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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| | | | | |
(Mark One) |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended June 30, 2024
| | | | | |
OR |
| |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
For the Transition Period from to |
Commission file number 1-13045
IRON MOUNTAIN INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
| | | | | |
Delaware | 23-2588479 |
(State or other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
85 New Hampshire Avenue, Suite 150, Portsmouth, New Hampshire 03801
(Address of Principal Executive Offices, Including Zip Code)
(617) 535-4766
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, $.01 par value | | IRM | | NYSE |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| | | | | | | | | | | |
Large accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
Emerging growth company | ☐ | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 26, 2024, the registrant had 293,335,826 outstanding shares of common stock, $.01 par value.
IRON MOUNTAIN INCORPORATED
2024 FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 1 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
| | | | | | | | | | | |
| JUNE 30, 2024 | | DECEMBER 31, 2023 |
ASSETS | | | |
Current Assets: | | | |
Cash and cash equivalents | $ | 144,256 | | | $ | 222,789 | |
| | | |
Accounts receivable (less allowances of $78,513 and $74,762 as of June 30, 2024 and December 31, 2023, respectively) | 1,273,900 | | | 1,259,826 | |
| | | |
Prepaid expenses and other | 295,583 | | | 252,930 | |
| | | |
Total Current Assets | 1,713,739 | | | 1,735,545 | |
Property, Plant and Equipment: | | | |
Property, plant and equipment | 10,976,919 | | | 10,373,989 | |
Less—Accumulated depreciation | (4,183,895) | | | (4,059,120) | |
Property, Plant and Equipment, Net | 6,793,024 | | | 6,314,869 | |
Other Assets, Net: | | | |
Goodwill | 5,099,772 | | | 5,017,912 | |
Customer and supplier relationships and other intangible assets | 1,284,339 | | | 1,279,800 | |
Operating lease right-of-use assets | 2,593,461 | | | 2,696,024 | |
Other | 482,599 | | | 429,652 | |
Total Other Assets, Net | 9,460,171 | | | 9,423,388 | |
Total Assets | $ | 17,966,934 | | | $ | 17,473,802 | |
LIABILITIES AND EQUITY | | | |
Current Liabilities: | | | |
Current portion of long-term debt | $ | 125,409 | | | $ | 120,670 | |
Accounts payable | 527,968 | | | 539,594 | |
Accrued expenses and other current liabilities (includes current portion of operating lease liabilities) | 1,174,979 | | | 1,250,259 | |
Deferred revenue | 329,718 | | | 325,665 | |
Total Current Liabilities | 2,158,074 | | | 2,236,188 | |
Long-term Debt, net of current portion | 12,814,166 | | | 11,812,500 | |
Long-term Operating Lease Liabilities, net of current portion | 2,453,935 | | | 2,562,394 | |
Other Long-term Liabilities | 257,497 | | | 237,590 | |
Deferred Income Taxes | 231,150 | | | 235,410 | |
Commitments and Contingencies | | | |
Redeemable Noncontrolling Interests | 184,861 | | | 177,947 | |
(Deficit) Equity: | | | |
Iron Mountain Incorporated Stockholders' (Deficit) Equity: | | | |
Preferred stock (par value $0.01; authorized 10,000,000 shares; none issued and outstanding) | — | | | — | |
Common stock (par value $0.01; authorized 400,000,000 shares; issued and outstanding 293,298,465 and 292,142,739 shares as of June 30, 2024 and December 31, 2023, respectively) | 2,933 | | | 2,921 | |
Additional paid-in capital | 4,555,883 | | | 4,533,691 | |
(Distributions in excess of earnings) Earnings in excess of distributions | (4,230,599) | | | (3,953,808) | |
Accumulated other comprehensive items, net | (461,091) | | | (371,156) | |
Total Iron Mountain Incorporated Stockholders' (Deficit) Equity | (132,874) | | | 211,648 | |
Noncontrolling Interests | 125 | | | 125 | |
Total (Deficit) Equity | (132,749) | | | 211,773 | |
Total Liabilities and (Deficit) Equity | $ | 17,966,934 | | | $ | 17,473,802 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 2 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
| | | | | | | | | | | |
| THREE MONTHS ENDED JUNE 30, |
| 2024 | | 2023 |
Revenues: | | | |
Storage rental | $ | 919,746 | | | $ | 830,756 | |
Service | 614,663 | | | 527,180 | |
| | | |
Total Revenues | 1,534,409 | | | 1,357,936 | |
Operating Expenses: | | | |
Cost of sales (excluding depreciation and amortization) | 675,971 | | | 592,644 | |
| | | |
Selling, general and administrative | 344,838 | | | 311,805 | |
Depreciation and amortization | 224,501 | | | 195,367 | |
Acquisition and Integration Costs | 9,502 | | | 1,511 | |
Restructuring and other transformation | 46,513 | | | 45,588 | |
| | | |
| | | |
Loss (Gain) on disposal/write-down of property, plant and equipment, net | 2,790 | | | (1,505) | |
Total Operating Expenses | 1,304,115 | | | 1,145,410 | |
Operating Income (Loss) | 230,294 | | | 212,526 | |
Interest Expense, Net (includes Interest Income of $0 and $2,290 for the three months ended June 30, 2024 and 2023, respectively) | 176,521 | | | 144,178 | |
Other Expense (Income), Net | 5,833 | | | 62,950 | |
Net Income (Loss) Before Provision (Benefit) for Income Taxes | 47,940 | | | 5,398 | |
Provision (Benefit) for Income Taxes | 13,319 | | | 4,255 | |
| | | |
| | | |
Net Income (Loss) | 34,621 | | | 1,143 | |
Less: Net (Loss) Income Attributable to Noncontrolling Interests | (1,162) | | | 1,029 | |
Net Income (Loss) Attributable to Iron Mountain Incorporated | $ | 35,783 | | | $ | 114 | |
Net Income (Loss) Per Share Attributable to Iron Mountain Incorporated: | | | |
| | | |
| | | |
Basic | $ | 0.12 | | | $ | 0.00 | |
| | | |
| | | |
| | | |
Diluted | $ | 0.12 | | | $ | 0.00 | |
Weighted Average Common Shares Outstanding—Basic | 293,340 | | | 291,825 | |
Weighted Average Common Shares Outstanding—Diluted | 295,838 | | | 293,527 | |
| | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 3 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
| | | | | | | | | | | |
| SIX MONTHS ENDED JUNE 30, |
| 2024 | | 2023 |
Revenues: | | | |
Storage rental | $ | 1,804,588 | | | $ | 1,640,845 | |
Service | 1,206,684 | | | 1,031,440 | |
| | | |
Total Revenues | 3,011,272 | | | 2,672,285 | |
Operating Expenses: | | | |
Cost of sales (excluding depreciation and amortization) | 1,329,226 | | | 1,164,270 | |
| | | |
Selling, general and administrative | 664,303 | | | 606,325 | |
Depreciation and amortization | 434,056 | | | 377,461 | |
Acquisition and Integration Costs | 17,311 | | | 3,106 | |
Restructuring and other transformation | 87,280 | | | 82,501 | |
| | | |
| | | |
Loss (Gain) on disposal/write-down of property, plant and equipment, net | 3,179 | | | (14,566) | |
Total Operating Expenses | 2,535,355 | | | 2,219,097 | |
Operating Income (Loss) | 475,917 | | | 453,188 | |
Interest Expense, Net (includes Interest Income of $3,425 and $5,197 for the six months ended June 30, 2024 and 2023, respectively) | 341,040 | | | 281,347 | |
Other (Income) Expense, Net | (6,697) | | | 84,150 | |
Net Income (Loss) Before Provision (Benefit) for Income Taxes | 141,574 | | | 87,691 | |
Provision (Benefit) for Income Taxes | 29,928 | | | 21,013 | |
| | | |
| | | |
Net Income (Loss) | 111,646 | | | 66,678 | |
Less: Net Income (Loss) Attributable to Noncontrolling Interests | 1,802 | | | 1,969 | |
Net Income (Loss) Attributable to Iron Mountain Incorporated | $ | 109,844 | | | $ | 64,709 | |
Net Income (Loss) Per Share Attributable to Iron Mountain Incorporated: | | | |
| | | |
| | | |
Basic | $ | 0.37 | | | $ | 0.22 | |
| | | |
| | | |
| | | |
Diluted | $ | 0.37 | | | $ | 0.22 | |
Weighted Average Common Shares Outstanding—Basic | 293,043 | | | 291,633 | |
Weighted Average Common Shares Outstanding—Diluted | 295,529 | | | 293,288 | |
| | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 4 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS) (UNAUDITED)
| | | | | | | | | | | |
| THREE MONTHS ENDED JUNE 30, |
| 2024 | | 2023 |
Net Income (Loss) | $ | 34,621 | | | $ | 1,143 | |
Other Comprehensive (Loss) Income: | | | |
Foreign Currency Translation Adjustment | (31,579) | | | 18,035 | |
Change in Fair Value of Derivative Instruments | (488) | | | 7,896 | |
Reclassifications from Accumulated Other Comprehensive Items, net | — | | | (2,527) | |
Total Other Comprehensive (Loss) Income: | (32,067) | | | 23,404 | |
Comprehensive Income (Loss) | 2,554 | | | 24,547 | |
Comprehensive (Loss) Income Attributable to Noncontrolling Interests | (935) | | | 909 | |
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated | $ | 3,489 | | | $ | 23,638 | |
| | | | | | | | | | | |
| SIX MONTHS ENDED JUNE 30, |
| 2024 | | 2023 |
Net Income (Loss) | $ | 111,646 | | | $ | 66,678 | |
Other Comprehensive (Loss) Income: | | | |
Foreign Currency Translation Adjustment | (98,848) | | | 58,261 | |
Change in Fair Value of Derivative Instruments | 10,900 | | | 4,454 | |
Reclassifications from Accumulated Other Comprehensive Items, net | (2,528) | | | (2,527) | |
Total Other Comprehensive (Loss) Income: | (90,476) | | | 60,188 | |
Comprehensive Income (Loss) | 21,170 | | | 126,866 | |
Comprehensive Income (Loss) Attributable to Noncontrolling Interests | 1,261 | | | 2,398 | |
Comprehensive Income (Loss) Attributable to Iron Mountain Incorporated | $ | 19,909 | | | $ | 124,468 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 5 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF (DEFICIT) EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THREE MONTHS ENDED JUNE 30, 2024 |
| | | IRON MOUNTAIN INCORPORATED STOCKHOLDERS' (DEFICIT) EQUITY | | | | | |
| | | COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | (DISTRIBUTIONS IN EXCESS OF EARNINGS) EARNINGS IN EXCESS OF DISTRIBUTIONS | | ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET | | NONCONTROLLING INTERESTS | | | REDEEMABLE NONCONTROLLING INTERESTS |
| TOTAL | | SHARES | | AMOUNTS | | | |
Balance, March 31, 2024 | $ | 18,660 | | | 293,085,683 | | | $ | 2,931 | | | $ | 4,518,644 | | | $ | (4,074,243) | | | $ | (428,797) | | | $ | 125 | | | | $ | 179,222 | |
Issuance and net settlement of shares under employee stock purchase and option plans and stock-based compensation | 37,241 | | | 212,782 | | | 2 | | | 37,239 | | | — | | | — | | | — | | | | — | |
Changes in equity related to redeemable noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | 7,284 | |
Parent cash dividends declared | (192,139) | | | — | | | — | | | — | | | (192,139) | | | — | | | — | | | | — | |
Other comprehensive (loss) income | (32,294) | | | — | | | — | | | — | | | — | | | (32,294) | | | — | | | | 227 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | 35,783 | | | — | | | — | | | — | | | 35,783 | | | — | | | — | | | | (1,162) | |
| | | | | | | | | | | | | | | | |
Noncontrolling interests dividends | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | (710) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Balance, June 30, 2024 | $ | (132,749) | | | 293,298,465 | | | $ | 2,933 | | | $ | 4,555,883 | | | $ | (4,230,599) | | | $ | (461,091) | | | $ | 125 | | | | $ | 184,861 | |
| | | | | | | | | | | | | | | | |
SIX MONTHS ENDED JUNE 30, 2024 |
| | | IRON MOUNTAIN INCORPORATED STOCKHOLDERS' (DEFICIT) EQUITY | | | | | |
| | | COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | (DISTRIBUTIONS IN EXCESS OF EARNINGS) EARNINGS IN EXCESS OF DISTRIBUTIONS | | ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET | | NONCONTROLLING INTERESTS | | | REDEEMABLE NONCONTROLLING INTERESTS |
| TOTAL | | SHARES | | AMOUNTS | | | | | |
Balance, December 31, 2023 | $ | 211,773 | | | 292,142,739 | | | $ | 2,921 | | | $ | 4,533,691 | | | $ | (3,953,808) | | | $ | (371,156) | | | $ | 125 | | | | $ | 177,947 | |
Issuance and net settlement of shares under employee stock purchase and option plans and stock-based compensation | 21,782 | | | 1,155,726 | | | 12 | | | 21,770 | | | — | | | — | | | — | | | | — | |
Changes in equity related to redeemable noncontrolling interests | 422 | | | — | | | — | | | 422 | | | — | | | — | | | — | | | | 6,862 | |
Parent cash dividends declared | (386,635) | | | — | | | — | | | — | | | (386,635) | | | — | | | — | | | | — | |
Other comprehensive (loss) income | (89,935) | | | — | | | — | | | — | | | — | | | (89,935) | | | — | | | | (541) | |
Net income (loss) | 109,844 | | | — | | | — | | | — | | | 109,844 | | | — | | | — | | | | 1,802 | |
Noncontrolling interests dividends | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | (1,209) | |
| | | | | | | | | | | | | | | | |
Balance, June 30, 2024 | $ | (132,749) | | | 293,298,465 | | | $ | 2,933 | | | $ | 4,555,883 | | | $ | (4,230,599) | | | $ | (461,091) | | | $ | 125 | | | | $ | 184,861 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 6 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THREE MONTHS ENDED JUNE 30, 2023 |
| | | IRON MOUNTAIN INCORPORATED STOCKHOLDERS' EQUITY | | | | | |
| | | COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | (DISTRIBUTIONS IN EXCESS OF EARNINGS) EARNINGS IN EXCESS OF DISTRIBUTIONS | | ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET | | NONCONTROLLING INTERESTS | | | REDEEMABLE NONCONTROLLING INTERESTS |
| TOTAL | | SHARES | | AMOUNTS | | | |
Balance, March 31, 2023 | $ | 545,589 | | | 291,584,999 | | | $ | 2,916 | | | $ | 4,459,265 | | | $ | (3,510,949) | | | $ | (405,768) | | | $ | 125 | | | | $ | 95,630 | |
Issuance and net settlement of shares under employee stock purchase and option plans and stock-based compensation | 27,862 | | | 239,959 | | | 2 | | | 27,860 | | | — | | | — | | | — | | | | — | |
Changes in equity related to redeemable noncontrolling interests | 1,367 | | | — | | | — | | | 1,367 | | | — | | | — | | | — | | | | (1,367) | |
Parent cash dividends declared | (182,113) | | | — | | | — | | | — | | | (182,113) | | | — | | | — | | | | — | |
Other comprehensive income (loss) | 23,524 | | | — | | | — | | | — | | | — | | | 23,524 | | | — | | | | (120) | |
Net Income (Loss) | 114 | | | — | | | — | | | — | | | 114 | | | — | | | — | | | | 1,029 | |
Noncontrolling interests equity contributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | 9,900 | |
Noncontrolling interests dividends | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | (1,013) | |
Balance, June 30, 2023 | $ | 416,343 | | | 291,824,958 | | | $ | 2,918 | | | $ | 4,488,492 | | | $ | (3,692,948) | | | $ | (382,244) | | | $ | 125 | | | | $ | 104,059 | |
| | | | | | | | | | | | | | | | |
SIX MONTHS ENDED JUNE 30, 2023 |
| | | IRON MOUNTAIN INCORPORATED STOCKHOLDERS' EQUITY | | | | | |
| | | COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | (DISTRIBUTIONS IN EXCESS OF EARNINGS) EARNINGS IN EXCESS OF DISTRIBUTIONS | | ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET | | NONCONTROLLING INTERESTS | | | REDEEMABLE NONCONTROLLING INTERESTS |
| TOTAL | | SHARES | | AMOUNTS | | | | | |
Balance, December 31, 2022 | $ | 636,793 | | | 290,830,296 | | | $ | 2,908 | | | $ | 4,468,035 | | | $ | (3,392,272) | | | $ | (442,003) | | | $ | 125 | | | | $ | 95,160 | |
Issuance and net settlement of shares under employee stock purchase and option plans and stock-based compensation | 19,100 | | | 994,662 | | | 10 | | | 19,090 | | | — | | | — | | | — | | | | — | |
Changes in equity related to redeemable noncontrolling interests | 1,367 | | | — | | | — | | | 1,367 | | | — | | | — | | | — | | | | (1,367) | |
Parent cash dividends declared | (365,385) | | | — | | | — | | | — | | | (365,385) | | | — | | | — | | | | — | |
Other comprehensive income (loss) | 59,759 | | | — | | | — | | | — | | | — | | | 59,759 | | | — | | | | 429 | |
Net income (loss) | 64,709 | | | — | | | — | | | — | | | 64,709 | | | — | | | — | | | | 1,969 | |
Noncontrolling interests equity contributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | 9,900 | |
Noncontrolling interests dividends | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | (2,032) | |
Balance, June 30, 2023 | $ | 416,343 | | | 291,824,958 | | | $ | 2,918 | | | $ | 4,488,492 | | | $ | (3,692,948) | | | $ | (382,244) | | | $ | 125 | | | | $ | 104,059 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 7 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED) | | | | | | | | | | | |
| SIX MONTHS ENDED JUNE 30, |
| 2024 | | 2023 |
Cash Flows from Operating Activities: | | | |
Net income (loss) | $ | 111,646 | | | $ | 66,678 | |
| | | |
| | | |
Adjustments to reconcile net income (loss) to cash flows from operating activities: | | | |
Depreciation | 302,562 | | | 254,395 | |
Amortization (includes amortization of deferred financing costs and discounts of $12,243 and $8,095 for the six months ended June 30, 2024 and 2023, respectively) | 143,737 | | | 131,161 | |
| | | |
Revenue reduction associated with amortization of customer inducements and above- and below-market leases | 2,798 | | | 3,491 | |
Stock-based compensation expense | 43,928 | | | 34,882 | |
(Benefit) provision for deferred income taxes | (442) | | | 2,799 | |
| | | |
Loss (gain) on disposal/write-down of property, plant and equipment, net | 3,179 | | | (14,566) | |
| | | |
| | | |
| | | |
Loss associated with the Clutter Acquisition | — | | | 38,000 | |
Foreign currency transactions and other, net | 12,655 | | | 69,183 | |
(Increase) decrease in assets | (86,117) | | | (31,071) | |
(Decrease) increase in liabilities | (21,731) | | | (108,858) | |
| | | |
| | | |
| | | |
| | | |
Cash Flows from Operating Activities | 512,215 | | | 446,094 | |
| | | |
| | | |
Cash Flows from Investing Activities: | | | |
Capital expenditures | (777,901) | | | (600,758) | |
Cash paid for acquisitions, net of cash acquired | (123,323) | | | (21,465) | |
| | | |
| | | |
Customer inducements | (3,457) | | | (2,630) | |
Contract costs | (50,800) | | | (39,989) | |
| | | |
Investments in joint ventures and other investments, net | (10,190) | | | (15,830) | |
Proceeds from sales of property and equipment and other, net | 5,923 | | | 35,390 | |
Cash Flows from Investing Activities | (959,748) | | | (645,282) | |
| | | |
| | | |
Cash Flows from Financing Activities: | | | |
Repayment of revolving credit facility, term loan facilities and other debt | (4,896,450) | | | (10,087,033) | |
Proceeds from revolving credit facility, term loan facilities and other debt | 5,843,362 | | | 9,683,880 | |
| | | |
Net proceeds from sale of senior note | — | | | 990,000 | |
Debt financing and equity contribution from noncontrolling interests | — | | | 9,900 | |
Equity distribution to noncontrolling interests | (1,209) | | | (2,032) | |
| | | |
Parent cash dividends | (388,709) | | | (367,060) | |
Payment of deferred purchase obligation | (158,677) | | | — | |
| | | |
Net (payments) proceeds associated with employee stock-based awards | (22,146) | | | (15,782) | |
| | | |
Other, net | (6,880) | | | (2,046) | |
Cash Flows from Financing Activities | 369,291 | | | 209,827 | |
| | | |
| | | |
Effect of Exchange Rates on Cash and Cash Equivalents | (291) | | | (2,943) | |
(Decrease) increase in Cash and Cash Equivalents | (78,533) | | | 7,696 | |
Cash and Cash Equivalents, Beginning of Period | 222,789 | | | 141,797 | |
Cash and Cash Equivalents, End of Period | $ | 144,256 | | | $ | 149,493 | |
Supplemental Information: | | | |
Cash Paid for Interest | $ | 382,823 | | | $ | 270,146 | |
Cash Paid for Income Taxes, Net | $ | 43,099 | | | $ | 46,502 | |
Non-Cash Investing and Financing Activities: | | | |
| | | |
Financing Leases and Other | $ | 67,996 | | | $ | 61,085 | |
Accrued Capital Expenditures | $ | 213,636 | | | $ | 192,197 | |
Deferred Purchase Obligations and Other Deferred Payments | $ | 133,813 | | | $ | 9,290 | |
Dividends Payable | $ | 200,318 | | | $ | 192,597 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 8 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data) (Unaudited)
1. GENERAL
The unaudited condensed consolidated financial statements of Iron Mountain Incorporated, a Delaware corporation, and its subsidiaries ("we" or "us"), have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to those rules and regulations, but we believe that the disclosures included herein are adequate to make the information presented not misleading. The interim condensed consolidated financial statements are presented herein and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary for a fair presentation. Interim results are not necessarily indicative of results for a full year.
The Condensed Consolidated Financial Statements and Notes thereto, which are included herein, should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K filed with the SEC on February 22, 2024 (our "Annual Report").
In September 2022, we announced a global program designed to accelerate the growth of our business ("Project Matterhorn"). See Note 11.
We have been organized and have operated as a real estate investment trust for United States federal income tax purposes beginning with our taxable year ended December 31, 2014.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and cash invested in highly liquid short-term securities, which have remaining maturities at the date of purchase of less than 90 days. Cash and cash equivalents are carried at cost, which approximates fair value.
B. ACCOUNTS RECEIVABLE
We maintain an allowance for doubtful accounts and a credit memo reserve for estimated losses resulting from the potential inability of our customers to make required payments and potential disputes regarding billing and service issues. The rollforward of the allowance for doubtful accounts and credit memo reserves for the six months ended June 30, 2024 is as follows:
| | | | | | | | | | |
| | | | |
| | Balance as of December 31, 2023 | | $ | 74,762 | |
| | Credit memos charged to revenue | | 44,137 | |
| | Allowance for bad debts charged to expense | | 24,233 | |
| | Deductions and other(1) | | (64,619) | |
| | Balance as of June 30, 2024 | | $ | 78,513 | |
(1)Primarily consists of the issuance of credit memos, the write-off of accounts receivable and the impact associated with currency translation adjustments.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 9 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. LEASES
We lease facilities for certain warehouses, data centers and office space. We also have land leases, including those on which certain facilities are located.
Operating and financing lease right-of-use assets and lease liabilities as of June 30, 2024 and December 31, 2023 are as follows:
| | | | | | | | | | | | | | |
DESCRIPTION | | JUNE 30, 2024 | | DECEMBER 31, 2023 |
Assets: | | | | |
Operating lease right-of-use assets | | $ | 2,593,461 | | | $ | 2,696,024 | |
Financing lease right-of-use assets, net of accumulated depreciation(1) | | 340,842 | | | 304,600 | |
Liabilities: | | | | |
Current | | | | |
Operating lease liabilities | | $ | 302,234 | | | $ | 291,795 | |
Financing lease liabilities(1) | | 42,260 | | | 39,089 | |
Long-term | | | | |
Operating lease liabilities | | $ | 2,453,935 | | | $ | 2,562,394 | |
Financing lease liabilities(1) | | 336,653 | | | 310,776 | |
(1)Financing lease right-of-use assets, current financing lease liabilities and long-term financing lease liabilities are included within Property, plant and equipment, net, Current portion of long-term debt and Long-term debt, net of current portion, respectively, within our Condensed Consolidated Balance Sheets.
The components of the lease expense for the three and six months ended June 30, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED JUNE 30, | | SIX MONTHS ENDED JUNE 30, |
DESCRIPTION | | 2024 | | 2023 | | 2024 | | 2023 |
Operating lease cost(1) | | $ | 172,735 | | | $ | 161,241 | | | $ | 344,481 | | | $ | 317,114 | |
Financing lease cost: | | | | | | | | |
Depreciation of financing lease right-of-use assets | | $ | 12,078 | | | $ | 10,202 | | | $ | 23,022 | | | $ | 20,210 | |
Interest expense for financing lease liabilities | | 5,217 | | | 4,416 | | | 10,438 | | | 8,757 | |
(1)Operating lease cost, the majority of which is included in Cost of sales, includes variable lease costs of $39,594 and $77,688 for the three and six months ended June 30, 2024, respectively, and $34,418 and $65,998 for the three and six months ended June 30, 2023, respectively.
Other information: Supplemental cash flow information relating to our leases for the six months ended June 30, 2024 and 2023 is as follows:
| | | | | | | | | | | | | | |
| | SIX MONTHS ENDED JUNE 30, |
CASH PAID FOR AMOUNTS INCLUDED IN MEASUREMENT OF LEASE LIABILITIES: | | 2024 | | 2023 |
Operating cash flows used in operating leases | | $ | 235,030 | | | $ | 220,764 | |
| | | | |
Operating cash flows used in financing leases (interest) | | 10,438 | | | 8,757 | |
Financing cash flows used in financing leases | | 21,536 | | | 22,010 | |
| | | | |
NON-CASH ITEMS: | | | | |
Operating lease modifications and reassessments | | $ | 573 | | | $ | 44,779 | |
New operating leases (including acquisitions and sale-leaseback transactions) | | 80,474 | | | 163,326 | |
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 10 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. GOODWILL
Our reporting units as of December 31, 2023 are described in detail in Note 2.l. to Notes to Consolidated Financial Statements included in our Annual Report.
The changes in the carrying value of goodwill attributable to each reportable segment and Corporate and Other (as defined in Note 9) for the six months ended June 30, 2024 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| GLOBAL RIM BUSINESS | | GLOBAL DATA CENTER BUSINESS | | | | CORPORATE AND OTHER | | TOTAL CONSOLIDATED |
Goodwill balance, net of accumulated amortization, as of December 31, 2023 | $ | 3,911,945 | | | $ | 478,930 | | | | | $ | 627,037 | | | $ | 5,017,912 | |
Tax deductible goodwill acquired during the period | — | | | — | | | | | 131,790 | | | 131,790 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Fair value and other adjustments | 963 | | | (186) | | | | | (186) | | | 591 | |
Currency effects | (45,888) | | | (3,928) | | | | | (705) | | | (50,521) | |
Goodwill balance, net of accumulated amortization, as of June 30, 2024 | $ | 3,867,020 | | | $ | 474,816 | | | | | $ | 757,936 | | | $ | 5,099,772 | |
Accumulated goodwill impairment balance as of June 30, 2024 | $ | 132,409 | | | $ | — | | | | | $ | 26,011 | | | $ | 158,420 | |
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 11 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. FAIR VALUE MEASUREMENTS
The assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2024 and December 31, 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | FAIR VALUE MEASUREMENTS AT JUNE 30, 2024 USING |
DESCRIPTION | | TOTAL CARRYING VALUE AT JUNE 30, 2024 | | QUOTED PRICES IN ACTIVE MARKETS (LEVEL 1) | | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) | | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)(2) |
Money Market Funds | | $ | 10,218 | | | $ | — | | | $ | 10,218 | | | $ | — | |
Time Deposits | | 20,762 | | | — | | | 20,762 | | | — | |
Trading Securities | | 8,841 | | | 7,166 | | | 1,675 | | | — | |
Derivative Assets | | 25,607 | | | — | | | 25,607 | | | — | |
Derivative Liabilities | | 2,670 | | | — | | | 2,670 | | | — | |
Deferred Purchase Obligations(1) | | 114,703 | | | — | | | — | | | 114,703 | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2023 USING |
DESCRIPTION | | TOTAL CARRYING VALUE AT DECEMBER 31, 2023 | | QUOTED PRICES IN ACTIVE MARKETS (LEVEL 1) | | SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) | | SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)(2) |
Money Market Funds | | $ | 66,008 | | | $ | — | | | $ | 66,008 | | | $ | — | |
Time Deposits | | 15,913 | | | — | | | 15,913 | | | — | |
Trading Securities | | 9,952 | | | 6,149 | | | 3,803 | | | — | |
Derivative Assets | | 6,359 | | | — | | | 6,359 | | | — | |
Derivative Liabilities | | 5,769 | | | — | | | 5,769 | | | — | |
Deferred Purchase Obligations(1) | | 208,265 | | | — | | | — | | | 208,265 | |
(1)Primarily relates to the fair values of the deferred purchase obligations associated with the ITRenew Transaction (as defined in Note 3 to Notes to Consolidated Financial Statements included in our Annual Report) and the Regency Transaction (as defined in Note 3).
(2)The following is a rollforward of the Level 3 liabilities presented above for December 31, 2023 through June 30, 2024: | | | | | | | | | |
| | | | | |
Balance as of December 31, 2023 | $ | 208,265 | | | | | |
Additions | 63,700 | | | | | |
Payments | (158,677) | | | | | |
Other changes, including accretion | 1,415 | | | | | |
Balance as of June 30, 2024 | $ | 114,703 | | | | | |
The level 3 valuations of the deferred purchase obligations were determined utilizing Monte-Carlo models and take into account our forecasted projections as they relate to the underlying performance of the respective businesses. The Monte-Carlo simulation model applied in assessing the fair value of the deferred purchase obligation associated with the ITRenew Transaction incorporates assumptions as to expected gross profits over the achievement period, including adjustments for the volatility of timing and amount of the associated revenue and costs, as well as discount rates that account for the risk of the arrangement and overall market risks. The Monte-Carlo simulation model applied in assessing the fair value of the deferred purchase obligation associated with the Regency Transaction incorporates assumptions as to expected revenue over the achievement period, including adjustments for volatility and timing, as well as discount rates that account for the risk of the arrangement and overall market risks. Any material change to these assumptions may result in a significantly higher or lower fair value of the related deferred purchase obligation.
There were no material items that were measured at fair value on a non-recurring basis at June 30, 2024 and December 31, 2023 other than (i) those disclosed in Note 2.p. to Notes to Consolidated Financial Statements included in our Annual Report and (ii) assets acquired and liabilities assumed through our acquisitions that occurred during the six months ended June 30, 2024 (see Note 3), both of which are based on Level 3 inputs.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 12 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. ACCUMULATED OTHER COMPREHENSIVE ITEMS, NET
The changes in Accumulated other comprehensive items, net for the three and six months ended June 30, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED JUNE 30, 2024 | | THREE MONTHS ENDED JUNE 30, 2023 |
| FOREIGN CURRENCY TRANSLATION AND OTHER ADJUSTMENTS | | DERIVATIVE FINANCIAL INSTRUMENTS | | TOTAL | | FOREIGN CURRENCY TRANSLATION AND OTHER ADJUSTMENTS | | DERIVATIVE FINANCIAL INSTRUMENTS | | TOTAL |
Beginning of Period | $ | (440,129) | | | $ | 11,332 | | | $ | (428,797) | | | $ | (414,832) | | | $ | 9,064 | | | $ | (405,768) | |
Other comprehensive (loss) income: | | | | | | | | | | | |
Foreign currency translation and other adjustments | (31,806) | | | — | | | (31,806) | | | 18,155 | | | — | | | 18,155 | |
Change in fair value of derivative instruments | — | | | (488) | | | (488) | | | — | | | 7,896 | | | 7,896 | |
Reclassifications from accumulated other comprehensive items, net | — | | | — | | | — | | | — | | | (2,527) | | | (2,527) | |
Total other comprehensive (loss) income | (31,806) | | | (488) | | | (32,294) | | | 18,155 | | | 5,369 | | | 23,524 | |
End of Period | $ | (471,935) | | | $ | 10,844 | | | $ | (461,091) | | | $ | (396,677) | | | $ | 14,433 | | | $ | (382,244) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SIX MONTHS ENDED JUNE 30, 2024 | | SIX MONTHS ENDED JUNE 30, 2023 |
| FOREIGN CURRENCY TRANSLATION AND OTHER ADJUSTMENTS | | DERIVATIVE FINANCIAL INSTRUMENTS | | TOTAL | | FOREIGN CURRENCY TRANSLATION AND OTHER ADJUSTMENTS | | DERIVATIVE FINANCIAL INSTRUMENTS | | TOTAL |
Beginning of Period | $ | (373,628) | | | $ | 2,472 | | | $ | (371,156) | | | $ | (454,509) | | | $ | 12,506 | | | $ | (442,003) | |
Other comprehensive (loss) income: | | | | | | | | | | | |
Foreign currency translation and other adjustments | (98,307) | | | — | | | (98,307) | | | 57,832 | | | — | | | 57,832 | |
Change in fair value of derivative instruments | — | | | 10,900 | | | 10,900 | | | — | | | 4,454 | | | 4,454 | |
Reclassifications from accumulated other comprehensive items, net | — | | | (2,528) | | | (2,528) | | | — | | | (2,527) | | | (2,527) | |
Total other comprehensive (loss) income | (98,307) | | | 8,372 | | | (89,935) | | | 57,832 | | | 1,927 | | | 59,759 | |
End of Period | $ | (471,935) | | | $ | 10,844 | | | $ | (461,091) | | | $ | (396,677) | | | $ | 14,433 | | | $ | (382,244) | |
G. REVENUES
The costs associated with the initial movement of customer records into physical storage and certain commissions are considered costs to fulfill or obtain customer contracts (collectively, "Contract Costs"). Contract Costs as of June 30, 2024 and December 31, 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | JUNE 30, 2024 | | DECEMBER 31, 2023 |
| | GROSS CARRYING AMOUNT | | ACCUMULATED AMORTIZATION | | NET CARRYING AMOUNT | | GROSS CARRYING AMOUNT | | ACCUMULATED AMORTIZATION | | NET CARRYING AMOUNT |
Intake Costs asset | | $ | 77,922 | | | $ | (38,683) | | | $ | 39,239 | | | $ | 76,150 | | | $ | (39,617) | | | $ | 36,533 | |
Commissions asset | | 178,289 | | | (67,801) | | | 110,488 | | | 156,639 | | | (64,279) | | | 92,360 | |
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 13 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred revenue liabilities are reflected in our Condensed Consolidated Balance Sheets as follows:
| | | | | | | | | | | | | | | | | | | | |
DESCRIPTION | | LOCATION IN BALANCE SHEET | | JUNE 30, 2024 | | DECEMBER 31, 2023 |
Deferred revenue - Current | | Deferred revenue | | $ | 329,718 | | | $ | 325,665 | |
Deferred revenue - Long-term | | Other Long-term Liabilities | | 95,605 | | | 100,770 | |
DATA CENTER LESSOR CONSIDERATIONS
Our Global Data Center Business features storage rental provided to customers at contractually specified rates over a fixed contractual period, which are accounted for in accordance with Accounting Standards Codification 842, Leases. Storage rental revenue associated with our Global Data Center Business for the three and six months ended June 30, 2024 and 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED JUNE 30, | | SIX MONTHS ENDED JUNE 30, |
| | 2024 | | 2023 | | 2024 | | 2023 |
Storage rental revenue | | $ | 147,397 | | | $ | 110,990 | | | $ | 287,425 | | | $ | 218,425 | |
H. STOCK-BASED COMPENSATION
Our stock-based compensation expense includes the cost of stock options, restricted stock units ("RSUs") and performance units ("PUs") (together, the "Employee Stock-Based Awards").
STOCK-BASED COMPENSATION EXPENSE
Stock-based compensation expense for the Employee Stock-Based Awards for the three and six months ended June 30, 2024 and 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED JUNE 30, | | SIX MONTHS ENDED JUNE 30, | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
Stock-based compensation expense | | $ | 29,889 | | | $ | 22,373 | | | $ | 43,928 | | | $ | 34,882 | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
During the six months ended June 30, 2024, we granted approximately 83,100 stock options, 644,200 RSUs and 450,700 PUs under the 2014 Plan (as defined in Note 2.t to Notes to Consolidated Financial Statements included in our Annual Report).
As of June 30, 2024, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards, inclusive of our estimated achievement of the performance metrics, is $111,128.
| | | | | | | | | | | |
IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 14 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
I. ACQUISITION AND INTEGRATION COSTS
Acquisition and integration costs represent operating expenditures directly associated with the closing and integration activities of our business acquisitions that have closed, or are highly probable of closing, and include (i) advisory, legal and professional fees to complete business acquisitions and (ii) costs to integrate acquired businesses into our existing operations, including move, severance and system integration costs (collectively, "Acquisition and Integration Costs").
Acquisition and Integration Costs for the three and six months ended June 30, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED JUNE 30, | | SIX MONTHS ENDED JUNE 30, | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
Acquisition and Integration Costs | | $ | 9,502 | | | $ | 1,511 | | | $ | 17,311 | | | $ | 3,106 | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
J. LOSS (GAIN) ON DISPOSAL/WRITE-DOWN OF PROPERTY, PLANT AND EQUIPMENT, NET
Loss (gain) on disposal/write-down of property, plant and equipment, net for the three and six months ended June 30, 2024 and 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED JUNE 30, | | SIX MONTHS ENDED JUNE 30, |
| | 2024 | | 2023 | | 2024 | | 2023(1) |
Loss (gain) on disposal/write-down of property, plant and equipment, net | | $ | 2,790 | | | $ | (1,505) | | | $ | 3,179 | | | $ | (14,566) | |
(1) The gains for the six months ended June 30, 2023 primarily consist of a gain of approximately $18,500 associated with a sale-leaseback transaction of a facility in Singapore during the first quarter 2023. The gains recognized during 2023 are the result of our program to monetize a small portion of our industrial assets through sale and sale-leaseback transactions. The terms for these leases are consistent with the terms of our lease portfolio, which are disclosed in detail in Note 2.j. to Notes to Consolidated Financial Statements included in our Annual Report.
K. OTHER EXPENSE (INCOME), NET
Other expense (income), net for the three and six months ended June 30, 2024 and 2023 consists of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED JUNE 30, | | SIX MONTHS ENDED JUNE 30, |
DESCRIPTION | | 2024 | | 2023 | | 2024 | | 2023 |
Foreign currency transaction losses (gains), net(1) | | $ | 1,013 | | | $ | 15,063 | | | $ | (15,366) | | | $ | 29,487 | |
Other, net(2) | | 4,820 | | | 47,887 | | | 8,669 | | | 54,663 | |
Other Expense (Income), Net | | $ | 5,833 | | | $ | 62,950 | | | $ | (6,697) | | | $ | 84,150 | |
(1)The losses for the three and six months ended June 30, 2023 primarily consist of the impact of changes in the exchange rate of the British pound sterling against the United States dollar on our intercompany balances with and between certain of our subsidiaries.
(2)Other, net for the six months ended June 30, 2023 consists primarily of a loss of approximately $38,000 associated with the remeasurement to fair value of our previously held equity interest in the Clutter JV (as defined and discussed in Note 10) as well as losses on our equity method investments and the change in value of the Deferred Purchase Obligation (as defined in Note 3 to Notes to Consolidated Financial Statements included in our Annual Report).
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IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 15 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
L. INCOME TAXES
We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our effective tax rates for the three and six months ended June 30, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED JUNE 30, | | SIX MONTHS ENDED JUNE 30, |
| | 2024(1) | | 2023(2) | | 2024 | | 2023(2) |
Effective Tax Rate | | 27.8 | % | | 78.8 | % | | 21.1 | % | | 24.0 | % |
(1)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three months ended June 30, 2024 were the lack of tax benefits recognized for the year to date ordinary losses of certain entities, the benefits derived from the dividends paid deduction and the differences in the tax rates to which our foreign earnings are subject.
(2)The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate for the three and six months ended June 30, 2023 were (i) the loss of approximately $38,000 recorded in Other, net a component of Other expense (income), net during the second quarter of 2023 to reflect the remeasurement of our previously held equity interest in the Clutter JV to fair value, for which there was no tax impact, (ii) the benefits derived from the dividends paid deduction and (iii) the differences in the tax rates to which our foreign earnings are subject.
M. INCOME (LOSS) PER SHARE—BASIC AND DILUTED
The calculations of basic and diluted income (loss) per share for the three and six months ended June 30, 2024 and 2023 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED JUNE 30, | | SIX MONTHS ENDED JUNE 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Net Income (Loss) | $ | 34,621 | | | $ | 1,143 | | | $ | 111,646 | | | $ | 66,678 | |
Less: Net (Loss) Income Attributable to Noncontrolling Interests | (1,162) | | | 1,029 | | | 1,802 | | | 1,969 | |
Net Income (Loss) Attributable to Iron Mountain Incorporated (utilized in numerator of Earnings Per Share calculation) | $ | 35,783 | | | $ | 114 | | | $ | 109,844 | | | $ | 64,709 | |
Weighted-average shares—basic | 293,340,000 | | | 291,825,000 | | | 293,043,000 | | | 291,633,000 | |
Effect of dilutive potential stock options | 2,068,000 | | | 1,322,000 | | | 1,977,000 | | | 1,269,000 | |
Effect of dilutive potential RSUs and PUs | 430,000 | | | 380,000 | | | 509,000 | | | 386,000 | |
Weighted-average shares—diluted | 295,838,000 | | | 293,527,000 | | | 295,529,000 | | | 293,288,000 | |
Net Income (Loss) Per Share Attributable to Iron Mountain Incorporated: | | | | | | | |
Basic | $ | 0.12 | | | $ | 0.00 | | | $ | 0.37 | | | $ | 0.22 | |
Diluted | $ | 0.12 | | | $ | 0.00 | | | $ | 0.37 | | | $ | 0.22 | |
Antidilutive stock options, RSUs and PUs excluded from the calculation | 506,149 | | | 157,132 | | | 435,957 | | | 151,431 | |
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IRON MOUNTAIN JUNE 30, 2024 FORM 10-Q | | | 16 |
Part I. Financial Information
IRON MOUNTAIN INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(In thousands, except share and per share data) (Unaudited)
3. ACQUISITIONS
REGENCY TECHNOLOGIES
On January 3, 2024, in order to expand our asset lifecycle management ("ALM") business, we acquired 100% of RSR Partners, LLC (doing business as Regency Technologies), an information technology asset disposition services provider with operat