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Iron Mountain Reports First Quarter 2013 Financial Results

  Iron Mountain Reports First Quarter 2013 Financial Results

 First Quarter Results Supported by Consistent Constant Dollar Storage Rental
                                Growth of 4.4%

   Adjusted OIBDA and Adjusted Earnings per Share in Line with Expectations

                       Company Reiterates 2013 Guidance

Business Wire

BOSTON -- May 01, 2013

Iron Mountain Incorporated (NYSE: IRM), the storage and information management
company, today reported financial and operating results for the first quarter
ended March 31, 2013. Total revenues for the quarter were $747 million. On a
constant dollar (C$) basis, total revenue growth for the first quarter was
0.5%, reflecting solid storage rental gains of 4.4%, partially offset by a
decline in total service revenues. Adjusted OIBDA for the first quarter was
$227 million, up 2% from the same period in 2012. Adjusted EPS was $0.27 per
share ($0.10 per share on a GAAP basis) in the current period, compared with
$0.29 per share in the first quarter of 2012 ($0.35 per share on a GAAP
basis).

Reconciliations of supplemental non-GAAP measures to GAAP measures may be
found in Appendix A or by visiting the Investor Relations page at
www.ironmountain.com under “Supplemental Data.”

“During the first quarter, we delivered solid operating performance driven by
consistent storage rental growth,” said William Meaney, Iron Mountain’s
president and chief executive officer. “Strong constant dollar storage rental
growth of 4.4% reflected continued healthy revenue increases of 12% in our
International business and consistent 2% gains in North America. Margin
contribution from our International business continued to improve, supported
by solid performance in our western European operations.”

Durable growth in storage rental, driven by regulatory and compliance
requirements, continues to offset expected service declines. As the company
has previously noted, decreases in service revenues reflect a trend toward
reduced retrieval/re-file activity and the related transportation revenues.
Declines in service revenues were relatively higher in the first quarter of
2013, reflecting more difficult comparisons in international shredding and
project revenues, as well as declines in destruction and termination fees. The
company expects these impacts to moderate through the year.

“We feel good about the direction of our business for 2013, with storage
rental growth in line with our expectations,” Mr. Meaney said. “While early,
we are making progress with the realignment of our sales and account
management organizations, and we are beginning to see the benefits of this
structure in vertical markets where our efforts are further advanced, such as
in healthcare.

“In addition, we continue to see opportunities to invest to sustain the
durability of our storage rental business at attractive returns. We have an
active pipeline of fold-in and smaller business acquisitions in North America,
and we have additional opportunities to enhance our presence in fast-growing
emerging markets through investment in joint ventures and consolidation of
local businesses,” Mr. Meaney added.

Financial Review

Strong C$ storage rental gains for the first quarter continued to provide a
solid foundation for overall financial performance and more than offset a
decline in total service revenues. Global storage rental internal growth was
3% on a year-over-year basis, driven by 5% internal growth in International
and 2% in North America. Global records  management volume growth was 2.8% on
a year-over-year basis, driven by 13.5% growth in the International business
(including the second quarter 2012 Grupo Store acquisition). North America
records management net pricing increased approximately 2% in the quarter.
Solid growth in Document Management Solutions helped to offset the core
service revenue declines in developed markets and lower shredding services
revenue in the International Business segment. Paper pricing had a minimal
impact on results, as the average price during the first quarter was fairly
consistent with the same prior year period. Foreign currency rate changes had
a modest negative impact on revenue growth rates of approximately 0.4% during
the quarter.

Adjusted OIBDA margins for the first quarter were up 70 basis points to 30.5%
compared with the same prior year period, primarily driven by continued
International profit gains, overhead cost controls in North America and lower
corporate expenses. The decrease in selling, general and administrative
expenses, excluding REIT Costs (defined in Appendix A), was due primarily to
continued margin improvement initiatives in the International business
segment, lower stock-based compensation expense and lower account management
expense in North America. The company maintained solid Adjusted OIBDA margins
of approximately 41% in North America and drove further profitability
improvement in its International Business segment, remaining on track to
achieve 25% International Adjusted OIBDA margins by the end of 2013.

The decline in Adjusted EPS for the quarter compared to the same prior year
period was due primarily to higher shares outstanding as a result of the 17
million new shares issued in connection with the special dividend paid in
November 2012 and higher income tax expense.

Free Cash Flow (FCF) for the first quarter of 2013, before acquisitions, real
estate and capital expenditures related to our proposed conversion to a real
estate investment trust, or REIT, was $50 million, compared with $24 million
for the same prior year period. Capital expenditures totaled $45 million
(excluding $20 million of acquired real estate and $6 million of REIT-related
capital expenditures), or 6.0% of revenues for the quarter. FCF and capital
expenditures are best evaluated on a full-year basis because capital
expenditures do not occur evenly throughout the year. The company’s liquidity
position remains strong at $842 million, and its consolidated leverage ratio
of net debt to EBITDA (as defined in its credit agreement) was 3.95x at
quarter end, within its target range of 3.0x to 4.0x.

Dividends

On March 14, 2013, Iron Mountain’s board of directors declared a quarterly
cash dividend of $0.27 per share for stockholders of record as of March 25,
2013, which was paid on April 15, 2013.

Financial Performance Outlook

Today the company reiterated its 2013 full-year guidance. This guidance is
based on current expectations and does not include the potential impact of any
future acquisitions or divestitures (dollars in millions, except per share
data):

                                FY/2013
($MM except per share data)   Outlook           C$ Growth
                                Current
Revenues                        $3,020 - $3,100   0% - 3%^(1)
Adjusted OIBDA^(2)              $905 - $935         (1)% - 2%
Adjusted EPS^(2)                $1.13 - $1.24
Investments:
Capex (ex RE)^(2)(3)            ~$215
Real Estate^(4)                 ~$75
FCF (ex RE) ^ (2)               $320 - $360
                                                    

(1) Includes (1)% - 2% internal revenue growth

(2) These items exclude costs and expenditures associated with the work of the
Strategic Review Special Committee of the board of directors and the proposed
REIT conversion

(3) Includes ~$22 million for the relocation of the Boston headquarters

(4) Includes ~$30 million for data center construction

Iron Mountain’s conference call to discuss its first quarter 2013 financial
results and full-year outlook will be held today at 8:30 a.m. Eastern Time.
The company will simulcast the conference call on its website at
www.ironmountain.com, the content of which is not part of this earnings
release. A slide presentation providing summary financial and statistical
information that will be discussed on the conference call will also be posted
to the website and available for real-time viewing. The slide presentation,
replays of the conference call and related transcript will be available on the
website for future reference.

About Iron Mountain

Iron Mountain Incorporated (NYSE: IRM) is a leading provider of storage and
information management solutions. The company’s real estate network of over 64
million square feet across more than 1,000 facilities in 35 countries allows
it to serve customers around the world. And its solutions for records
management, data backup and recovery, document management and secure shredding
help organizations to lower storage costs, comply with regulations, recover
from disaster, and better use their information for business advantage.
Founded in 1951, Iron Mountain stores and protects billions of information
assets, including business documents, backup tapes, electronic files and
medical data. Visitwww.ironmountain.com for more information.

Forward Looking Statements

This press release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and other
securities laws and is subject to the safe-harbor created by such Act.
Forward-looking statements include our 2013 financial performance outlook and
statements regarding our operations, economic performance, financial
condition, goals, beliefs, future growth strategies, investment objectives,
plans and current expectations, such as our expected target leverage ratio,
our acquisition pipeline, expected Adjusted OIBDA margins in our International
business, our proposed conversion to a REIT and the estimated range of tax
payments and other costs expected to be incurred in connection with our
proposed conversion to a REIT. These forward-looking statements are subject to
various known and unknown risks, uncertainties and other factors. 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. Important factors that could cause actual results to
differ from expectations include, among others: (i) with regard to our
proposed conversion to a REIT, there are significant implementation and
operational complexities to address before we can convert to a REIT, including
obtaining a favorable private letter ruling from the Internal Revenue Service,
completing internal reorganizations and modifying accounting, information
technology and real estate systems, receiving stockholder approvals and making
required stockholder payouts and we can provide no assurance when conversion
to a REIT will be successful, if at all; (ii) with regard to our estimated tax
and other REIT conversion costs, our estimates may not be accurate, and such
costs may turn out to be materially different than our estimates due to
unanticipated outcomes in the private letter rulings from the U.S. Internal
Revenue Service, changes in our support functions and support costs, the
unsuccessful execution of internal planning, including restructurings and cost
reduction initiatives, or other factors;(iii) the cost to comply with current
and future laws, regulations and customer demands relating to privacy issues;
(iv)the impact of litigation or disputes that may arise in connection with
incidents in which we fail to protect our customers' information; (v)changes
in the price for our storage and information management services relative to
the cost of providing such storage and information management services;
(vi)changes in customer preferences and demand for our storage and
information management services; (vii) the adoption of alternative
technologies and shifts by our customers to storage of data through non-paper
based technologies; (viii)the cost or potential liabilities associated with
real estate necessary for our business; (ix)the performance of business
partners upon whom we depend for technical assistance or management expertise
outside the U.S.; (x)changes in the political and economic environments in
the countries in which our international subsidiaries operate; (xi) claims
that our technology violates the intellectual property rights of a third
party; (xii) changes in the cost of our debt; (xiii) the impact of
alternative, more attractive investments on dividends; (xiv) our ability or
inability to complete acquisitions on satisfactory terms and to integrate
acquired companies efficiently; (xv) other trends in competitive or economic
conditions affecting our financial condition or results of operations not
presently contemplated; and (xvi) other risks described more fully in the
Company’s most recently filed Annual Report on Form 10-K filed on March 1,
2013, under “Item 1A. Risk Factors,” and other documents that the Company
files with the Securities and Exchange Commission from time to time. Except as
required by law, the Company undertakes no obligation to release publicly the
result of any revision to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

APPENDIX A

We have presented in this earnings release financial data (Adjusted OIBDA,
Adjusted OIBDA Margin %, Adjusted EPS and FCF) that exclude certain costs
associated with the company’s 2011 proxy contest, the work of the Strategic
Review Special Committee of the board of directors and the Company’s proposed
REIT conversion (collectively, “REIT Costs”). Reconciliations of supplemental
non-GAAP measures to GAAP measures may be found below or by visiting the
Investor Relations page at www.ironmountain.com under “Supplemental Data.” We
believe the adjusted data provides meaningful supplemental information
regarding the Company’s operating results primarily because they exclude
amounts we do not consider part of ongoing operating results when planning and
forecasting and assessing the performance of the organization or our
individual operating segments. We believe that the adjusted data also
facilitates the comparison by management and investors of results for current
periods and guidance for future periods with results for past periods.

                                                              
Selected Financial Data:
(dollars in millions, except per share     Q1/2012    Q1/2013    Inc (Dec)
data)
Revenues                                   $ 746        $ 747        0.1    %
                                                                     
Gross Profit (excluding D&A)               $ 431        $ 426        (1.2   )%
Gross Margin %                               57.8 %       57.0 %
                                                                     
Adjusted OIBDA                             $ 223        $ 227        2.2    %
Adjusted OIBDA Margin %                      29.8 %       30.5 %
                                                                     
Operating Income                           $ 142        $ 123        (13.4  )%
Interest Expense, net                      $ 59         $ 63         7.5    %
                                                                     
Income from Continuing Operations          $ 61         $ 18         (70.0  )%
Adj. EPS from Continuing Operations –      $ 0.29       $ 0.27       (6.9   )%
FD
                                                                            

Non-GAAP Measures

We have presented supplemental non-GAAP financial measures as part of this
earnings release. A reconciliation is provided below that reconciles each
non-GAAP measure to its most comparable GAAP measure. This presentation of
non-GAAP financial measures should not be considered in isolation from, or as
a substitute for, the most directly comparable GAAP measures. We believe that
these non-GAAP financial measures provide meaningful supplemental information
regarding the company’s operating results primarily because they exclude
amounts we do not consider part of ongoing operating results when planning and
forecasting and assessing the performance of the organization or our
individual operating segments. We believe that our non-GAAP financial measures
also facilitate the comparison by management and investors of results for
current periods and guidance for future periods with results for past periods.

Adjusted Operating Income Before Depreciation, Amortization, Intangible
Impairments, and REIT Costs, or Adjusted OIBDA

Adjusted OIBDA is defined as operating income before depreciation,
amortization, intangible impairments, (gain) loss on disposal/write-down of
property, plant and equipment, net, and REIT Costs. Adjusted OIBDA Margin is
calculated by dividing Adjusted OIBDA by total revenues. These measures are an
integral part of the internal reporting system we use to assess and evaluate
the operating performance of our business. We use multiples of current or
projected Adjusted OIBDA in conjunction with our discounted cash flow models
to determine our overall enterprise valuation and to evaluate acquisition
targets. We believe Adjusted OIBDA and Adjusted OIBDA Margin provide our
current and potential investors with relevant and useful information regarding
our ability to generate cash flow to support business investment.

Adjusted Earnings per Share from Continuing Operations, or Adjusted EPS

Adjusted EPS is defined as reported earnings per share from continuing
operations excluding: (1) (gain) loss on disposal/write-down of property,
plant and equipment, net; (2) intangible impairments; (3) REIT Costs; (4)
other (income) expense, net; and (5) the tax impact of reconciling items and
discrete tax items. 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.

Free Cash Flows before Acquisitions and Discretionary Investments, or FCF

FCF is defined as Cash Flows from Operating Activities from continuing
operations less capital expenditures (excluding real estate and capital
expenditures associated with the REIT conversion), net of proceeds from the
sales of property and equipment and other, net, and additions to customer
relationship and acquisition costs. REIT Costs are also excluded from FCF. Our
management uses this measure when evaluating the operating performance of our
consolidated business. We believe this measure provides relevant and useful
information to our current and potential investors. FCF 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 of capital to our
stockholders and voluntary prepayments of indebtedness.

Following are reconciliations of the above-described measures to the most
directly comparable GAAP measures:

Adjusted OIBDA reconciled to operating income (in millions):

                                                    Three Months Ended
                                                 
                                                    March 31,
                                                     2012    2013 
Adjusted OIBDA                                      $ 223    $ 227
Less: Depreciation & Amortization                     78         80
Loss (Gain) on disposal/write-down of PP&E, net       1          (1   )
REIT Costs                                           2         25   
Operating Income                                    $ 142      $ 123  

Adjusted EPS from Continuing Operations – FD reconciled to Reported EPS from
Continuing Operations – FD:

                                                   Three Months Ended
                                                     March 31,
                                                      2012        2013
Adjusted EPS from Continuing Operations – FD         $ 0.29        $ 0.27
Less: Other (Income) Expense, net                      (0.02   )       0.01
REIT Costs                                             0.01            0.13
Tax impact of reconciling items and discrete tax      (0.05   )      0.03
items
Reported EPS from Continuing Operations – FD         $ 0.35         $ 0.10
                                                                     
Weighted average common shares outstanding – FD       172,223       192,110
(000s)

Free Cash Flows before Acquisitions and Discretionary Investments reconciled
to Cash Flows from Operating Activities from Continuing Operations (in
millions):

                                                            Three Months Ended
                                                         
                                                            March 31,
                                                              2012    2013
Free Cash Flows Before Acquisitions and Discretionary       $  24     $ 50
Investments
Add: Capital Expenditures (excluding real estate), net         53         75
Additions to Customer Acquisition Costs                        3          5
Less: REIT Conversion Costs, net of tax                        1          18
REIT Conversion Capital Expenditures                          --        6
Cash Flows from Operating Activities from Continuing        $  79       $ 106
Operations

                                                              
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands except Per Share Data)
(Unaudited)
                                                                   
                                                   Three Months Ended

                                                   March 31,
                                                    2012        2013    
REVENUES:
Storage Rental                                     $ 425,341       $ 442,469
Service                                             321,157       304,562 
                                                                   
Total Revenues                                       746,498         747,031
                                                                   
OPERATING EXPENSES:
Cost of Sales (Excluding Depreciation and            315,298         321,076
Amortization)
Selling, General and Administrative                  210,660         223,451
Depreciation and Amortization                        78,008          80,201
Loss (Gain) on Disposal/Write-down of
Property, Plant and                                 719           (539    )

Equipment, Net
                                                                   
Total Operating Expenses                            604,685       624,189 
                                                                   
OPERATING INCOME                                     141,813         122,842
                                                                   
INTEREST EXPENSE, NET                                58,784          63,182
OTHER (INCOME) EXPENSE, NET                         (3,304  )      2,739   
                                                                   
Income from Continuing Operations before
Provision                                            86,333          56,921
for Income Taxes
                                                                   
PROVISION FOR INCOME TAXES                          25,260        38,571  
INCOME FROM CONTINUING OPERATIONS                    61,073          18,350
(LOSS) INCOME FROM DISCONTINUED OPERATIONS,         (5,093  )      2,184   
NET OF TAX
NET INCOME                                           55,980          20,534
                                                                   
Less: Net Income Attributable to
Noncontrolling                                      630           1,148   

Interests
                                                                   
Net Income Attributable to Iron Mountain           $ 55,350       $ 19,386  
Incorporated
                                                                   
EARNINGS (LOSSES) PER SHARE – BASIC:
INCOME FROM CONTINUING OPERATIONS                  $ 0.36         $ 0.10    
TOTAL (LOSS) INCOME FROM DISCONTINUED              $ (0.03   )     $ 0.01    
OPERATIONS
Net Income Attributable to Iron Mountain           $ 0.32         $ 0.10    
Incorporated
EARNINGS (LOSSES) PER SHARE – DILUTED:
INCOME FROM CONTINUING OPERATIONS                  $ 0.35         $ 0.10    
TOTAL (LOSS) INCOME FROM DISCONTINUED              $ (0.03   )     $ 0.01    
OPERATIONS
Net Income Attributable to Iron Mountain           $ 0.32         $ 0.10    
Incorporated
                                                                   
DIVIDENDS DECLARED PER COMMON SHARE                $ 0.2500       $ 0.2700  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING –        171,320       190,213 
BASIC
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING –        172,223       192,110 
DILUTED
                                                                   
Adjusted Operating Income before Depreciation,
Amortization                                       $ 222,551       $ 227,476
and Intangible Impairments

                                                           
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
(Unaudited)
                                                                
                                             December 31,       March 31,

                                             2012               2013
ASSETS
                                                                
CURRENT ASSETS:
Cash and Cash Equivalents                    $ 243,415          $ 229,999
Restricted Cash                                33,612             33,613
Accounts Receivable (less allowances of
$25,209                                        572,200            571,402

and $26,939, respectively)
Other Current Assets                          174,865          166,122    
Total Current Assets                          1,024,092        1,001,136  
                                                                
PROPERTY, PLANT AND EQUIPMENT:
Property, Plant and Equipment at Cost          4,443,323          4,470,141
Less: Accumulated Depreciation                (1,965,596 )      (1,992,030 )
Property, Plant and Equipment, net            2,477,727        2,478,111  
                                                                
OTHER ASSETS:
Goodwill, net                                  2,334,759          2,308,720
Other Non-current Assets, net                _ _ 521,761        _ _ 510,213
Total Other Assets                            2,856,520        2,818,933  
                                                                
Total Assets                                 $ 6,358,339       $ 6,298,180  
                                                                
LIABILITIES AND EQUITY
                                                                
CURRENT LIABILITIES:
Current Portion of Long-term Debt            $ 92,887           $ 91,853
Other Current Liabilities                     812,066          752,725    
Total Current Liabilities                      904,953            844,578
                                                                
LONG-TERM DEBT, NET OF CURRENT PORTION         3,732,116          3,757,853
OTHER LONG-TERM LIABILITIES                    558,822            567,672
COMMITMENTS AND CONTINGENCIES
TOTAL IRON MOUNTAIN INCORPORATED               1,149,971          1,114,555
STOCKHOLDERS’ EQUITY
NONCONTROLLING INTERESTS                      12,477           13,522     
                                                                
TOTAL EQUITY                                  1,162,448        1,128,077  
                                                                
Total Liabilities and Equity                 $ 6,358,339       $ 6,298,180  

Contact:

Iron Mountain Incorporated
Investor Relations Contacts:
Melissa Marsden, 617-869-9920
Senior Vice President, Investor Relations
melissa.marsden@ironmountain.com
or
Stephen P. Golden, 617-535-4766
Vice President, Investor Relations
sgolden@ironmountain.com