IRM - NYSE

Good morning, and welcome to the Iron Mountain Incorporated Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Press star then zero on your telephone keypad for assistance. After today's presentation, there will be an opportunity to ask questions. We will limit an analyst to one question, and you can rejoin the queue. Please note that this event is being recorded. I would now like to turn the conference over to Mark Rupe, Senior Vice President of Investor Relations. Please go ahead. Thanks, Chloe.

Good morning, everyone, and welcome to our Fourth Quarter 2025 earnings conference call. Joining us today are William L. Meaney, our President and Chief Executive Officer, and Barry A. Hytinen, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will open the lines for Q&A. Today's call will include forward-looking statements, which are subject to risks and uncertainties. For a discussion of the major risk factors that could cause our actual results to differ from these statements, please refer to today's earnings materials, including the Safe Harbor language on Slide 2 of the earnings presentation, and our annual and quarterly reports on Forms 10-K and 10-Q. Each of these items, as well as reconciliations of non-GAAP financial measures referenced during this call, can be found on our Investor Relations website at investors.ironmountain.com. With that, I will turn the call over to William L. Meaney. Thank you, Mark, and thank you all for joining us today to discuss our fourth quarter and full year results. We are pleased to report another record performance in the fourth quarter above our expectations, delivering all-time highs and 17% year-over-year growth for revenue, adjusted EBITDA, and AFFO. Organic revenue increased 14% in the quarter driven by broad-based strength and record results across our portfolio. Full year revenue increased 12% to $6.9 billion reflecting our team's steadfast commitment to delivering innovative solutions for our customers, and the strong returns we are generating from our growth investments across the business. Let me share some of the highlights from this record year and the momentum this provides underwriting our expectations to sustain industry-leading revenue and earnings growth into 2026 and beyond. We continue to capitalize on robust data center industry demand. Data center revenue increased 30% in 2025 including 39% in the fourth quarter. We expect the data center market will remain very strong in the coming years as hyperscalers build out inference and cloud capacity. With 43 megawatts leased in the fourth quarter, we enter 2026 with strong momentum in leasing and have great assets in prime markets. Our confidence in sustaining strong data center growth is supported by our current backlog, which we expect to drive more than 25% revenue growth in 2026. And on top of this, we expect another year of 20% plus growth in 2027. Moreover, we anticipate a year where we lease over 100 megawatts in 2026, further adding to our backlog. This confidence is driven by the conversations we are having with our customers around our land bank, which includes 400 megawatts of available capacity that is expected to energize over the next 24 months, half of which is expected to energize in the next 18 months. And we are driving substantial growth in our asset lifecycle management business. ALM revenue increased 63% in total in 2025 including 40% on an organic basis. And we ended the year on a high note with 56% organic growth in the fourth quarter driven in part by higher component remarketing revenue. In 2025, we increased the number of Fortune 1,000 customers utilizing our ALM services to 360. This is up from 270 in the prior year. And importantly, we have significant room to grow within these existing customers. Looking ahead, we are focused on capitalizing on the large opportunities in the ALM market, and we expect this to be a multibillion dollar business for Iron Mountain Incorporated in the future. Furthermore, we are off to a strong start in 2026 benefiting from recent commercial wins, increased customer penetration, and higher component remarketing revenue. And our digital solutions business continues to build momentum. We achieved an all-time high for digital revenue in 2025 eclipsing $500 million driven by another year of double-digit growth. We are seeing solid demand for traditional projects and are winning new contracts across industry verticals for DXP, our AI-powered digital solutions platform. The number of DXP deals secured in the fourth quarter was an all-time high and were at an average deal value more than double the prior year. The outlook is equally as promising as the DXP pipeline continues to grow. In 2026, we expect to maintain strong digital growth supported by our new project wins and growth in our underlying recurring business, which is now more than 40% of our digital revenue. Collectively, these three growth businesses of data center, ALM, and digital grew more than 30% in 2025 to nearly $2.0 billion in revenue. They accounted for two-thirds of our growth, or eight percentage points of growth on a consolidated basis. This growth portfolio provides an important tailwind in supporting our plan for double-digit top and bottom line growth well into the future, which will only build as the growth portfolio continues to become a larger mix of the overall enterprise. I also want to highlight the strength and importance of our highly recurring legacy physical storage business. This high-margin, nearly $5.0 billion business serves as a strong foundation for Iron Mountain Incorporated. It drives substantial cash flow and funds growth investments across the business. It is also central to our cross-selling opportunity as this is where we originally built our more than 240,000 customer relationships, including 950 of the 1,000 largest global companies. In 2025, the physical storage business achieved record revenue growing at a mid-single digit rate, consistent with our long-term expectations. This year's performance marked our 37th consecutive year of organic storage rental revenue growth. And looking ahead, we remain totally committed to growing this business through our innovation around how we help our customers get more value from the information we store on their behalf as well as our revenue management strategy. This continues to prove a winning strategy by yielding consistent volume growth coupled with an increase in our value-add driven by our approach to this important service line. We have great confidence in delivering on this in 2026 and we have already set into motion many of our key initiatives. In addition to our growth achievements, we also executed very well operationally. We drove expanded profitability across the portfolio with adjusted EBITDA increasing 15% and margin improving 90 basis points at the enterprise level as compared to last year. So as you can see, I am very proud of our team's performance in 2025. And we are entering 2026, our 75th anniversary, with incredibly strong momentum. And yet, despite all of our recent success, what is even more compelling is that we are still in the early phases of our longer-term growth journey. We are just still scratching the surface of the $170 billion total addressable market for our services. We look forward to 2026 being another record year for Iron Mountain Incorporated, and this is supported by our guidance outlook. Now let me share some recent commercial wins that illustrate the strength of our synergistic business model and support our conviction in sustaining double-digit growth. In North America, a Fortune 500 healthcare company selected Iron Mountain Incorporated to expand our longstanding partnership for records management and ALM as well as deliver a comprehensive suite of information governance solutions. Our longstanding relationship, proven track record, global footprint, deep compliance expertise, and ability to deliver meaningful value to the customer were key factors in securing the deal. In Europe, we secured a multiyear agreement with a major UK government department to provide records management solutions. Iron Mountain Incorporated was selected based on the strength of our established relationship, proven reliability, deep understanding of regulatory requirements, and ability to drive measurable operational efficiency for the customer. I would also like to highlight a very important win in our media and archival services business. A leading global media and entertainment company and partner of ours for more than 15 years engaged us to securely store and preserve more than 1,600 high-value media assets across multiple geographies. Iron Mountain Incorporated’s unmatched global reach, technical expertise, and proven track record in managing complex media archives were key advantages in winning this large and competitively bid deal. In our digital solutions business, a leading Asia financial services company with more than 1,000 locations selected Iron Mountain Incorporated to support its digital modernization efforts through a multiyear agreement building on an existing 10-year records management relationship. This transformative software-only deal launches in four key markets with plans to expand across 16 additional markets, replacing the customer's legacy enterprise data management platform with DXP. The solution incorporates DXP's AI capabilities to extract metadata from over 500 million images and digital files to improve the quality and accuracy of the customer's database as well as provide secure digital storage and advanced backup services. Our leading AI technology that allows our customers to treat unstructured data in a structured manner, robust security standards, deep regulatory expertise, and ability to deliver a scalable solution aligned with the customer's strategic priorities were instrumental in securing this award and displacing incumbent providers. And as it relates to our work with the Department of the Treasury, we continue to execute under this new agreement. We expect 2026 will be a ramp-up year. We have already established ourselves as the leading partner to the Treasury for these services. As the department manages through the complexity of this significant project, we have included $45 million of revenue related to this program in our 2026 outlook. Now let me turn to our data center business. Our strong partnerships with many of the largest hyperscalers drove new leasing in the fourth quarter, and they remain actively interested in all of our key data center developments. At our Northern Virginia campus, we won a 15-year contract for 28 megawatts of capacity from a major hyperscaler supporting the continued expansion of its cloud platform. In addition, as we discussed in November, an existing hyperscale customer leased our entire 36-megawatt Chicago site as part of a 10-year contract, transferring and expanding the customer's previous lease in London. Also this quarter, another major hyperscaler leased 2 megawatts in our Phoenix campus as well as 600 kilowatts in our Madrid campus. Turning to our asset lifecycle management business, in the U.S., a large financial institution selected Iron Mountain Incorporated to provide secure IT asset disposition services for end-of-life network equipment and telephones across over 2,000 branch locations. The deal represents a cross-sell, building on our longstanding partnership for records management and digital solutions. Our established track record of providing customer value along with our reputation for security, compliance, and ability to operate at scale across the U.S. were important factors in winning this business. Successful cross-selling was also key to winning a deal with a Fortune 100 healthcare technology company to manage the secure recovery, audit, and compliant disposition of more than 11,000 employee devices. Our unique capability to rapidly deploy comprehensive end-to-end ITAD logistics while mitigating operational risk and compliance exposure were determining factors in the customer's decision. We are optimistic that this newly expanded relationship will deliver significantly more opportunities in the future. And a global IT infrastructure services provider has engaged Iron Mountain Incorporated to support data center decommissioning and asset remarketing initiatives for more than 30,000 deployed IT assets across North America. This multiyear deal builds on our established records management and digital solutions relationship. Our ability to deliver scalable, compliant, and cost-effective solutions was a key differentiator in displacing incumbent providers. In conclusion, I want to thank my fellow Mountaineers across the world for their continued dedication in serving our customers. Our Mountaineers’ best-in-class stewardship of our more than 240,000 customers continues to be a key factor in our success. As you heard today, we are delivering exceptional results, have incredibly strong momentum across the business, and remain in the early phases of executing against our tremendous long-term growth opportunity. With that, I will turn the call over to Barry A. Hytinen. Thanks, Bill, and thank you all for joining us to discuss our results. As you have heard this morning, we delivered exceptional performance across the business in 2025 and entered 2026 with strong momentum. In terms of the fourth quarter, we achieved record quarterly results across all key financial metrics. Revenue of $1.84 billion was up $262 million year-on-year. This was well ahead of the projection we provided on our last call, driven by strength across our business and particularly in our ALM business. As compared to last year, revenue increased 17% on a reported basis, 15% on a constant currency basis, and 14% on an organic growth basis in the quarter. Total storage revenue was $1.0 billion, up $119 million, or 13% year-on-year. Total service revenue was $782 million, up $143 million, or 22% from last year. With the strong services growth, gross margin in the quarter was modestly down from last year, entirely the result of mix. As we have talked about before, our services revenue has lower gross margins, and services increased in penetration by 200 basis points as compared to last year. I will also note that our services gross margin expanded over 100 basis points year-over-year and was up 350 basis points from the third quarter. This is an excellent accomplishment and resulted from strong execution by our operations team. And from an expense perspective, we achieved great operating leverage, delivering our lowest SG&A expense ratio in many, many years. Adjusted EBITDA of $705 million expanded $100 million, or 17% year-on-year. This was $15 million ahead of the projection we provided on our last call, driven by higher revenue and operational efficiency across the business. Adjusted EBITDA margin was 38.3%, which is the highest level we have ever reported for this metric so far. And as you will see in our guidance, we are projecting further EBITDA margin expansion in 2026. AFFO was $430 million, up $62 million. This represented an increase of 17% as compared to last year. And AFFO on a per share basis was $1.44, up 16% to last year, and was $0.05 ahead of the projection we gave on our last call. Now let me summarize briefly the full year, which marked our fifth consecutive year of record results across all key financial metrics. Stepping back, when compared to our initial outlook for the year, we exceeded the high end of our guidance for revenue and adjusted EBITDA by approximately $100 million and $50 million, respectively. Revenue of $6.9 billion increased 12% on both a reported and constant currency basis. Adjusted EBITDA increased 15% year-on-year to $2.57 billion, an increase of $338 million. AFFO increased over 15% to $1.54 billion, or $5.17 on a per share basis. Now turning to segment performance. In our Global RIM business in the fourth quarter, we achieved record quarterly revenue of $1.37 billion, an increase of $115 million. Reported growth was 9%, including organic growth of 7% year-on-year. Storage revenue growth increased 7% on a reported basis and 5% on an organic basis. We were very pleased with our core physical performance, which, as you know, includes our box and consumer storage businesses. It was up 8% year-on-year and up quarter-over-quarter. Now I will call out that you will see that our total RIM storage revenue was down very slightly from the third quarter. This was attributable to two items. The U.S. dollar was stronger quarter-over-quarter, and secondly, we recognized lower data management revenue following a particularly strong performance in the third quarter. Global RIM service revenue grew 12% with organic growth of 10% in the quarter. This strong growth was driven primarily by our digital business and core records management services. Turning to the Treasury contract that Bill mentioned, we recognized $6 million of revenue in the fourth quarter, modestly ahead of the expectation we shared on our last earnings call. For 2026, we are using a conservative outlook as we are in the first year of this multiyear contract and have included $45 million of revenue in our guidance. Looking out to 2027 and beyond, we expect to generate in excess of $100 million in revenue annually. Global RIM adjusted EBITDA increased $43 million to $622 million, yielding an adjusted EBITDA margin of 45.3%. Turning to our Global Data Center business, we achieved revenue of $237 million in the fourth quarter, an increase of $67 million, or 39% year-on-year, driven by lease commencements and positive pricing trends. In the fourth quarter, we signed 43 megawatts of new leases, commenced 41 megawatts of leases, and we renewed 176 leases totaling 4 megawatts. Pricing remains strong with renewal pricing spreads of 9% and 12% on a cash and GAAP basis, respectively. Fourth quarter data center adjusted EBITDA was $122 million, up $34 million year-on-year, resulting in an adjusted EBITDA margin of 51.5%. For 2026, we expect more than $1.0 billion in data center revenue, which represents an increase of more than 25% year-on-year together with segment EBITDA margin up year-on-year in every quarter. Turning to Asset Lifecycle Management. Total ALM revenue was $190 million, an increase of $78 million, or 70% year-over-year. This exceeded the projection we provided on our last call by $30 million, driven equally by hyperscale and enterprise businesses. On an organic basis, our team grew revenue $64 million, or 56% growth. This was achieved through broad strength across the ALM business. Within enterprise, we continue to win new logos and increase penetration with our existing customers. Our recent acquisitions of Premier Surplus and ACT Logistics are performing well, contributing $14 million to revenue in the quarter. And from a profitability perspective, we are pleased with the team's execution in driving continued improvement, expanding margins. For 2026, we expect $850 million in ALM revenue, which represents about 35% year-on-year growth, together with expanding margins. Turning to capital allocation. We remain focused on growing our dividend and investing in high-return opportunities that drive double-digit growth while maintaining a strong balance sheet. Our Board of Directors declared our quarterly dividend of $0.864 per share to be paid in early April. Now as a reminder, this is 10% higher than the comparable quarterly dividend last year. Our commitment is to continue growing our dividend, building on four consecutive years of increases, while we maintain a target payout ratio in the low 60s as a percentage of AFFO per share. In terms of capital investments, we invested $525 million of growth CapEx and $43 million of recurring CapEx in the fourth quarter. For 2026, we are planning for capital expenditures to be slightly down from last year with $2.0 billion in growth capital and $150 million in recurring CapEx. Now as investors know, our data center strategy is focused on pre-leasing before commencing meaningful construction. Turning to the balance sheet. With strong EBITDA performance, we ended the quarter with net lease-adjusted leverage of 4.9x, slightly better than our expectation. This represents our lowest leverage level achieved since prior to the company's REIT conversion in 2014. For 2026, we expect to end the year at similar levels to year-end 2025.

And now turning to our outlook for the full year 2026. As you have heard from us today, we are very pleased with the momentum we built in the business and have line of sight to another year of double-digit growth. For 2026, we expect total revenue to be within the range of $7.625 to $7.775 billion, which represents year-on-year growth of 12% at the midpoint. On an organic constant currency basis, this represents growth of 10%. We expect adjusted EBITDA to be within the range of $2.875 to $2.925 billion, which represents year-on-year growth of 13% at the midpoint. We expect AFFO to be within the range of $1.705 to $1.735 billion, which represents year-on-year growth of 12% at the midpoint. And we expect AFFO per share to be $5.69 to $5.79. This represents year-on-year growth of 11% at the midpoint. I want to provide a couple of points for modeling. We expect FX to be a benefit to full-year revenue by approximately $75 million and last year's acquisitions to contribute revenue of approximately $45 million. And turning to the first quarter, we expect revenue of approximately $1.855 billion, an increase of 16% to last year. On an organic constant currency basis, excluding FX and last year's acquisitions, this equates to 12% growth to last year. Adjusted EBITDA of approximately $685 million, an increase of 8% to last year. We expect AFFO of approximately $425 million. On like-for-like FX rates used to establish these targets, our 2026 guidance for revenue and adjusted EBITDA is approximately $8.1 billion and $3.0 billion, respectively. This represents five-year CAGRs in excess of 12% for revenue and 13% for EBITDA. With the large and highly fragmented markets we address, together with only 5% of our customers currently buying from more than one of our business units, we expect to grow revenue at a double-digit rate for the foreseeable future. I would like to express my thanks to our entire team for their focus and dedication to serving our customers and their commitment to Iron Mountain Incorporated. And with that, Operator, would you please open the line for Q&A?

Thank you. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We will limit analysts to one question. You can rejoin the queue. At this time, we will pause momentarily to assemble our roster. The first question today comes from Eric Thomas Luebchow with Wells Fargo. Please go ahead.

Great. I appreciate the question. Good morning, Eric. Can we maybe touch a little bit on the data center pipeline? Obviously, it is encouraging to hear you talk about a 100 megawatt plus opportunity ahead of you. Maybe you could talk about some of the markets where you are tracking larger deals and your degree of confidence in some of the activity and leasing conversations you have had. It would be great to hear about that. Thank you. Good morning, Eric, and thanks for the question. The first point is we feel like we are going into the year with very strong momentum based on the over 40 megawatts of leasing we did in the fourth quarter. And you can imagine leasing 40 megawatts in the fourth quarter if you are having a number of conversations about a number of sites with your key customers. The sites are not surprising. If you look at the 400 megawatts that we have energizing over the next two years, the sites that are attracting a lot of interest are continued Northern Virginia because we still have some capacity that will be coming online there. Richmond, we have over 225 megawatts of capacity coming online before 2027. Madrid obviously is a hot market in Europe. Our London campus, where we did that swap where a customer wanted to swap out of London for going in and taking all of Chicago, we put that back on the market, and, of course, that is very attractive both to hyperscalers but also the retail market. In London the retail market is extremely strong and obviously has very high yields. So we have a number of conversations both around retail and wholesale there. And then India. The Indian market is getting more and more momentum, and we have a lot of capacity coming online again there in the next two years. So across the board, the conversations really started picking up in the fourth quarter, which you could see in the leasing activity we did in the fourth quarter. We feel really good that we have 400 megawatts being energized in the next 24 months. And we see a lot of the folks that were focused on large language models in the last year are now going back to making sure they have enough for their cloud buildout and inference.

The next question comes from Tobey O'Brien Sommer with Truist. Please go ahead. Thank you.

I would like to ask you a question about ALM. Can you give us some more color about the momentum you are seeing in that business for organic growth this year and then the opportunity for you to really maybe broaden your footprint through acquisitions as this turns into a truly global business? Yes, thanks for the question, Tobey. Let me start off in terms of the conversations we are having with the customers and the cross-selling capability, and then Barry can give you a little bit more color in terms of how that is showing up in the financials. If you notice in the Fortune 1,000, effectively 950, we are really pleased with the number of logos that we added this year. It is over a 20% increase in the number of logos. The thing that is important here, we are well in excess of over 300 of our largest customers that are now buying our services. But even with those we are just scratching the surface. We are really growing the business among the largest, most complex, most regulated companies in the world in two dimensions. One is we are now building and displacing their previous suppliers in many cases, and there is more growth just within those customers. And we are continuing to build momentum in the customers that we are not serving in ALM but that we already are serving in other business lines. So the momentum and the growth both in terms of expanding in existing customers, as well as adding new logos, is continuing to build.

Yes, Tobey, I will just add that, first of all, we feel great about the ALM business. We are operating in a very large fragmented market and we are clearly driving growth. If you look at this year, the $850 million of revenue that we just guided to, that includes just about $20 million of acquisition contribution, and as you work through your math, you would find that our enterprise business we are forecasting to be upwards of 20% organic growth, with the balance being in our hyperscale business where, as we talked about before, that tends to be more of a current market trend as it relates to the dynamics of hyperscale decommissioning in this forecast. There is a tremendous amount of opportunity for us in ALM, both in hyperscale and in enterprise. Thank you.

The next question comes from George Tong with Goldman Sachs. Please go ahead.

Hi. Thanks. Good morning. In your ALM business, revenue grew 56% organically in the fourth quarter. Can you talk about how much of that growth came from volumes versus pricing, and what you are assuming for pricing contributions in your 2026 ALM outlook?

Yes, George, I will take that one. If you recall, in December I was speaking at an investor conference. I mentioned that memory pricing in particular, and I think that is what you are specifically speaking about because that is where the industry has seen some pricing trends, that pricing in memory was running $15 million plus ahead of what we had provided for our fourth quarter guidance at that point in December. And we did a little bit better than that, probably $15 million to $20 million versus our original guide for the fourth quarter on pricing related to memory. As you know, hyperscale represents generally about 40% of our ALM business. It was a little bit higher than that in the fourth quarter, but for the full year it was at 40%. And memory tends to be between 40%–50% of the revenue, and we were at the higher end of that percentage in light of where pricing has been. Pricing has continued to be strong here in the early part of the year. With our current forecast, we are continuing to use current conditions as it relates to pricing and volume going forward. The other thing I will give you is that, in total, you heard us right, 56% plus organic growth in the quarter. Our enterprise business was very strong as well. So it was a very balanced mix across the business. The outperformance, as I mentioned in the prepared remarks, was equally split between hyperscale and enterprise. So we are feeling quite good about where we are.

The next question comes from Shlomo H. Rosenbaum with Stifel. Please go ahead.

Hi. This is Daniel on for Shlomo. Could you just dive a little bit deeper into the gross margin trends in the services business? You mentioned some of the puts and takes of why that was, but maybe just provide a little more detail if you could. Thank you.

Okay, Daniel. Thanks for that one. As I talked about before, our total gross margin is naturally affected by mix because our storage business is a higher gross margin, as investors know, and our services margin is lower. The important thing to note about our services gross margin in the quarter is it was up over 100 basis points and, on a sequential basis, up 350. Our services margins are improving across the company. Our services margins within Global RIM improved year-on-year meaningfully. They improved meaningfully within ALM. Data center does not have a lot of services, but it was also very strong. Our teams are executing quite well, and that is a function of both strong execution, operating leverage, and a little bit of pricing on the services lines as well. We think that trend can continue with respect to our services gross margin. While our gross margin on storage, I mentioned in the prepared remarks, was down slightly, that was all due to mix because even within the Global RIM business, the storage gross margin was up year-on-year. As data center becomes a larger portion of our business, it has a slightly dilutive gross margin to our storage average, but it is very accretive to EBITDA margin for the total company. We were very pleased with the margin performance across the company, both within storage and services. Thanks, Daniel.

The next question comes from Jonathan Atkin with RBC Capital Markets. Please go ahead.

Yes. I wonder if you could maybe just talk about the M&A landscape as it pertains to both ALM as well as data centers. Thanks.

I will start, Jonathan, thanks for the question, and Barry may want to add something. On the data center side, we do not really see ourselves active in the M&A market for data centers. We have done some. We did the IO Data Centers acquisition. We did the EvoSwitch acquisition in the U.S. We did EvoSwitch in Europe, and we did the Web Werks acquisition in India. But all those were brownfield acquisitions. It was when we were in the early days entering geographies and it was really buying a platform, and platform not just in terms of an asset with capacity to lease but also a team that understood those markets. I would not expect us to be a big acquirer of data center assets. We feel pretty good about the teams that we have. We feel pretty good about the platforms we have in those geographies. With 400 megawatts coming ready to be energized over the next 24 months, we feel really good about being able to grow that business on a purely organic basis. On the ALM side, we continue to see that as an attractive market. We are already in 40 markets. Some of those markets we use partners as a way of actually understanding the opportunity to do further acquisition to build out our footprint. We operate in 61 countries, and one of the big differentiators when we are winning new business or adding ALM services to an existing logo, like the 90 additional customers we picked up this year in the Fortune 1,000, is our global footprint. We want to be able to service our customers in all 61 countries around the globe and a big part of that is our M&A. Barry, you may want to comment further.

Yes, Jonathan. First and foremost, the business is growing on an organic basis tremendously and we have a long runway as we continue to penetrate our client base and as we land at clients, win new logos, and expand. On M&A in particular, our corporate development team and our ALM teams are consistently and constantly looking at opportunities. As one of the largest players, if not the undisputed largest player in the space, we generally get a chance to see any asset that might have a willingness to sell. We do not tend to predict when we might make a next acquisition in light of the dynamics of how M&A works. In this market, we kind of see mid- to high-single digits as a multiple of EBITDA, and with our ability to synergize those down, that quickly gets to below 5x. It is a very positive way for us to continue to grow and supplement the organic growth that the team is delivering. Thanks, Jonathan.

The next question comes from Andrew Steinerman with JPMorgan. Please go ahead.

As we are building out our 2026 cash flow waterfall as we do every year, could you tell us if there are any meaningful restructuring charges to consider for 2026? And then also you noted that CapEx is down year-over-year. Maybe a little more color on that and refresh us how that splits between growth and maintenance CapEx and any other callouts that would be helpful in your cash flow assumptions for 2026?

Okay. Sure thing, Andrew. Thank you for that. On restructuring charges, let me be very clear about this. We will not have any Matterhorn restructuring. We have no restructuring charges in our plan at all. Our Matterhorn plan for restructuring ended last year, and so that cash flow generates a considerable amount of incremental capacity for investment with less debt required. Of the approximately $2.0 billion in growth CapEx we guided, we are in the vicinity of $1.8 billion that will be data centers specifically, if not more. When I mentioned that it would be slightly down and I also alluded to the fact that we are very focused on pre-leasing, the situation is such that we have provided in our guidance for our ability to commence construction on assets in excess of the level of what our guidance is. Specifically, I would imagine we would not necessarily spend this level unless we were actually pre-leasing more than we just projected. We said we would do at least 100, if not more, megawatts. We are very focused on pre-leasing, and this allocation for capital deployment more than accommodates that level. As it relates to any other tidbits on cash flow, for AFFO purposes, from a cash interest standpoint, I would be planning for somewhere in the vicinity of $905 million for the full year. That is taking the fourth quarter run rate—we had $227 million on that line—annualizing that and then adding some incremental for borrowings in the fourth quarter as well as borrowings across the year, and you get right to that number. Cash taxes, I am assuming will be up probably in the vicinity of $20 million year-on-year. That may be conservative, but in light of the phenomenal growth we are seeing in services, particularly in ALM, I thought it was prudent to plan for a little bit more. In both of those cases, they work into our AFFO guidance such that I feel very confident in the way we guided for AFFO, Andrew. Thank you.

The next question comes from Brendan James Lynch with Barclays. Please go ahead.

I wanted to follow up on RIM organic constant currency storage growth of about 5.2%. I think, Barry, you mentioned that there was some impact from lower data management revenue and maybe some consumer storage effects. Could you unpack that a little bit more and maybe tell us what is factored into your expectation for 2026?

Okay. I will start with the first part. The consumer business was right in line with what we expected, Brendan, just to mention that first and foremost. So that was not a factor in the quarter. What was a factor in the quarter on a sequential basis was, first of all, the dollar was stronger, so that cut into our growth rate some if you look at third quarter versus fourth quarter. Data management had a particularly strong comp in the third quarter. That business tends to be fairly steady, but it can oscillate quarter to quarter some, and you have seen that over many quarters of disclosure. When you look at our total RIM storage results, it is the combination of physical business, the box consumer business, as well as data management. Most times when investors are talking to me about our physical business, they are talking about our traditional box business. That business is very healthy. Our total physical business was up 8% year-on-year. It was up in excess of about 1% on a sequential basis despite FX. Volumes have continued to trend very well. As it relates to what we are forecasting, we are expecting it to be in that same mid-single digit rate that we have expected for some time. A couple other tidbits: all of the revenue management actions that we anticipated taking are now fully in the marketplace. Everything went essentially in January. From a timing perspective, that will help the first quarter a little bit—it is a little bit earlier than last year's revenue management—and that will play out over the first half as it relates to year-on-year. We are very much expecting another year of modest growth in terms of organic physical volume. Thank you.

The next question comes from Nathan Crossett with BNP. Please go ahead. Hey, good morning.

I think you might have said it in the prepared remarks, but can you just go over again how much you are expecting from the Department of the Treasury contract this year, and how that ramps over time? And then also, I do not think you give SG&A guidance. Is there anything you can share on that for us in 2026? Thank you.

Morning, Nathan. I will start with the Department of the Treasury, and Barry, you can chime in if you want to add more color. We expect this year for it to be at least $45 million as the Department of the Treasury starts ramping up, because they are in a process of outsourcing from doing everything in-house to outsourcing. We feel really good about that number and that number will build. As Barry said, we expect it to next year be around $100 million, which would be more consistent with the annual run rate that we would expect from that contract and the feedback we are getting from the Department of the Treasury. We are getting very positive feedback on our ability to execute on their behalf. We already have a FedRAMP certification at Moderate, but we are also in the final approvals for FedRAMP High, and we are the only vendor at that stage in terms of FedRAMP certification. The FedRAMP certification is an important certification when you are providing services to the federal government in terms of your SaaS platform. This is based on our InSight SaaS platform, which is a part of our DXP platform. We feel really good both in terms of our technology clearing these important hurdles to serve the federal government as well as the feedback we are getting from the customer. As we always expected, 2026 will be a bit of a ramp as they are beginning their outsourcing curve. These things do not generally just flip a switch. It takes a little bit of time to move people across.

Nathan, I will add just a couple of points on Treasury and then come to your other question. We positioned ourselves in a very prudent way as it relates to this contract in our guidance. In the fourth quarter, we delivered about $6 million of revenue. In the first quarter, I would expect that to ramp up some. From a halves standpoint, I would expect the $45 million to be generally split evenly. That $45 million level is purely being conservative and prudent based on the ramp-up and how they outsource. We fully expect the business to be generating in excess of $100 million in 2027 and beyond, and it may be well beyond $100 million as we continue to demonstrate our capabilities to the government. We continue to work with various federal agencies about additional opportunities to support government efficiency. We feel very good about what we are doing with our digital solutions. On your second question, from an SG&A standpoint, at the midpoint we are forecasting 40 basis points of additional EBITDA margin expansion. That will be benefited by SG&A leverage. Our teams across the company are working to continue to transform the business. We are adopting AI tools to improve efficiency, get more operating leverage, and we are in the very early stages of that. There is a multiyear opportunity to drive SG&A leverage and operating leverage across the company, and I look forward to reporting that to you over the next few years. Thank you.

This concludes our question and answer session in the Iron Mountain Incorporated Fourth Quarter 2025 earnings conference call. Thank you for attending today's call. You may now disconnect. You have been removed from the call.