangible impairments; (iii) other expense (income), net (which includes foreign currency transaction (gains) losses, net, and debt extinguishment expense); (iv) Significant Acquisition Costs; (v) Restructuring Charges; (vi) COVID-19 Costs; and (vii) the tax impact of reconciling items and discrete tax items. Adjusted EPS includes income (loss) attributable to noncontrolling interests. We do not believe these excluded items to be indicative of our ongoing operating results, and they are not considered when we are forecasting our future results. We believe Adjusted EPS is of value to our current and potential investors when comparing our results from past, present and future periods.

Reconciliation of Net Income Attributable to IRM to FFO and AFFO

(Dollars in thousands, except per-share data)

Q3 2020 Q3 2019 % YTD 2020 YTD 2019 % Change Change



Net Income $ 38,562 $ 108,284 (64.4 ) $ 96,341 $ 231,211 (58.3 ) % %

Add / (Deduct):

Real Estate )Depreciation 72,019 72,939 (1.3 % 224,325 220,179 1.9 %(1)

(Gain) Loss onSale of Real (75,880 ) (9,740 ) n/a (77,461 ) (40,252 ) 92.4 %Estate, Net ofTax

Data CenterLease-BasedIntangible 10,441 11,356 (8.1 ) 32,173 35,337 (9.0 )Asset % %Amortization(2)



FFO (Nareit) $ 45,142 $ 182,839 (75.3 ) $ 275,378 $ 446,475 (38.3 ) % %

Add / (Deduct):

Loss (Gain) onDisposal/ 40 369 (89.2 ) (359 ) 28,558 n/a Write-Down of %PP&E, Net

ForeignCurrency 29,635 (18,251 ) n/a (6,293 ) (19,885 ) (68.4 )Transaction %Loss / (Gain)

DebtExtinguishment 51,260 - n/a 68,300 - n/a Expense

Other Expense 2,570 4,836 (46.9 ) 4,432 6,488 (31.7 )(Income) , Net % %

Intangible - - n/a 23,000 - n/a Impairments

Tax Impact ofReconcilingItems and (4,314 ) 1,283 n/a (13,959 ) (9,202 ) 51.7 %Discrete TaxItems (3)

(Income) LossfromDiscontinued - - n/a - (104 ) n/a Operations,Net of Tax

Real EstateFinancing 3,501 3,115 12.4 % 10,095 9,732 3.7 %LeaseDepreciation

SignificantAcquisition - 3,950 n/a - 8,597 n/a Costs

Restructuring 48,371 - n/a 128,715 - n/a Charges

FFO $ 176,205 $ 178,141 (1.1 ) $ 498,594 $ 470,659 5.9 %(Normalized) %



Per ShareAmounts (Fully DilutedShares)

FFO (Nareit) $ 0.16 $ 0.64 (75.1 ) $ 0.95 $ 1.55 (38.7 ) % %

FFO $ 0.61 $ 0.62 (1.5 ) $ 1.73 $ 1.64 5.6 %(Normalized) %



WeightedAverage CommonShares 288,403 287,152 0.4 % 288,105 286,869 0.4 %Outstanding -Basic

WeightedAverage CommonShares 288,811 287,691 0.4 % 288,471 287,555 0.3 %Outstanding -Diluted

(1)

Includes depreciation expense related to owned real estate assets (land improvements, buildings, building improvements, leasehold improvements and racking), excluding depreciation related to financing leases.

(2)

Includes amortization expense for Data Center In-Place Lease Intangible Assets and Data Center Tenant Relationship Intangible Assets.

(3)

Represents the tax impact of (i) the reconciling items above, which impact our reported income (loss) from continuing operations before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) from income taxes and (ii) other discrete tax items.

Funds From Operations, or FFO (Nareit), and FFO (Normalized)

Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trusts ("Nareit") and us as net income (loss) excluding depreciation on real estate assets, gains on sale of real estate, net of tax and amortization of data center leased-based intangibles ("FFO (Nareit)"). FFO (Nareit) does not give effect to real estate depreciation because these amounts are computed, under GAAP, to allocate the cost of a property over its useful life. Because values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, we believe that FFO (Nareit) provides investors with a clearer view of our operating performance. Our most directly comparable GAAP measure to FFO (Nareit) is net (loss) income. Although Nareit has published a definition of FFO, modifications to FFO (Nareit) are common among REITs as companies seek to provide financial measures that most meaningfully reflect their particular business. Our definition of FFO (Normalized) excludes certain items included in FFO (Nareit) that we believe are not indicative of our core operating results, specifically: (i) (gain) loss on disposal/write-down of property, plant and equipment (excluding real estate), net; (ii) intangible impairments; (iii) other expense (income), net (which includes foreign currency transaction (gains) losses, net, and debt extinguishment expense); (iv) real estate financing lease depreciation; (v) Significant Acquisition Costs; (vi) Restructuring Charges; (vii) COVID-19 Costs; (viii) the tax impact of reconciling items and discrete tax items; (ix) loss (income) from discontinued operations, net of tax; and (x) loss (gain) on sale of discontinued operations, net of tax.

FFO (Normalized) per share

FFO (Normalized) divided by weighted average fully-diluted shares outstanding.

(1) Includes depreciation expense related to owned real estate assets (land improvements, buildings, building improvements, leasehold improvements and racking), excluding depreciation related to financing leases.

(2) Includes amortization expense for Data Center In-Place Lease Intangible Assets and Data Center Tenant Relationship Intangible Assets.

Represents the tax impact of (i) the reconciling items above, which impact our reported income (loss) from continuing operations before(3) provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) from income taxes and (ii) other discrete tax items.

Funds From Operations, or FFO (Nareit), and FFO (Normalized)

Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trusts ("Nareit") and us as net income (loss) excluding depreciation on real estate assets, gains on sale of real estate, net of tax and amortization of data center leased-based intangibles ("FFO (Nareit)"). FFO (Nareit) does not give effect to real estate depreciation because these amounts are computed, under GAAP, to allocate the cost of a property over its useful life. Because values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, we believe that FFO (Nareit) provides investors with a clearer view of our operating performance. Our most directly comparable GAAP measure to FFO (Nareit) is net (loss) income. Although Nareit has published a definition of FFO, modifications to FFO (Nareit) are common among REITs as companies seek to provide financial measures that most meaningfully reflect their particular business. Our definition of FFO (Normalized) excludes certain items included in FFO (Nareit) that we believe are not indicative of our core operating results, specifically: (i) (gain) loss on disposal/write-down of property, plant and equipment (excluding real estate), net; (ii) intangible impairments; (iii) other expense (income), net (which includes foreign currency transaction (gains) losses, net, and debt extinguishment expense); (iv) real estate financing lease depreciation; (v) Significant Acquisition Costs; (vi) Restructuring Charges; (vii) COVID-19 Costs; (viii) the tax impact of reconciling items and discrete tax items; (ix) loss (income) from discontinued operations, net of tax; and (x) loss (gain) on sale of discontinued operations, net of tax.

FFO (Normalized) per share

FFO (Normalized) divided by weighted average fully-diluted shares outstanding.

Reconciliation of Net Income Attributable to IRM to FFO and AFFO (continued)

(Dollars in thousands)

Q3 2020 Q3 2019 % YTD 2020 YTD 2019 % Change Change



FFO $ 176,205 $ 178,141 (1.1 ) $ 498,594 $ 470,659 5.9 %(Normalized) %

Add / (Deduct):

Non-Real )Estate 32,629 32,099 1.7 % 100,357 106,574 (5.8 %Depreciation

Amortization 33,271 33,830 (1.7 ) 99,704 98,451 1.3 %Expense (1) %

Amortizationof Deferred 4,149 4,078 1.8 % 13,150 12,286 7.0 %FinancingCosts

RevenueReductionAssociatedwithAmortization ) )of Permanent 2,363 3,237 (27.0 % 7,612 10,417 (26.9 %WithdrawalFees and Above- andBelow-MarketLeases

Non-Cash RentExpense 2,779 1,379 n/a 8,276 3,394 n/a (Income)

Stock-basedCompensation 8,055 7,120 13.1 % 31,998 28,140 13.7 %Expense

Reconciliationto Normalized (5,441 ) 4,641 n/a 23,375 (5,882 ) n/a Cash Taxes

Less:

Non-RealEstate Growth 20,658 15,822 30.6 % 40,800 28,915 41.1 %InvestmentCapEx (2)

Real Estate,Data Centerand Non-Real 20,301 23,433 (13.4 ) 48,508 66,830 (27.4 )Estate % %RecurringCapEx

AFFO $ 213,051 $ 225,270 (5.4 ) $ 693,758 $ 628,293 10.4 % %

(1)

Includes Customer Relationship Value, intake costs, acquisition of customer relationships, and other intangibles. Excludes amortization of capitalized commissions of $5.4M and $4.2M in Q3 2020 and Q3 2019, respectively, and $17.0M and $14.1M in YTD 2020 and YTD 2019, respectively.

(2)

Non-Real Estate Growth CapEx excludes Summit CapEx included in the Summit Transformation project of $2.5M and $4.5M in Q3 2020 and YTD 2020, respectively.

Adjusted Funds From Operations, or AFFO

AFFO is defined as FFO (Normalized) excluding non-cash rent expense or income plus depreciation on non-real estate assets, amortization expense associated with customer relationship value (CRV), intake costs, acquisitions of customer relationships and other intangibles, and excluding amortization expense associated with capitalized internal commissions, amortization of deferred financing costs, revenue reduction associated with amortization of permanent withdrawal fees and above-and below-market data center leases, stock-based compensation expense and the impact of reconciling to normalized cash taxes, less recurring capital expenditures and non-real estate growth investments (on a cash basis), excluding Significant Acquisition Capital Expenditures. We believe AFFO is a useful measure in determining our ability to generate excess cash that may be used for reinvestment in the business, discretionary deployment in investments such as real estate or acquisition opportunities, returning capital to our stockholders and voluntary prepayments of indebtedness. Additionally AFFO is reconciled to cash flow from operations to adjust for real estate and REIT tax adjustments, Significant Acquisition Costs, Restructuring Charges, and other non-cash expenses. AFFO does not include adjustments for customer inducements, acquisition of customer relationships and investment in innovation as we consider these expenditures to be growth related.

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CONTACT: Investor Relations Contacts: Greer Aviv Senior Vice President, Investor Relations Greer.Aviv@ironmountain.com (617) 535-2887

CONTACT: Nathan McCurren Director, Investor Relations Nathan.McCurren@ironmountain.com (617) 535-2997