Melissa Marsden - Iron Mountain, Inc. William Leo Meaney - Iron Mountain, Inc. Stuart B. Brown - Iron Mountain, Inc. Unverified Participant.

Andrew Charles Steinerman - JPMorgan Securities LLC Karin Ford - MUFG Securities America, Inc. Andrew John Wittmann - Robert W. Baird & Co., Inc. Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc. Kevin McVeigh - Deutsche Bank Securities, Inc..

Good morning, everyone, and welcome to the Iron Mountain Second Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

I would now like to turn the conference over to Melissa Marsden, Senior Vice President of Investor Relations. Please go ahead..

Thank you and welcome everyone to our Second Quarter 2017 Earnings Conference Call. The user-controlled slides that we will be referring to today in our prepared remarks are available on our Investor Relations website, along with the link to today's webcast.

You can find the presentation at ironmountain.com under About Us/Investors/Events & Presentations. Alternatively, you can access today's financial highlights, press release, the presentation and the full supplemental financial information together as one PDF file by going to investors.ironmountain.com, under Financial Information.

Additionally, we have filed all the related documents as one Form 8-K, which is also available through the website.

On this morning's call, we'll hear from Bill Meaney, Iron Mountain's President and CEO, who will discuss highlights and progress toward our strategic plan; followed by Stuart Brown, our CFO, who will cover financial results and guidance. After our prepared remarks, we'll open up the phone lines for Q&A.

Referring now to page 2 of the presentation, today's earnings call, slide presentation and supplemental financial information will contain forward-looking statements, most notably our outlook for 2017 financial and operating performance. All forward-looking statements are subject to risks and uncertainties.

Please refer to today's press release, earnings call presentation, supplemental financial report, the safe harbor language on this slide, and our most recently filed annual report on Form 10-K for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements.

In addition, we use several non-GAAP measures when presenting our financial results and the reconciliations to these measures, as required by Reg G, are included in our supplemental financial information.

With that, Bill, would you please begin?.

Thank you, Melissa, and good morning, everyone. We are pleased this morning to report strong second quarter results and our first acquisition in the data center space. We're excited about this transaction and look forward to welcoming the FORTRUST team to the Iron Mountain Family.

We achieved financial performance in line with our expectations and the durability of our high-margin Records Management Storage business drove solid internal growth and enhanced profitability across the business. Our second quarter financial and operating results demonstrate solid execution of our strategic plan.

As you know, that plan is focused on extending our durable business model through continued investment in our core developed markets, whilst expanding into faster-growing emerging markets and capturing opportunities to provide new, innovative solutions to both our new and existing customers and to tap into new storage-related segments such as the Data Center business.

Let me start with highlights on the third slide of the earnings call presentation.

Our second quarter financial results were in line with our expectations and reflect how our rapid integration of Recall and success with our Transformation initiative have significantly enhanced the Adjusted EBITDA and AFFO that support recent dividend increases and provide a solid foundation for future growth in dividend well in excess of inflation.

We continue to make progress on our goal of reducing SG&A as a percentage of revenue, down 80 basis points from the first quarter to 23.4% whilst our EBITDAR margins improved 230 basis points sequentially to 33.5%.

Prior to one-time items, which Stuart will detail later, the sequential improvement would have been 170 basis points or 32.9% in terms of margin. During the quarter, we also achieved internal storage rental revenue growth of 4.8%, which as noted, included a data center lease termination fee.

Excluding that fee, we posted very strong internal storage rental growth of 4%. This growth reflects improvement in pricing through revenue management efforts and 1.3% growth in internal global records management volume or excluding impacts from acquisitions and dispositions.

You'll note in the supplemental report that trailing 12-month volume growth now includes Recall volume in the base, rather than being held out separately as acquisition-related, which is how we have presented Recall volume for the past four quarters.

As we have noted in calls over the past year, after lapping the anniversary of the acquisition, folding in Recall's volume into the base increases it by about 20%, which has the impact of making all percentage growth figures a bit lower, even though there is little to no change on an absolute basis.

Slide 4 shows the absolute volume change for total records management storage. Importantly, new volume from both existing and new customers of 50 million cubic feet over the past 12 months is up from 44 million cubic feet of new volume over the 12-month period prior to the Recall acquisition.

This demonstrates the benefit of the transaction and consistency of customer behavior related to storage of new regulatory and legal documents. And remember that the 9 million cubic feet of net record growth stays with us for an average of 15 years.

Based on the strength of our core fundamentals, we remain comfortable with our full-year revenue, Adjusted EBITDA and AFFO guidance for 2017. Whilst we benefited from some one-time items in the second quarter, our expectations are unchanged. Stuart will have more on the pluses and minuses shortly.

Slide 5 is a review of progress during the quarter against our 2020 strategic plan. In developed markets, which includes both North America RIM and our Western European segment, we achieved internal storage revenue growth of 3.4% and 1.8 million cubic feet of net internal volume growth in developed markets on a trailing 12-month basis.

We are pleased with the durability of volume growth and our ability to achieve price gains in the developed markets. In addition, we continued to identify attractive acquisition opportunities in developed markets, closing on four tuck-in deals in North America, including an acquisition of a small shredding business.

In terms of expanding our business model into faster growing emerging markets, we are just shy of 18% of total revenue on a 2014 constant dollar basis, a major improvement from about 10% just three years ago.

Year-over-year progress against this goal was supported by acquisitions closed during the quarter, including those in the remaining markets that were part of the Santa Fe deal, namely Indonesia, India and the Philippines. We also closed on a transaction in Peru during the second quarter.

In total, we invested $27 million in emerging markets in Q2, which includes some real estate assets. Subsequent to quarter end, we closed on a $29 million acquisition in Cyprus.

We continued to nurture a strong pipeline of M&A opportunities and are maintaining our full year guidance for acquisition investment independent of the data center acquisition announced this morning, which I'll address in just a minute.

Also, during the second quarter, we sold our business in Russia and Ukraine to OSG, a leading records management provider in Russia.

We remain confident in the long-term attractiveness of the market opportunity and growth characteristics of these countries and will continue to participate through a passive 25% minority interest in the combined entity.

We believe that owning a stake in the OSG business that now includes Iron Mountain customers and operations is the best value-creating strategy at this time.

Turning to slide 6, we meaningfully advanced our adjacent business strategy with the signing of an agreement to acquire FORTRUST, a Denver-based data center company, for approximately $128 million, which we announced earlier this morning. This acquisition adds 9 megawatts of existing capacity and allows for significant future expansion.

Together with the first phase of our data center campus in Northern Virginia that goes online next month, we will have a total existing capacity of more than 30 megawatts by the end of the year.

Adding the expansion potential from FORTRUST, full build-out of our Northern Virginia campus and construction in progress in our Boyers and Kansas City locations, we have the potential to expand our data center platform to more than 70 megawatts. FORTRUST is a great fit with our business.

It is highly regarded private data center operator with a distinction of having 100% critical systems uptime throughout its 15-year history. And FORTRUST's focus on enhanced security and consistent accessibility for critical applications is very consistent with our brand positioning in targeted verticals.

It has a diversified base of more than 250 customers, with the top 25 representing about 50% of annualized rental revenue.

In addition, Denver is quite attractive as a critical location for customers seeking East-West data center redundancy and the market is seeing solid demand driven by the technology solutions, data management, software, education and healthcare industries.

The acquisition, including the real estate, represents a multiple of approximately 13 times stabilized EBITDA and will be funded with a combination of cash and unregistered stock issued to the seller.

Assuming this deal is funded with approximately $73.5 million worth of equity at or near the current stock price, it would be $0.01 per share to $0.02 per share dilutive to EPS in 2017 and neutral to AFFO. We expect it to be accretive to EPS in year two or 2019.

Our year-end run rate revenue mix following this data center transaction will bring adjacent business to roughly 3% of total revenue relative to be at 5% by 2020. Combined with the growth in our emerging markets, we are well positioned to meet our goal of 25% of total revenues from our higher growth portfolio by 2020.

In summary, we had a solid quarter characterized by good operating fundamentals, strong financial performance, improved profitability and excellent progress in all three pillars of our strategic plan.

We continued to identify attractive investment opportunities that both strengthen the durability of the core business and drive growth in new businesses. This progress supports growth in Adjusted EBITDA and cash flow that ultimately underpins our ability to grow our dividend per share and to delever over time.

With that, I'd like to turn the call over to Stuart..

Thank you, Bill, and good morning, everyone. We are pleased to report on another strong quarter of healthy continuing growth in our core Records Management business. This morning, I'll provide some color on our quarter's operational and financial drivers and then cover our outlook for 2017.

As you see on slide 7, which shows our key financial metrics, our second quarter total revenues grew 8.4% on a C$ basis and were modestly impacted by delayed closings of acquisitions compared to our original outlook.

As Bill mentioned, we achieved strong internal storage rental revenue growth of 4.8% in the second quarter, or 4% excluding a lease termination fee from a data center customer whose business had been acquired.

Service revenues increased 5.1% in the second quarter on a C$ basis with internal service revenue down 1.1% as higher paper prices in our Shred business this year were more than offset by cycling over a high Recall destruction revenue a year ago in our Other International segment and less tape rotation in our Data Management business.

As noted last quarter, we will be cycling against last year's paper price increases in the second half. So at current paper pricing, we don't anticipate further upside this year.

With year-to-date internal service revenue growth of minus 0.4%, we continue to be comfortable with our outlook for flattish internal service revenue growth for the full year.

Selling, general and administrative costs as a percentage of total revenues were down 230 basis points year-over-year and decreased 80 basis points from the first quarter, driven by transformation and integration progress and excluding Recall integration costs. Our Adjusted EBITDA grew by 23% on a C$ basis in the second quarter.

Excluding the additional month of Recall in our 2017 results compared with last year, growth was about 18% due to solid operational execution and acquisition synergies, resulting in margin improvement across all our regions.

In addition, results benefited from almost $6 million of non-recurring items this quarter, including the data center lease termination fee just mentioned and the reversal of an earn-out provision on a previous acquisition. I'll speak to our Adjusted EBITDA outlook in a few minutes.

But at a high level, we expect these favorable items to be largely offset by integration costs associated with acquisition activity in the second half, as well as a loss of EBITDA from the sale of our Russian and Ukrainian businesses.

Looking at the Adjusted EBITDA margin on a sequential basis, that is to attract progress on synergies and transformation, the Adjusted EBITDA margin improved 230 basis points from the first quarter, driven by top-line growth, gross margin improvement, acquisition synergies, the overhead improvement and to a lesser extent the nonrecurring items.

Compared to a year ago, the Adjusted EBITDA margin increased 390 basis points to 33.5%, of which about 60 basis points was due to the nonrecurring items. AFFO was $217 million in the second quarter, an increase of almost $62 million or about 40% on a C$ basis.

This strong growth resulted from growth in Adjusted EBITDA, timing of maintenance capital expenditures, as well as a swing in the timing of quarterly cash taxes compared to a year ago of about $14 million. Remember that annually, cash taxes will generally reflect our structural tax rate. But we will have some quarterly volatility.

Year-to-date, cash taxes have been just a little bit lower than our expected annual run rate. Let's turn to slide 8 to cover internal growth performance by segment for the quarter. In the North America Records and Information Management business, internal storage revenue grew by 3.7%.

This growth was largely driven by higher average price, as reported internal volume growth was flat. North American internal service revenue growth of 1.3% resulted from higher revenues from Information Governance, or Digital Imaging Services, shred activity and paper pricing, and other project-based revenue.

The North America RIM Adjusted EBITDA margin increased 400 basis points to 43.3%. As you can see on this slide, the total North America RIM business represents over 50% of total revenues. The strong growth in this segment has a significant impact on overall growth.

The North America Data Management business trends were in line with the first quarter, with internal storage revenue growth of 2.9%. Internal service revenue declined about $2 million due to the ongoing reduction in tape rotation.

While the internal service revenue decline on a percentage basis is more noticeable in Data Management compared to other segments, remember that Data Management service is just 3.4% of total revenues.

Further, new services are just beginning to offset these declines, but we expect it will be some time before the tape handling declines are fully offset. The Adjusted EBITDA margin in North America Data Management declined slightly from a year ago as a result of increased investments in product development.

However, the margins remained a very healthy 53.4%. The internal storage revenue growth in Western Europe improved 2.5%, up from the first quarter, reflecting good revenue management efforts.

The internal service revenue decline of 1.7% or less than $1 million was due mainly to a lower contribution from Data Management and fewer destruction projects in the UK.

In the Other International segment, which includes the larger legacy Recall Australian business, we continue to see strong storage internal revenue growth of 7.1% and improving margins. Service internal growth in this segment was impacted by the high level of Recall destruction projects underway a year ago.

The Adjusted EBITDA margin in Other International was 29.2% in the second quarter, continuing to improve year-over-year. Remember that this segment, representing emerging markets plus Recall's larger Australian and New Zealand business, now account for over 20% of total revenues.

In our Corporate and Other segment, we recorded the lease termination fee in our Data Center business, that drove a very high internal storage growth on a percentage basis given the small base.

The Fine Arts Storage business also had a strong quarter driven by new sales leadership and implementation of enhanced sales management tools, as well as a focus on customer retention and operational efficiencies.

Touching on slide 9 quickly, this shows the relative size of each segment by product line and the contribution to our results through a storage and service lens. Storage provides over 80% of Adjusted gross profit with the remainder from service.

We continue to innovate on new offerings for our customers focusing on value-added services, which deliver gross profit growth. Before turning to our outlook for 2017, let me quickly touch on the composition of our global business as well as our balance sheet. Remember that roughly 70% of Adjusted EBITDA in the U.S. is in U.S.

dollars, demonstrating the limited impact foreign exchange fluctuations have on our results. Also, we continued to match our foreign-denominated debt to create natural currency hedges to mitigate translation exposure, while also being tax-efficient. At quarter end, 23% of our debt is in currencies other than the U.S. dollar.

In keeping with this focus, in May, we completed a €300 million senior unsecured note offering. We had great execution resulting in a transaction that was historically significant, and we believe that at a 3% coupon was the second lowest coupon ever for a reverse Yankee issuance.

This reflects bondholders' understanding of the health of our business, durability of cash flows and strength of our balance sheet. We're keeping a close eye on market conditions and may have additional opportunities for refinancing activity later this year.

We maintain liquidity of nearly $1.3 billion at quarter end and our lease-Adjusted debt ratio remained at 5.8 times, which is in line with our expectations. Let's turn to our guidance for 2017 summarized on page 10 of the results presentation. Our core outlook remains unchanged on a constant dollar basis.

However, we are updating underlying assumptions for the acquisition of FORTRUST and increased our internal revenue growth expectations for storage.

With our strong first half internal growth momentum, we now anticipate internal storage rental revenue growth to range from 2.5% to 3% for the year, an increase of 50 basis points driven by both volume growth and pricing improvement. Our EBITDA guidance is unchanged.

As noted earlier, we had $6 million of onetime benefits in the second quarter, which we expect to be offset by the timing of acquisition activity and the divestment of our Russian and Ukrainian businesses.

In addition, our shared service implementation costs as well as investments in data technology and consumer storage are weighted to the second half of the year. Therefore, after a strong sequential increase in Adjusted EBITDA, we expect a flatter progression of growth from here to the end of the year.

Regarding AFFO, our range of guidance for the full year is unchanged with maintenance CapEx and cash taxes increasing in the second half of the year relative to the first half.

With the FORTRUST acquisition expected to close in the third quarter, we haven't Adjusted EBITDA or EPS guidance ranges given that we will have only a partial year contribution of results and will incur integration costs.

We don't intend to exclude these integration costs from our Adjusted EBITDA definition in the same manner as we do for Recall costs, as this is more of an ordinary course acquisition in terms of size. Also, the partial year addition to revenue from this deal would be subsumed within our guidance range.

However, from an investment standpoint, we are assuming an additional $128 million of growth capital, of which $73.5 million funded from the private placement of shares to the seller based on the average price prior to closing.

Therefore, our outlook reflects an increase of about 2 million shares outstanding or roughly 1 million shares on the 2017 weighted average share count. Turning to slide 11, our projected cash available for distribution and investments, or CAD, also remains unchanged other than for FORTRUST.

For 2017, we continue to expect CAD to cover our anticipated full-year dividend and required maintenance capital expenditures, with approximately $120 million of capital remaining to support core growth racking and other discretionary value-creating investments.

The private placement of shares and borrowings will fund the estimated $345 million needed for growth investments including FORTRUST and excluding Recall costs. Slide 12 shows the same information, but in a sources and uses format based on our AFFO guidance for the year.

As we can see, AFFO, which by definition adds back non-cash items and deducts maintenance CapEx, covers the dividend, as well as acquisitions of customer relationships and inducements with the same $120 million of cash remaining.

That $120 million plus debt and private placement equity as shown is adequate to address the investment in FORTRUST, our existing data center development plus acquisitions, real estate investments and innovation.

Overall, we are very pleased with our second quarter performance and remain well positioned to deliver on our financial projections for the year, having maintained strong internal growth momentum. With that, I'll turn the call over to Bill for closing remarks before we open up for Q&A..

Thanks, Stuart. Just a couple of high-level comments before we turn it over to Q&A.

First, we have had a very strong quarter in terms of the financials perspective, 4% internal storage revenue growth, year-over-year EBITDA margin expansion of 330 basis points excluding all the one-time items and strong AFFO growth which continues to drive dividend growth and to deleverage the business.

Second, incoming trailing 12-month volume growth has gone from 44 million cubic feet to 50 million cubic feet after absorbing Recall, showing the robustness and quality of the business, the physical storage side.

And third, we've made significant progress in building our higher growth segment aided by M&A, both in the emerging markets and now in the data center space. With that, I'd like to turn it over to questions..

Thank you. We will now begin the question-and-answer session. And the first questioner today is going to be Andrew Steinerman with JPMorgan. Please go ahead. Mr. Steinerman .....

Sorry about that.

My question is within the internal storage guide, could you give us a sense of how much net pricing benefits?.

Well, you can see it in terms of the – you see the difference, Andrew, between the 4% internal revenue growth and you see the increase in volume. So you can kind of – we don't do it on a like-for-like basis as always, one's on a trailing 12 month and one's quarter-over-quarter but ....

Right..

...but you can kind of see that we're getting significantly more price than we have in the past..

Right. And last question.

On the internal guide of 2.5% to 3% for the year, are you counting second quarter as 4.0% or the higher number?.

We are counting the second quarter as a 4.0% because we're stripping out the SimpliVity termination when HP bought them..

Perfect. Thank you..

And the next question for today is going to be Karin Ford with MUFG Securities. Please go ahead..

Hi, good morning. I wanted to ask a question on the FORTRUST acquisition.

First as a clarification, you are buying the real estate as part of this deal? And then secondly, the 13 times pricing on synergized EBITDA, what's included in that synergized EBITDA?.

Okay. So, we – so Karin, we are buying the real estate – we're buying the whole business including the real estate..

Okay..

And the 13 time synergize is after also building out the additional 7 megawatts of capacity..

And fully leasing....

Yes. Karin, it's just to clarify. It's really – so it's the – if you look at the current run rate of EBITDA with the leases that they have in place, if there are – we have couple leases signed that haven't taken occupancy yet. And the synergize also, there is a little bit of synergies, not a lot.

And then a build out of some of the existing spaces and it's not the future development space..

Okay. Does it include getting the 75% leased portion up to call it stabilization....

Yeah. It's stable – fully stabilized yield which is if you look at sort of a 95% occupancy, you're going to get a yield there of call it 12%..

Okay..

...on the initial purchase and then obviously a higher yield on the future development..

Okay. Great. Second question is just on the Northern Virginia Data Center.

Can you just talk about leasing progress on that and when you would expect to hit stabilization on that development as well? development as well?.

Originally, we've guided that it will take us about three years to get stabilized on that. I think it will be a bit faster than that. But I think in terms of pre-leasing activity, we had a few small customers already coming, but we had a lot of people, in fact this week, we had a tour of someone looking at both Northern Virginia as well as Denver.

He's looking for in the new order of a couple of megawatts at both facilities. So, we feel pretty good in terms of where the interest in terms of that facility. We've already had quite a few sales tours, looking at that and it comes online as said in the middle of August..

Great.

Last question is just for Stuart, on debt to EBITDA and you said the 5.8 time, this quarter was in-line with your expectations, are you still expecting to get debt to EBITDA down to 5.6 times at year-end or has that target changed with the incremental acquisitions you've made this quarter?.

It'll still be around 5.6 times, you've got to remember, we've funded it – the seller actually wanted to take Iron Mountain stock and so we were able to fund that with the basically same leverage ratio as the existing balance sheet..

Got it. Thank you..

And the next question is going to be Andrew Wittmann with Robert W. Baird and Company. Please go ahead..

Great. I guess, I'd maybe ask a couple of questions here on service to start out with. I noticed that North American Rim service was plus 1.3%, that's continuing a trend of relatively positive results.

Are you working on any large projects that are happening here in the last couple of quarters or this rate of service growth in North American Rim is sustainable?.

Thanks, Andrew. No, I think it's more than sustainable and, in fact, although these were more in Western Europe, we had a few projects that have slipped into the third quarter, because the timing on these things is never exact. So we feel pretty good about the pipeline on the service side.

And as you can see, the North American was naturally our primary focus in terms of getting our service pipeline built up because it's by far the largest portion of our service revenue. Most of it comes from North America, but we see good progress across the spectrum looking at Europe and also data management in terms of building the pipeline..

The one thing I'll add is that the first half was helped by the higher paper prices that we will be cycling against. It started to increase last year August, September..

Yeah. Okay. That makes sense. And then I guess, Stuart, on the financial statement, I just noticed in the Adjusted EBITDA reconciliation as well as the Adjusted EPS reconciliation there is the other income line actually had a pretty significant number. I think it was like almost $40 million in EBITDA and $0.07 in EPS.

So I was just wondering if you could give us some detail as to what that is?.

It's really all boiled down to FX and the change in FX in the quarter, and you can see that impact also in the supplemental where we go back and adjust FX out of that in the, what is that on page, pull it up real quick, but you can see it was about a 1% impact in the second quarter in terms of growth rates, and so that just flows through to the other..

Okay. Final question here just on the guidance. I just want to understand, check my understanding of this. On the FORTRUST acquisition, it sounded like the income statement impact because it's partial year or whatever it gets absorbed in the range, but the capital structure impact is in fact included in the guidance that you've given today.

Is that right?.

That's correct. That's correct. So even as Karin asked a few minutes ago, even with that, we can keep getting the leverage down close to 5.6%..

And I can't imagine Russia, Ukraine was too much revenue, but what was the annualized revenue from that, if you don't mind us asking?.

It was about $12 million. In the year, the impact was about $12 million, so an annualized basis call it $15 million or $16 million of annualized revenue, maybe $18 million....

Maybe $18 million..

$18 million annualized impact on revenue..

Okay. Great. Thank you very much..

And the next question today is going to be Shlomo Rosenbaum with Stifel. Please go ahead..

Hi. Thank you very much for taking my questions. Hey, Stuart, can you just walk through kind of some of the give and takes in the quarter? I guess starting on revenue, onetime benefit from a lease termination, I think you said that was $6 million.

What was the in-quarter impact negative from disposition of Russia, Ukraine?.

Yes. So the in-quarter impact was pretty small; the impact for rest of the year, so it was probably about a $0.5 million impact on negative impact on EBITDA.

You'll end up seeing a piece of that in the second half actually flow through sort of other income, right, because now we have a 25%, we will maintain a 25% investment, so as a minority, so it comes out of EBITDA, but we continue to remain invested in Russia. So you'll end up picking some of that back up from an EPS and AFFO standpoint. But.

What about revenue?.

...of the $6 million the biggest piece of that was the lease termination fee and it was about $2 million impact from the other – from the accrued earn-out that we ended up not paying..

Okay. So, but – how much, I know you said $0.5 a million impact on EBITDA on the quarter from Russia, Ukraine.

How much was the Russia impact?.

I mean, that's the biggest piece of it. We don't breakout EBITDA by country, so..

Okay. What I am trying to get is that there, if I'm trying to normalize the revenue for the quarter so if we take out $6 million from the termination plus the accrued in that earn out, I also wonder if we have to remove any disposition, so I'm looking on a go-forward basis.

So, what should I remove for the dispositions?.

Yeah, this would be just under our smallest about a half – okay, so this is a disposition about a $0.5 million and the lease termination was about $4 million of the $6 million..

Okay. And then....

And those are two adjustments, those are the normalizations you should make..

Got it.

And then for a currency headwind in the quarter what was the aggregate currency headwind during the quarter in from the company?.

Yeah that's – it is on slide 7 of the supplemental, it was about 1%, it was – yeah, about 1% impact..

Okay.

And then the termination fee was because it compare the – the client got bought out and someone moved the business elsewhere?.

Yeah, HP bought SimpliVity, here in Boston and then they moved it into their data center, they had the excess data center space so they is part of that acquisition they move SimpliVity out, but they paid out the contract..

Got it. Okay. And then if I go ahead and look at the internal storage volume growth on the pages where you have those borrower's bars, it looks like they are below trend a little bit before the Recall acquisition.

So, if I go back, it just looks like North America and other international just seems to be a little bit lower than they were before the four large borrower's bars with the – with Recall, I want to know if there is any commentary on that?.

That's just increasing the base, I mean it's the – because now the base is 20% bigger than it was before with Recall volume in there..

Okay.

So, I should divide it by 0.8 to get kind of a more normalized of what I should think about it?.

No, not really let me get it – your – we're sort of try to talk about it from a volume basis, right.

The volume is up and as you can see that in the that in the charts in the earnings presentation, but your denominator like your base of what you're comparing that growth to, that 9 million cubic feet over the last four quarters, is your growth that you're dividing that by 20% figure base, so you can't just take that – we can't just take that times 0.8 normalized..

Yeah. I think, I mean, I think the way I would think about modeling on a go forward basis is do it around the absolute, right. In other words, the new absolute. We said that over trailing 12 months we have gone from $44 million to $50 million of incoming volume.

So, I would kind of think about it in terms of the absolute rather than just try to mess around with the percentages..

Okay. All right.

I'll just probe that a little more offline, but just if you go to page 28 of this supplemental, there is this bar chart that looks like volume has been coming down and I was just wondering if you can give us if you look at top left like year-over-year growth in units' storage, in records management storage portfolio in cubic feet, can you just explain to us what that is exactly, I guess it's down 2.1%.

Yeah. So that utilization, you got to remember that the divestments are in that as well. So, you get impacted by the disposals that we've done related to the Recall transaction. So, those divestments as well as Russia right, so go down even in Q1 because of the divestments..

Got it.

So it's all divestment related?.

Yes..

Okay. That's what I'm getting to. Okay, pretty good. Thank you..

I think the divestments is about 14 million impact cumulative, yeah – yeah 14 million cu was the impact..

Okay.

So, then it would have been flat, if I put it together just year-over-year?.

Yeah. It would have been up a little bit, but....

One of the areas that we continue to improve through our real estate consolidation. So, generally the trend line is moving up, but you have to take out this one off..

Yeah. All right, I'll ask you more offline on that. But, thank you very much..

Thanks..

And our next questioner today is Kevin McVeigh with Deutsche Bank. Please go ahead..

Great. Thanks. Hey, I wonder if you could just a following up on Andrew's question.

The boost of the storage internal on the pricing side, was that primarily step up in pricing on Recall or was that across the base business?.

It's across the base business, we've been -- Kevin we've been, as you know that you can plan the stores while they – we started building up our revenue management expertise probably three years ago.

And it takes a while for that to bleed through just the natural tenure of our contracts and we're really starting to make – you starting to see the progress that we've been working on three years now starting to bleed through into the pricing across the business..

Got it, got it.

And then just on the slide 11, where you talk about the cash available for the FORTRUST, is it the full $130 million or should we adjust it for the private placement of stocks, till maybe to not $350 million, it should be the $345 million or so less the price, private placement or in terms of incremental capital or is that, I am thinking in terms of cash need?.

$345 million is not our cash right, as we've been talking about in investor day, there are different things that we can do to fund our growth, obviously borrowing is a piece of it, if you can see clearly on the next slide you got the private placement of debt and we've also even got capital recycling.

So, we continue to do some real estate investment as well, that you don't really see above the service, above the surface, because we are selling some real estate to acquire real estate in better locations or where we want to grow..

Got it.

So, that's all, all different avenues in terms of funding?.

Yeah, if you look at the next slide, if you look at slide 12, we can clearly see sort of Yeah. If you look at the next slide. If you look at slide 12, you can clearly see the sort of funding it shows the source of expectation..

Okay. Thanks so much..

There look to be no further questions. So, this will conclude the Q&A session and today's conference call. To access a digital replay of the conference call, you may dial 877-344-7529 or 412-317-0088 beginning approximately one hour after the call's conclusion today. You will be prompted to answer a conference number, which will be 10108752.

Please record recall you name and company when joining. Thank you for attending today's presentation, you may now disconnect..

Thanks to everyone for joining us this morning..