IRON MOUNTAIN INC (IRM) FY 2023 MD&A

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto and the other financial and operating information included elsewhere in this Annual Report.

This discussion contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and in other securities laws. See "Cautionary Note Regarding Forward-Looking Statements" on page iii of this Annual Report and "Item 1A. Risk Factors" beginning on page 9 of this Annual Report.

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OVERVIEW

PROJECT MATTERHORN

In September 2022, we announced Project Matterhorn, a global program designed to accelerate the growth of our business. Project Matterhorn investments focus on transforming our operating model to a global operating model. Project Matterhorn focuses on the formation of a solution-based sales approach that is designed to allow us to optimize our shared services and best practices to better serve our customers' needs. We are investing to accelerate growth and to capture a greater share of the large, global addressable markets in which we operate. We expect to incur approximately $150.0 million in costs annually related to Project Matterhorn from 2023 through 2025. Costs are comprised of (1) restructuring costs, which include (i) site consolidation and other related exit costs, (ii) employee severance costs and (iii) certain professional fees associated with these activities and (2) other transformation costs, which include professional fees such as project management costs and costs for third party consultants who are assisting in the enablement our growth initiatives. The following chart presents (in thousands) total Restructuring and other transformation costs related to Project Matterhorn from the inception of Project Matterhorn through December 31, 2023 and for the years ended December 31, 2023 and 2022:

From the Inception of Project Matterhorn through December 31, 2023

For the Year ended December 31, 2023

For the Year ended December 31, 2022

GENERAL

RESULTS OF OPERATIONS - KEY TRENDS

•Our organic storage rental revenue growth is primarily driven by revenue management in our Global RIM Business segment, where we expect volume to be relatively stable in the near term, as well as by growth in our Global Data Center Business segment, primarily driven by lease commencements.

•Our organic service revenue growth is primarily due to increases in our service activity. We expect organic service revenue growth in 2024 to benefit from our new and existing digital offerings and ALM, as well as our traditional services.

•We expect continued total revenue and Adjusted EBITDA growth in 2024 as a result of our focus on new product and service offerings, innovation, customer solutions and market expansion in line with our Project Matterhorn objectives.

Our revenues consist of storage rental revenues as well as service revenues and are reflected net of sales and value-added taxes. Storage rental revenues, which are considered a key driver of financial performance for the storage and information management services industry, consist primarily of recurring periodic rental charges related to the storage of materials or data (generally on a per unit basis) that are typically retained by customers for many years and of revenues associated with our data center operations. Service revenues include charges for related service activities, the most significant of which include: (1) the handling of records, including the addition of new records, temporary removal of records from storage, refiling of removed records, customer termination and permanent withdrawal fees, project revenues and courier operations consisting primarily of the pickup and delivery of records upon customer request; (2) destruction services, consisting primarily of (i) secure shredding of sensitive documents and the subsequent sale of shredded paper for recycling, the price of which can fluctuate from period to period, and (ii) the decommissioning, data erasure, processing and disposition or sale of IT hardware and component assets; (3) digital solutions, including the scanning, imaging and document conversion services of active and inactive records, and consulting services; and (4) data center services, including set up, monitoring and support of our customers' assets which are protected in our data center facilities, and special project services, including data center fitout. Our Records Management and Data Management service revenue growth is being negatively impacted by declining activity rates as stored records and tapes are becoming less active and more archival. While customers continue to store their records and tapes with us, they are less likely than they have been in the past to retrieve records for research and other purposes, thereby reducing service activity levels.

Cost of sales (excluding depreciation and amortization) consists primarily of labor, including wages and benefits for field personnel, facility occupancy costs (including rent and utilities), transportation expenses (including vehicle leases and fuel), other product cost of sales and other equipment costs and supplies. Of these, labor and facility occupancy costs are the most significant. Selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, IT, sales, account management and marketing personnel, as well as expenses related to communications, travel, professional fees, bad debts, training, office equipment and supplies.

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Cost of sales (excluding depreciation and amortization) and Selling, general and administrative expenses for the year ended December 31, 2023 consists of the following:

Trends in facility occupancy costs are impacted by:•the total number of facilities we occupy;•the mix of properties we own versus properties we lease;•fluctuations in per square foot occupancy costs; and•the levels of utilization of these properties.Trends in total wages and benefits in dollars and as a percentage of total revenue are influenced by:•changes in headcount and compensation levels;•achievement of incentive compensation targets;•workforce productivity; and•variability in costs associated with medical insurance and workers’ compensation.The expansion of our international businesses has impacted the major cost of sales components and selling, general and administrative expenses.•Our international operations are more labor intensive relative to revenue than our operations in North America and, therefore, labor costs are a higher percentage of international operational revenue.•The overhead structure of our expanding international operations has generally not achieved the same level of overhead leverage as our North American operations, which has resulted in an increase in selling, general and administrative expenses as a percentage of revenue as our international operations become a larger percentage of our consolidated results.

Our depreciation and amortization charges result primarily from depreciation related to storage systems, which include racking structures, buildings, building and leasehold improvements and computer systems hardware and software. Amortization relates primarily to customer and supplier relationship intangible assets, Contract Costs (as defined below in Critical Accounting Estimates) and data center lease-based intangible assets. Both depreciation and amortization are impacted by the timing of acquisitions.

Our consolidated revenues and expenses are subject to the net effect of foreign currency translation related to our operations outside the United States. It is difficult to predict the future fluctuations of foreign currency exchange rates and how those fluctuations will impact our Consolidated Statements of Operations. As a result of the relative size of our international operations, these fluctuations may be material on individual balances. Our revenues and expenses from our international operations are generally denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of currency fluctuations on our operating income and operating margin is partially mitigated. In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we compare the percentage change in the results from one period to another period in this report using constant currency presentation. The constant currency growth rates are calculated by translating the 2022 results at the 2023 average exchange rates. Constant currency growth rates are a non-GAAP measure.

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The following table is a comparison of underlying average exchange rates of the foreign currencies that had the most significant impact on our United States dollar-reported revenues and expenses:

The percentage of United States dollar-reported revenues for all other foreign currencies was 12.7% for both of the years ended December 31, 2023 and 2022.

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NON-GAAP MEASURES

ADJUSTED EBITDA

We define Adjusted EBITDA as net income (loss) before interest expense, net, provision (benefit) for income taxes, depreciation and amortization (inclusive of our share of Adjusted EBITDA from our unconsolidated joint ventures), and excluding certain items we do not believe to be indicative of our core operating results, specifically:

Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenues. We also show Adjusted EBITDA and Adjusted EBITDA Margin for each of our reportable segments under "Results of Operations – Segment Analysis" below.

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

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (IN THOUSANDS):

(1)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").

(2)Includes foreign currency transaction losses (gains), net, debt extinguishment expense and other, net. See Note 2.v. to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding the components of Other expense (income), net.

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ADJUSTED EPS

We define Adjusted EPS as reported earnings per share fully diluted from net income (loss) attributable to Iron Mountain Incorporated (inclusive of our share of adjusted losses (gains) from our unconsolidated joint ventures) and excluding certain items, specifically:

We do not believe these excluded items to be indicative of our ongoing operating results, and they are not considered when we are forecasting our future results. We believe Adjusted EPS is of value to our current and potential investors when comparing our results from past, present and future periods.

RECONCILIATION OF REPORTED EPS—FULLY DILUTED FROM NET INCOME (LOSS) ATTRIBUTABLE TO IRON MOUNTAIN INCORPORATED TO ADJUSTED EPS—FULLY DILUTED FROM NET INCOME (LOSS) ATTRIBUTABLE TO IRON MOUNTAIN INCORPORATED:

(1)Relates to the amortization of the excluded component of our cross-currency swap agreements, which is recognized on a straight-line basis as a component of Interest expense, net in our Consolidated Statements of Operations.

(2)The differences between our effective tax rates and our structural tax rate (or adjusted effective tax rates) for the years ended December 31, 2023 and 2022 are primarily due to (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but have an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Our structural tax rate for purposes of the calculation of Adjusted EPS for the years ended December 31, 2023 and 2022 was 12.3% and 15.2%, respectively.

(3)Columns may not foot due to rounding.

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FFO (NAREIT) AND FFO (NORMALIZED)

Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trusts as net income (loss) excluding depreciation on real estate assets, losses and gains on sale of real estate, net of tax, and amortization of data center leased-based intangibles ("FFO (Nareit)"). We calculate our FFO measures, including FFO (Nareit), adjusting for our share of reconciling items from our unconsolidated joint ventures. FFO (Nareit) does not give effect to real estate depreciation because these amounts are computed, under GAAP, to allocate the cost of a property over its useful life. Because values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, we believe that FFO (Nareit) provides investors with a clearer view of our operating performance. Our most directly comparable GAAP measure to FFO (Nareit) is net income (loss).

We modify FFO (Nareit), as is common among REITs seeking to provide financial measures that most meaningfully reflect their particular business ("FFO (Normalized)"). Our definition of FFO (Normalized) excludes certain items included in FFO (Nareit) that we believe are not indicative of our core operating results, specifically:

RECONCILIATION OF NET INCOME (LOSS) TO FFO (NAREIT) AND FFO (NORMALIZED) (IN THOUSANDS):

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

(2)Tax expense associated with the gain on sale of real estate for the years ended December 31, 2023 and 2022 was approximately $0.5 million and $0.8 million, respectively.

(3)Includes amortization expense for Data Center In-Place Leases and Data Center Tenant Relationships as defined in Note 2.m. to Notes to Consolidated Financial Statements included in this Annual Report.

(4)Represents the tax impact of (i) the reconciling items above, which impact our reported net income (loss) before provision (benefit) for income taxes but has an insignificant impact on our reported provision (benefit) for income taxes and (ii) other discrete tax items. Discrete tax items resulted in a (benefit) provision for income taxes of $(18.1) million and $(11.9) million for the years ended December 31, 2023 and 2022, respectively.

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CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and for the period then ended. On an ongoing basis, we evaluate the estimates used. We base our estimates on historical experience, actuarial estimates, current conditions and various other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities and are not readily apparent from other sources. Actual results may differ from these estimates. The following should be read in conjunction with Note 2 to Notes to Consolidated Financial Statements included in this Annual Report, which provides a summary of our significant accounting policies. Our critical accounting estimates include the following, which are listed in no particular order:

REVENUE RECOGNITION

Revenue is recognized when or as control of promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. See Note 2.s. to Notes to Consolidated Financial Statements included in this Annual Report for additional details on our revenue recognition policies. Revenue for all our lines of business, with the exception of storage revenues in our Global Data Center Business (which is subject to Accounting Standards Codification ("ASC") Topic 842, Leases), is recognized in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"), the application of which requires that we make significant judgments related to performance obligations and the transfer of control to the customer.

We have determined that the majority of our contracts contain series performance obligations which qualify to be recognized under a practical expedient available in ASC 606 known as the "right to invoice". This determination allows variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates, which is typically the period in which it is billed, rather than requiring estimation of variable consideration at the inception of the contract.

The costs associated with the initial movement of customer records into physical storage and certain commissions are considered costs to obtain or fulfill customer contracts (collectively, "Contract Costs"). Contract Costs are generally amortized over a three year term, which we have determined is consistent with the transfer of the underlying performance obligations to which the assets relate. Different determinations on term length would result in differences in the amount and timing of amortization expense recognized.

ACCOUNTING FOR ACQUISITIONS

Part of our growth strategy has been to acquire businesses. The purchase price of each acquisition is determined after due diligence of the target business, market research, strategic planning and the forecasting of expected future results and synergies. Estimated future results and expected synergies are subject to revisions as we integrate each acquisition and attempt to leverage resources.

Accounting for acquisitions of a business has resulted in the capitalization of the cost in excess of the estimated fair value of the net assets acquired in each of these acquisitions as goodwill. We estimate the fair values of the assets acquired in each acquisition as of the date of acquisition and these estimates are subject to adjustment based on the final assessments of the fair value of intangible assets (primarily customer and supplier relationship and data center lease-based intangible assets), property, plant and equipment (primarily building, building improvements, leasehold improvements, data center infrastructure and racking structures), operating leases, contingencies and income taxes (primarily deferred income taxes). See Note 3 to Notes to Consolidated Financial Statements included in this Annual Report for a description of recent acquisitions.

Determining the fair values of the net assets acquired requires management’s judgment and often involves the use of assumptions with respect to future cash inflows and outflows, discount rates and market data, among other items. As it relates to our data center acquisitions, the fair values of the net assets acquired requires management’s judgment and often involves the use of assumptions with respect to (i) certain economic costs (as described more fully in Note 2.m. to Notes to Consolidated Financial Statements included in this Annual Report) avoided by acquiring a data center operation with active tenants that would have otherwise been incurred if the data center operation was purchased vacant, (ii) market rental rates and (iii) expectations of lease renewals and extensions. Due to the inherent uncertainty of future events, actual values of net assets acquired could be different from our estimated fair values and could have a material impact on our financial statements.

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Of the net assets acquired in our acquisitions, the fair value of owned buildings, including building improvements, customer and supplier relationship and data center lease-based intangible assets, racking structures and operating leases are generally the most common and most significant. For significant acquisitions or acquisitions involving new markets or new products, we generally use third parties to assist us in estimating the fair value of owned buildings, including building improvements, customer and supplier relationship and lease-based intangible assets and market rental rates for acquired operating leases. For acquisitions that are not significant or do not involve new markets or new products, we generally use third parties to assist us in estimating the fair value of acquired owned buildings, including building improvements, and market rental rates for acquired operating leases. When not using third party appraisals of the fair value of acquired net assets, the fair value of acquired customer and supplier relationship intangible assets, above and below market in-place operating leases, and racking structures is determined internally. We use discounted cash flow models to determine the fair value of customer and supplier relationship intangible assets, which requires a significant amount of judgment by management, including estimating expected lives of the relationships, expected future cash flows and discount rates. The fair value of above and below market in-place operating leases is determined internally using a discounted cash flow model, utilizing the difference in cash flows between the contractual lease payments over the remaining lease term and estimated market rental rates on comparable assets at the time of the acquisition. The fair value of acquired racking structures is determined internally by taking current estimated replacement cost at the date of acquisition for the quantity of racking structures acquired, discounted to take into account the quality (e.g. age, material and type) of the racking structures. We determine the fair value of tangible data center assets using an estimated replacement cost at the date of acquisition, then discounting for age, economic and functional obsolescence.

The fair value of the Deferred Purchase Obligation associated with the ITRenew Transaction (each as defined in Note 3 to Notes to Consolidated Financial Statements included in this Annual Report) was determined utilizing a Monte-Carlo simulation model and takes into account our forecasted projections as it relates to the underlying performance of the business. The Monte-Carlo simulation model incorporates assumptions as to expected gross profits over the applicable 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 underlying arrangement and overall market risks.

Our estimates of fair value are based upon assumptions believed to be reasonable at that time but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur, which may affect the accuracy of such assumptions. Total property, plant and equipment acquired in our 2023 acquisitions was approximately $140.7 million.

IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS

ASSETS SUBJECT TO DEPRECIATION OR AMORTIZATION

We review long-lived assets and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Examples of events or circumstances that may be indicative of impairment include, but are not limited to:

•A significant decrease in the market price of an asset;

•A significant change in the extent or manner in which a long-lived asset is being used or in its physical condition;

•A significant adverse change in legal factors or in the business climate that could affect the value of the asset;

•An accumulation of costs significantly greater than the amount originally expected for the acquisition or construction of an asset;

•A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; and

•A current expectation that, more likely than not, an asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

If events indicate the carrying value of such assets may not be recoverable, recoverability of these assets is determined by comparing the sum of the forecasted undiscounted net cash flows of the operation to which the assets relate to their carrying amount. The operations are generally distinguished by the business segment and geographic region in which they operate. If it is determined that we are unable to recover the carrying amount of the assets, the long-lived assets are written down, on a pro rata basis, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets.

We did not record impairment charges for any of our long-lived assets or finite-lived intangibles during the years ended December 31, 2023 and 2022.

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GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS NOT SUBJECT TO AMORTIZATION

Goodwill and intangible assets with indefinite lives are not amortized but are reviewed annually for impairment, or more frequently if impairment indicators arise. Other than goodwill, we currently have no intangible assets that have indefinite lives and which are not amortized. See Note 2.l. to Notes to Consolidated Financial Statements included in this Annual Report for additional details on our goodwill and other indefinite-lived intangible assets policies.

We have selected October 1 as our annual goodwill impairment review date. We have performed our annual goodwill impairment review as of October 1, 2023 and 2022. We concluded that as of October 1, 2023 and 2022, goodwill was not impaired.

Our reporting units at which level we performed our goodwill impairment analysis as of October 1, 2023 were as follows:

See Note 2.l. to Notes to Consolidated Financial Statements included in this Annual Report for a description of our reporting units.

Based on our goodwill impairment analysis as of October 1, 2023, all of our reporting units had estimated fair values exceeding their carrying values by greater than 30%. The Global Data Center and ALM reporting units represented approximately $1,058.4 million, or 21.1%, of our consolidated goodwill balance at December 31, 2023, and their fair values are most sensitive to changes in our assumptions. The following is a summary of the Global Data Center and ALM reporting units including the goodwill balance (in thousands), the percentage by which the fair value of the reporting units exceeded their carrying values and certain key assumptions used by us in determining the fair value of the reporting units as of October 1, 2023:

(1)For purposes of our goodwill impairment analysis, the term "capital expenditures" includes both growth investment and recurring capital expenditures. The capital expenditure assumptions in our goodwill impairment analysis for our Global Data Center reporting unit include significant growth investment in the next three years.

(2)Terminal growth rates are applied after year 10 of our discounted cash flow analysis.

The fair values of our reporting units are generally determined using a combined approach based on the present value of future cash flows (the "Discounted Cash Flow Model") and market multiples (the "Market Approach"). There are inherent uncertainties and judgments involved when determining the fair value of the reporting units for purposes of our annual goodwill impairment testing. The following includes supplemental information to the table above for the Global Data Center and ALM reporting units where the estimated fair value exceeded their respective carrying values by approximately 31.2% and 37.7% as of October 1, 2023. The fair value of our Global Data Center reporting unit was determined using a combined Discounted Cash Flow Model and Market Approach, while the fair value of our ALM reporting unit was determined using a Discounted Cash Flow Model approach. We do not use a Market Approach when determining the fair value of our ALM reporting unit given a lack of directly comparable publicly traded guideline companies to ALM. The success of these businesses and the achievement of certain key assumptions developed by management and used in the Discounted Cash Flow Model are contingent upon various factors including, but not limited to, (i) achieving growth from existing customers, (ii) sales to new customers, (iii) increased market penetration, (iv) accuracy in the timing and costs of capital investments related to expansions and (v) market pricing trends of IT hardware and component assets.

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GLOBAL DATA CENTER

Our Global Data Center Business operates 26 data centers across 21 global markets, either directly or through unconsolidated joint ventures. We provide enterprise-class data center facilities and hyperscale-ready capacity to protect mission-critical assets and ensure the continued operation of our customers’ IT infrastructure with secure, reliable and flexible data center options. Data centers are highly specialized and secure assets that serve as centralized repositories of server, storage and network equipment. They are capital intensive and designed to provide the space, power, cooling and network connectivity necessary to efficiently operate mission-critical IT equipment. The demand for data center infrastructure is being driven by many factors, but most importantly by significant growth in data as well as an increased demand for outsourcing. In order to attract and retain customers, as well as sustain growth in our existing and new markets, we must have the capability to tailor our facilities and invest capital to meet our customers’ needs. Our estimate of fair value reflects the expected growth in each of our data center markets along with the corresponding capital investments required to meet demand.

ALM

Our ALM business provides hyperscale and corporate IT infrastructure managers with services and solutions that enable the decommissioning, data erasure, processing and disposition or sale of IT hardware and component assets. ALM services are enabled by: (i) secure logistics, chain of custody and complete asset traceability practices; (ii) environmentally-responsible asset processing and recycling; and (iii) data sanitization and asset refurbishment services that enable value recovery through asset remarketing. The assumptions we used in determining fair value reflect the ongoing and anticipated expansion of these services, the maintenance and further development of the supplier relationships required to expand this business and meet customer demand and decommissioning schedules of our supplier's IT hardware and component assets, as well as demand for such assets at that time. The assumptions used also reflect the continued stabilization and improvement in market pricing for IT hardware and component assets from pricing observed as compared to recent history.

KEY ASSUMPTIONS

Key factors that could reasonably be expected to have a negative impact on the estimated fair value of these reporting units and potentially result in impairment charges include, but are not limited to: (i) a deterioration in general economic conditions, (ii) significant adverse changes in regulatory factors or in the business climate and (iii) adverse actions or assessment by regulators, all of which could result in adverse changes to the key assumptions used in valuing the reporting units. The inability to meet the assumptions used in the Discounted Cash Flow Model and Market Approach for each of the reporting units, or future adverse market conditions not currently known, could lead to a fair value that is less than the carrying value in any one of our reporting units.

The Discounted Cash Flow Model incorporates significant assumptions including future revenue growth rates, operating margins, discount rates and capital expenditures. The Market Approach requires us to make assumptions related to EBITDA multiples. Changes in economic and operating conditions impacting these assumptions or changes in multiples could result in goodwill impairments in future periods. In conjunction with our annual goodwill impairment reviews, we reconcile the sum of the valuations of all of our reporting units to our market capitalization as of such dates.

Although we believe we have sufficient historical and projected information available to us to test for goodwill impairment, it is possible that actual results could differ from the estimates used in our impairment tests. Of the key assumptions that impact the goodwill impairment test, the expected future cash flows and discount rate are among the most sensitive and are considered to be critical assumptions, as changes to these estimates could have an effect on the estimated fair value of each of our reporting units. We have assessed the sensitivity of these assumptions on each of our reporting units as of October 1, 2023.

We noted that, based on the estimated fair value of all of our reporting units determined as of October 1, 2023:

•a hypothetical decrease of 10% in the expected annual future cash flows of these reporting units, with all other assumptions unchanged, would have decreased the estimated fair value of our reporting units as of October 1, 2023 by a range of approximately 7.7% to 11.5% but would not, however, have resulted in the carrying value of any of our reporting units exceeding their estimated fair value; and

•a hypothetical increase of 100 basis points in the discount rate, with all other assumptions unchanged, would have decreased the estimated fair value of our reporting units as of October 1, 2023 by a range of approximately 2.7% to 15.4% but would not, however, have resulted in the carrying value of any of our reporting units exceeding their estimated fair value.

At December 31, 2023, no factors were identified that would alter the conclusions of our October 1, 2023 goodwill impairment analysis. In making this assessment, we considered a number of factors including operating results, business plans, anticipated future cash flows, transactions and marketplace data. There are inherent uncertainties related to these factors and our judgment in applying them to the analysis of goodwill impairment.

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INCOME TAXES

As a REIT, we are generally permitted to deduct from our federal taxable income the dividends we pay to our stockholders. The income represented by such dividends is not subject to federal taxation at the entity level but is taxed, if at all, at the stockholder level. The income of our domestic TRSs, which hold our domestic operations that may not be REIT-compliant as currently operated and structured, is subject, as applicable, to federal and state corporate income tax. In addition, we and our subsidiaries continue to be subject to foreign income taxes in other jurisdictions in which we have business operations or a taxable presence, regardless of whether assets are held or operations are conducted through subsidiaries disregarded for federal income tax purposes or TRSs. We will also be subject to a separate corporate income tax on any gains recognized on the sale or disposition of any asset previously owned by a C corporation during a five-year period after the date we first owned the asset as a REIT asset that are attributable to "built-in gains" with respect to that asset on that date. We will also be subject to a built-in gains tax on our depreciation recapture recognized into income as a result of accounting method changes in connection with our acquisition activities. If we fail to remain qualified for taxation as a REIT, we will be subject to federal income tax at regular corporate income tax rates. Even if we remain qualified for taxation as a REIT, we may be subject to some federal, state, local and foreign taxes on our income and property in addition to taxes owed with respect to our TRS operations. In particular, while state income tax regimes often parallel the federal income tax regime for REITs, many states do not completely follow federal rules and some do not follow them at all. See Note 10 to Notes to Consolidated Financial Statements included in this Annual Report for additional details on our tax policies.

Accounting for income taxes requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the tax and financial reporting bases of assets and liabilities and for loss and credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities as a result of a change in tax rates is recognized in income in the period that the change is enacted. Valuation allowances are provided when recovery of deferred tax assets does not meet the more likely than not standard as defined in GAAP. Valuation allowances would be reversed as a reduction to the provision for income taxes if related deferred tax assets are deemed realizable based on changes in facts and circumstances relevant to the recoverability of the asset.

At December 31, 2023, we have federal net operating loss carryforwards of $109.6 million, which can be carried forward indefinitely, of which $88.7 million is expected to be realized to reduce future federal taxable income. We have assets for foreign net operating losses of $133.5 million, with various expiration dates (and in some cases no expiration date), subject to a valuation allowance of approximately 73.8%. If actual results differ unfavorably from certain of our estimates used, we may not be able to realize all or part of our net deferred income tax assets and additional valuation allowances may be required. Although we believe our estimates are reasonable, no assurance can be given that our estimates reflected in the tax provisions and accruals will equal our actual results. These differences could have a material impact on our income tax provision and operating results in the period in which such determination is made.

The evaluation of an uncertain tax position is a two-step process. The first step is a recognition process whereby we determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is a measurement process whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. As of December 31, 2023 and 2022, we had approximately $23.6 million and $27.8 million, respectively, of reserves related to uncertain tax positions. The reversal of these reserves will be recorded as a reduction of our income tax provision if sustained. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes in our estimates.

During 2021, as a result of the enactment of a tax law and the closing of various acquisitions, we concluded that it is no longer our intention to reinvest our undistributed earnings of our foreign TRSs indefinitely outside the United States. As a REIT, future repatriation of incremental undistributed earnings of our foreign subsidiaries will not be subject to federal or state income tax, with the exception of foreign withholding taxes. However, such future repatriations may require distributions to our stockholders in accordance with REIT distribution rules, and any such distribution may then be taxable, as appropriate, at the stockholder level. We expect to provide for foreign withholding taxes on the current and future earnings of all of our foreign subsidiaries as the result of such reassessment.

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RESULTS OF OPERATIONS

The following information summarizes our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022. For a discussion of our results for the year ended December 31, 2022 compared to the year ended December 31, 2021, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K filed with the SEC on February 23, 2023.

COMPARISON OF YEAR ENDED DECEMBER 31, 2023 TO YEAR ENDED DECEMBER 31, 2022

(IN THOUSANDS):

(1)See "Non-GAAP Measures—Adjusted EBITDA" in this Annual Report for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin, reconciliation of Net Income (Loss) to Adjusted EBITDA and a discussion of why we believe these non-GAAP measures provide relevant and useful information to our current and potential investors.

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REVENUES

Total revenues consist of the following (in thousands):

(1)Constant currency growth rate, which is a non-GAAP measure, is calculated by translating the 2022 results at the 2023 average exchange rates.

(2)Our organic revenue growth rate, which is a non-GAAP measure, represents the year-over-year growth rate of our revenues excluding the impact of business acquisitions, divestitures and foreign currency exchange rate fluctuations. Our organic revenue growth rate includes the impact of acquisitions of customer relationships.

TOTAL REVENUES

For the year ended December 31, 2023, the increase in reported revenue was primarily driven by organic storage rental revenue growth. Foreign currency exchange rate fluctuations decreased our reported revenue growth rate by 0.2% in the year ended December 31, 2023 compared to the prior year period.

STORAGE RENTAL REVENUE AND SERVICE REVENUE

Primary factors influencing the change in reported storage rental revenue and reported service revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022 include the following:

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OPERATING EXPENSES

COST OF SALES

Cost of sales (excluding depreciation and amortization) consists of the following expenses (in thousands):

Primary factors influencing the change in reported Cost of sales for the year ended December 31, 2023 compared to the year ended December 31, 2022 include the following:

•an increase in labor costs driven by an increase in service activity, primarily within our Global RIM Business;

•an increase in facilities expenses driven by increases in rent expense, reflecting the impact from our sale-leaseback activity during the years ended December 31, 2022 and 2023, as well as increases in utilities costs;

•a decrease in product cost of sales in our ALM business as a result of component price declines, partially offset by increased volume; and

•a decrease of $4.0 million due to foreign currency exchange rate fluctuations.

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses consists of the following expenses (in thousands):

Primary factors influencing the change in reported Selling, general and administrative expenses for the year ended December 31, 2023 compared to the year ended December 31, 2022 include the following:

•an increase in general, administrative and other expenses, primarily driven by recent acquisitions;

•an increase in sales, marketing and account management expenses, driven by higher compensation expense, primarily reflecting increased headcount; and

•a decrease of $1.7 million due to foreign currency exchange rate fluctuations.

DEPRECIATION AND AMORTIZATION

Our depreciation and amortization charges result primarily from depreciation related to storage systems, which include racking structures, buildings, building and leasehold improvements and computer systems hardware and software. Amortization relates primarily to customer and supplier relationship intangible assets, Contract Costs and data center lease-based intangible assets. Both depreciation and amortization are impacted by the timing of acquisitions.

Depreciation expense increased $46.9 million, or 9.8%, on a reported dollar basis for the year ended December 31, 2023 compared to the year ended December 31, 2022. See Note 2.i. to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding the useful lives over which our property, plant and equipment is depreciated.

Amortization expense increased $1.7 million, or 0.7%, on a reported dollar basis for the year ended December 31, 2023 compared to the year ended December 31, 2022.

ACQUISITION AND INTEGRATION COSTS

Acquisition and Integration Costs for the years ended December 31, 2023 and 2022 was approximately $25.9 million and $47.7 million, respectively.

RESTRUCTURING AND OTHER TRANSFORMATION

Restructuring and other transformation costs for the years ended December 31, 2023 and 2022 were approximately $175.2 million and $41.9 million, respectively, and related to operating expenses associated with the implementation of Project Matterhorn.

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GAIN ON DISPOSAL/WRITE-DOWN OF PROPERTY, PLANT AND

EQUIPMENT, NET

OTHER EXPENSES, NET

INTEREST EXPENSE, NET

Interest expense, net increased $97.9 million to $585.9 million in the year ended December 31, 2023 from $488.0 million in the year ended December 31, 2022. The increase is primarily due to higher average debt outstanding during the year ended December 31, 2023 compared to the prior year period as well as an increase in our weighted average interest rate. Our weighted average interest rate, inclusive of the fees associated with our outstanding letters of credit, was 5.6% and 5.1% at December 31, 2023 and 2022, respectively. See Note 7 to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding our indebtedness.

OTHER EXPENSE (INCOME), NET

Other expense (income), net consists of the following (in thousands):

(1)We recorded net foreign currency transaction losses of $36.8 million in the year ended December 31, 2023, based on period-end exchange rates. These losses resulted primarily from the impact of changes in the exchange rate of the British pound sterling against the United States dollar compared to December 31, 2022 on our intercompany balances with and between certain of our subsidiaries.

(2)Other, net for the year ended December 31, 2023 consists primarily of a loss of approximately $38.0 million associated with the remeasurement to fair value of our previously held equity interest in the Clutter JV. See the Investments section of Liquidity and Capital Resources for additional information. We also recognized losses on our equity method investments and the change in value of the Deferred Purchase Obligation.

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PROVISION (BENEFIT) FOR INCOME TAXES

Our effective tax rates for the years ended December 31, 2023 and 2022 were 17.6% and 11.0%, respectively. Our effective tax rate is subject to variability in the future due to, among other items: (i) changes in the mix of income between our QRSs and our TRSs, as well as among the jurisdictions in which we operate, (ii) tax law changes, (iii) volatility in foreign exchange gains and losses, (iv) the timing of the establishment and reversal of tax reserves, (v) our ability to utilize net operating losses that we generate and (vi) the taxability or deductibility of significant transactions.

The primary reconciling items between the federal statutory tax rate of 21.0% and our overall effective tax rate were:

As a REIT, we are entitled to a deduction for dividends paid, resulting in a substantial reduction of federal income tax expense. As a REIT, substantially all of our income tax expense will be incurred based on the earnings generated by our foreign subsidiaries and our domestic TRSs.

We are subject to income taxes in the United States and numerous foreign jurisdictions. We are subject to examination by various tax authorities in jurisdictions in which we have business operations or a taxable presence. We regularly assess the likelihood of additional assessments by tax authorities and provide for these matters as appropriate. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in changes in our estimates.

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NET INCOME (LOSS) AND ADJUSTED EBITDA

The following table reflects the effect of the foregoing factors on our net income (loss) and Adjusted EBITDA (in thousands):

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SEGMENT ANALYSIS

See the discussion of Business Segments under Item I and Note 11 to Notes to Consolidated Financial Statements, both included in this Annual Report, for a description of our reportable segments.

GLOBAL RIM BUSINESS (IN THOUSANDS)

SEGMENT ANALYSIS: GLOBAL RIM BUSINESS (IN MILLIONS)

Primary factors influencing the change in revenue and Adjusted EBITDA Margin in our Global RIM Business segment for the year ended December 31, 2023 compared to the year ended December 31, 2022 include the following:

•organic storage rental revenue growth driven by revenue management;

•organic service revenue growth primarily driven by increases in our traditional service activity levels and growth in our Global Digital Solutions business;

•a decrease in revenue of $11.9 million due to foreign currency exchange rate fluctuations; and

•a 40 basis point decrease in Adjusted EBITDA Margin primarily driven by an increase in compensation and other employee-related costs and higher facilities costs, partially offset by revenue management.

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GLOBAL DATA CENTER BUSINESS (IN THOUSANDS)

SEGMENT ANALYSIS: GLOBAL DATA CENTER BUSINESS (IN MILLIONS)

Primary factors influencing the change in revenue and Adjusted EBITDA Margin in our Global Data Center Business segment for the year ended December 31, 2023 compared to the year ended December 31, 2022 include the following:

•organic storage rental revenue growth from leases that commenced during 2023 and in prior periods, improved pricing and higher pass-through power costs, partially offset by churn of 570 basis points;

•an increase in Adjusted EBITDA primarily driven by organic storage rental revenue growth; and

•a 20 basis point decrease in Adjusted EBITDA Margin reflecting higher pass-through power costs, partially offset by ongoing cost management and a decline in lower margin project revenue.

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CORPORATE AND OTHER (IN THOUSANDS)

Primary factors influencing the change in revenue and Adjusted EBITDA in Corporate and Other for the year ended December 31, 2023 compared to the year ended December 31, 2022 include the following:

•a decrease in service revenue in our ALM business as a result of component price declines, which we expect to improve from current levels, partially offset by increased volume; and

•a decrease in Adjusted EBITDA driven by the flow through of service revenue declines in our ALM business.

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LIQUIDITY AND CAPITAL RESOURCES

GENERAL

We expect to meet our short-term and long-term cash flow requirements through cash generated from operations, cash on hand, borrowings under our Credit Agreement (as defined below), as well as other potential financings (such as the issuance of debt). Our cash flow requirements, both in the near and long term, include, but are not limited to, capital expenditures, the repayment of outstanding debt, shareholder dividends, potential business acquisitions and normal business operation needs.

PROJECT MATTERHORN

As disclosed above, in September 2022, we announced Project Matterhorn. We estimate that the implementation of Project Matterhorn will result in costs of approximately $150.0 million per year from 2023 through 2025. During the years ended December 31, 2023 and 2022, we incurred approximately $175.2 million and $41.9 million, respectively, of Restructuring and other transformation costs related to Project Matterhorn, which are comprised of (1) restructuring costs, which include (i) site consolidation and other related exit costs, (ii) employee severance costs and (iii) certain professional fees associated with these activities and (2) other transformation costs, which include professional fees such as project management costs and costs for third party consultants who are assisting in the enablement our growth initiatives.

CASH FLOWS

The following is a summary of our cash balances and cash flows (in thousands) as of and for the years ended December 31,

A. CASH FLOWS FROM OPERATING ACTIVITIES

For the year ended December 31, 2023, net cash flows provided by operating activities increased by $185.9 million compared to the prior year period primarily due to an increase in cash from working capital of $211.9 million, primarily related to the timing of accounts receivable collections, partially offset by a decrease in net income (excluding non-cash charges) of $26.0 million.

B. CASH FLOWS FROM INVESTING ACTIVITIES

Our significant investing activities during the year ended December 31, 2023 included cash paid for capital expenditures of $1,339.2 million. Additional details of our capital spending are included in the "Capital Expenditures" section below.

C. CASH FLOWS FROM FINANCING ACTIVITIES

Our significant financing activities during the year ended December 31, 2023 included:

•Net proceeds of approximately $990.0 million associated with the issuance of the 7% Notes due 2029 (as defined below).

•Net proceeds of approximately $1,181.0 million associated with the borrowing of the Term Loan B due 2031 (as defined below), which were used to repay outstanding borrowings under the Revolving Credit Facility (as defined below).

•Payment of dividends in the amount of $737.7 million on our common stock.

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CAPITAL EXPENDITURES

We present two categories of capital expenditures: (1) Growth Investment Capital Expenditures and (2) Recurring Capital Expenditures with the following sub-categories: (i) Data Center; (ii) Real Estate; (iii) Innovation and Other (for Growth Investment Capital Expenditures only); and (iv) Non-Real Estate (for Recurring Capital Expenditures only).

GROWTH INVESTMENT CAPITAL EXPENDITURES:

•Data Center: Expenditures primarily related to investments in the construction of data center facilities (including the acquisition of land), as well as investments to drive revenue growth, expand capacity or achieve operational or cost efficiencies.

•Real Estate: Expenditures primarily related to investments in land, buildings, building improvements, leasehold improvements and racking structures to grow our revenues, extend the useful life of an asset or achieve operational or cost efficiencies.

•Innovation and Other: Discretionary capital expenditures for significant new products and services as well as computer hardware and software to support new products and services or to achieve operational or cost efficiencies. Integration costs of acquisitions are also included.

RECURRING CAPITAL EXPENDITURES:

•Data Center: Expenditures related to the replacement of equivalent components and overall maintenance of existing data center assets.

•Real Estate: Expenditures primarily related to the replacement of components of real estate assets such as buildings, building improvements, leasehold improvements and racking structures.

•Non-Real Estate: Expenditures primarily related to the replacement of containers and shred bins, warehouse equipment, fixtures, computer hardware, or third-party or internally-developed software assets that support the maintenance of existing revenues or avoidance of an increase in costs.

The following table presents our capital spend for 2023 and 2022 organized by the type of the spending as described above.

Excluding capital expenditures associated with potential future acquisitions, we expect total capital expenditures of approximately $1,500.0 million for the year ending December 31, 2024. Of this, we expect capital expenditures for growth investment of approximately $1,350.0 million, and recurring capital expenditures of approximately $150.0 million.

DIVIDENDS

See Note 9 to Notes to Consolidated Financial Statements included in this Annual Report for information on dividends.

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FINANCIAL INSTRUMENTS AND DEBT

Financial instruments that potentially subject us to credit risk consist principally of cash and cash equivalents (including money market funds and time deposits) and accounts receivable. The only significant concentrations of liquid investments as of December 31, 2023 are related to cash and cash equivalents held in money market funds. See Note 2.g. to Notes to the Consolidated Financial Statements included in this Annual Report for information on our money market funds.

Long-term debt as of December 31, 2023 is as follows (in thousands):

See Note 7 to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding our long-term debt.

CREDIT AGREEMENT

Our credit agreement (the "Credit Agreement") consists of a revolving credit facility (the "Revolving Credit Facility"), a term loan A facility (the "Term Loan A") and two term loan B facilities (the "Term Loan B due 2026" and the "Term Loan B due 2031").

The Revolving Credit Facility enables IMI and certain of its subsidiaries to borrow an aggregate outstanding amount not to exceed $2,250.0 million in United States dollars and (subject to sublimits) Canadian dollars. Additionally, the Credit Agreement permits us to incur incremental indebtedness thereunder by adding new term loans or revolving loans or by increasing the principal amount of any existing loans thereunder. The Revolving Credit Facility and the Term Loan A are scheduled to mature on March 18, 2027, at which point all obligations become due. On March 18, 2022, we borrowed the full amount of the Term Loan A of $250.0 million. The Term Loan A is to be paid in quarterly installments in an amount equal to $3.1 million per quarter. Iron Mountain Information Management, LLC ("IMIM"), a wholly-owned subsidiary of IMI, is the borrower under the Term Loan B due 2026, which has a principal amount of $700.0 million. The Term Loan B due 2026, which matures on January 2, 2026, was issued at 99.75% of par. Principal payments on the Term Loan B due 2026 are to be paid in quarterly installments of $1.8 million.

In December 2023, we entered into the Term Loan B due 2031 in the principal amount of $1,200.0 million, of which IMIM borrowed the full amount. The Term Loan B due 2031 was issued at 99.25% of par and matures on January 31, 2031. The aggregate net proceeds of approximately $1,181.0 million, after paying commissions to the joint lead arrangers and net of the original issue discount, were used to repay outstanding borrowings under the Revolving Credit Facility. The Term Loan B due 2031 is an incremental term loan under the Credit Agreement. Beginning in the first quarter of 2024, the Term Loan B due 2031 is to be paid in quarterly installments of $3.0 million.

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IMI and certain subsidiaries of IMI that represent the substantial majority of our operations in the United States, Canada and the United Kingdom guarantee all obligations under the Credit Agreement. The capital stock or other equity interests of our United States subsidiaries representing the substantial majority of our United States operations, and up to 66% of the capital stock or other equity interests of most of our first-tier foreign subsidiaries, are pledged to secure all obligations under the Credit Agreement, together with all intercompany obligations (including promissory notes) of subsidiaries owed to us or to one of our United States subsidiary guarantors. In addition, Iron Mountain Canada Operations ULC has pledged 66% of the capital stock of its subsidiaries, and all intercompany obligations (including promissory notes) owed to or held by it, to secure obligations under the Credit Agreement (collectively, the “Credit Agreement Collateral”).

The interest rate on borrowings under the Revolving Credit Facility varies depending on our choice of interest rate benchmark and currency options, plus an applicable margin, which varies based on our consolidated leverage ratio. The Term Loan A bears interest at the Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment of 0.1% plus 1.75%. Due to the discontinuance of the London Interbank Offered Rate ("LIBOR") reference rate on June 30, 2023, we transitioned the Term Loan B due 2026 from an interest rate of LIBOR plus 1.75% to a synthetic LIBOR rate plus 1.75%, effective July 1, 2023. The Term Loan B due 2031 bears interest at the SOFR plus 2.25%. Additionally, the Credit Agreement requires the payment of a commitment fee on the unused portion of the Revolving Credit Facility, which fee ranges from 0.2% to 0.3% based on our consolidated leverage ratio.

As of December 31, 2023, we had no outstanding borrowings under the Revolving Credit Facility and $228.1 million, $659.8 million and $1,200.0 million outstanding under the Term Loan A, the Term Loan B due 2026 and the Term Loan B due 2031, respectively. As of December 31, 2023, we had various outstanding letters of credit totaling $4.8 million under the Revolving Credit Facility. The remaining amount available for borrowing under the Revolving Credit Facility as of December 31, 2023, which is based on IMI’s leverage ratio, the last 12 months' earnings before interest, taxes, depreciation and amortization and rent expense ("EBITDAR"), other adjustments as defined in the Credit Agreement and current external debt, was $2,245.2 million (which amount represents the maximum availability as of such date). Available borrowings under the Revolving Credit Facility are subject to compliance with our indenture covenants as discussed below. The interest rates in effect under the Term Loan A, the Term Loan B due 2026 and the Term Loan B due 2031 as of December 31, 2023 were 7.2%, 5.2% and 7.6%, respectively.

VIRGINIA CREDIT AGREEMENTS

VIRGINIA 3 CREDIT AGREEMENT

On August 31, 2023, Iron Mountain Data Centers Virginia 3, LLC, a wholly-owned subsidiary of IMI, entered into a credit agreement (the "Virginia 3 Credit Agreement") in order to partially finance the construction of a data center facility in Virginia. The Virginia 3 Credit Agreement consists of a term loan facility and a letter of credit facility. We have the option to borrow, in the form of term loans, an aggregate outstanding amount not to exceed $275.0 million (the "Virginia 3 Term Loans"). The Virginia 3 Term Loans bear interest at the SOFR plus 2.50%. The Virginia 3 Credit Agreement requires the payment of a commitment fee on any unused commitments at a rate of 0.75%. The Virginia 3 Credit Agreement is secured by the equity interests and assets of Iron Mountain Data Centers Virginia 3, LLC. The Virginia 3 Credit Agreement is scheduled to mature on August 31, 2026, at which point all obligations will become due. We have two one-year options that allow us to extend the maturity date beyond August 31, 2026, subject to the conditions specified in the Virginia 3 Credit Agreement. As of December 31, 2023, we have $101.2 million in outstanding borrowings in Virginia 3 Term Loans with a weighted average interest rate of 6.2%.

VIRGINIA 4/5 CREDIT AGREEMENT

On October 31, 2022, Iron Mountain Data Centers Virginia 4/5 Subsidiary, LLC, a wholly-owned subsidiary of Iron Mountain Data Centers Virginia 4/5 JV, LP, entered into a credit agreement (the "Virginia 4/5 Credit Agreement") in order to finance the construction of two data center facilities in Virginia. The Virginia 4/5 Credit Agreement consists of a term loan facility and a letter of credit facility. We have the option to borrow, in the form of term loans, an aggregate outstanding amount not to exceed approximately $205.0 million (the "Virginia 4/5 Term Loans"). The Virginia 4/5 Term Loans bear interest at SOFR plus a credit spread adjustment of 0.1% plus 1.625%. The Virginia 4/5 Credit Agreement requires the payment of a commitment fee on any unused commitments at a rate of 0.4875%. The Virginia 4/5 Credit Agreement is secured by the equity interests and assets of Iron Mountain Data Centers Virginia 4/5 Subsidiary, LLC. The Virginia 4/5 Credit Agreement is scheduled to mature on October 31, 2025, at which point all obligations will become due. We have two one-year options that allow us to extend the maturity date beyond October 31, 2025, subject to the conditions specified in the Virginia 4/5 Credit Agreement, including the lender's consent. As of December 31, 2023, we have $16.3 million in outstanding borrowings in Virginia 4/5 Term Loans with a weighted average interest rate of 6.1%.

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MAY 2023 OFFERING

On May 15, 2023, Iron Mountain Incorporated completed a private offering of (in thousands):

(1)We may redeem the 7% Notes due 2029 at any time, at our option, in whole or in part. Prior to the par call date, we may redeem the 7% Notes due 2029 at the redemption price or make-whole premium specified in the indenture governing the 7% Notes due 2029, together with accrued and unpaid interest to, but excluding, the redemption date. On or after the par call date, we may redeem the 7% Notes due 2029 at a price equal to 100% of the principal amount being redeemed, together with accrued and unpaid interest to, but excluding, the redemption date.

The 7% Notes due 2029 were issued at 100% of par. The total net proceeds of approximately $990.0 million from the issuance of the 7% Notes due 2029, after deducting the initial purchasers' commissions, were used to repay outstanding borrowings under the Revolving Credit Facility.

AUSTRALIAN DOLLAR TERM LOAN

Iron Mountain Australia Group Pty, Ltd., a wholly owned subsidiary of IMI, has an AUD term loan with an original principal balance of 350.0 million Australian dollars ("AUD Term Loan"). All indebtedness associated with the AUD Term Loan was issued at 99% of par. Principal payments on the AUD Term Loan are to be paid in quarterly installments in an aggregate amount of 7.7 million Australian dollars per year. The AUD Term Loan bears interest at BBSY (an Australian benchmark variable interest rate) plus 3.625%. The AUD Term Loan is guaranteed by Iron Mountain Australia Group Pty, Ltd. and certain other Australian subsidiaries (the "Australia Group Guarantors") and by the guarantors of the Credit Agreement. The AUD Term Loan is secured by the capital stock and assets of the Australia Group Guarantors and by the Credit Agreement Collateral. The AUD Term Loan is scheduled to mature on September 30, 2026, at which point all obligations become due.

As of December 31, 2023, we had 292.4 million Australian dollars ($199.2 million based upon the exchange rate between the United States dollar and the Australian dollar as of December 31, 2023) outstanding on the AUD Term Loan. The interest rate in effect under the AUD Term Loan was 8.0% and 6.9% as of December 31, 2023 and 2022, respectively.

UK BILATERAL REVOLVING CREDIT FACILITY

Iron Mountain (UK) PLC ("IM UK") and Iron Mountain (UK) Data Centre Limited, wholly owned subsidiaries of IMI (collectively, the "UK Borrowers"), have a British pounds sterling Revolving Credit Facility (the "UK Bilateral Revolving Credit Facility"). The maximum amount permitted to be borrowed under the UK Bilateral Revolving Credit Facility is 140.0 million British pounds sterling, which was fully drawn as of December 31, 2023. We have the option to request additional commitments of up to 125.0 million British pounds sterling, subject to conditions specified in the UK Bilateral Revolving Credit Facility. IMI and subsidiaries of IMI that represent the substantial majority of our operations in the United States and the United Kingdom guarantee all obligations under the UK Bilateral Revolving Credit Facility. The UK Bilateral Revolving Credit Facility is secured by certain properties in the United Kingdom.

On September 19, 2023, the UK Borrowers amended the UK Bilateral Revolving Credit Facility to extend the maturity date from September 24, 2024 to September 24, 2025. The interest rate in effect under the UK Bilateral Revolving Credit Facility was 7.3% as of December 31, 2023.

ACCOUNTS RECEIVABLE SECURITIZATION PROGRAM

We participate in an accounts receivable securitization program (the "Accounts Receivable Securitization Program") involving several of our wholly-owned subsidiaries and certain financial institutions. Under the Accounts Receivable Securitization Program, certain of our subsidiaries sell substantially all of their United States accounts receivable balances to our wholly-owned special purpose entities, Iron Mountain Receivables QRS, LLC and Iron Mountain Receivables TRS, LLC (the "Accounts Receivable Securitization Special Purpose Subsidiaries"). The Accounts Receivable Securitization Special Purpose Subsidiaries use the accounts receivable balances to collateralize loans obtained from certain financial institutions. The Accounts Receivable Securitization Special Purpose Subsidiaries are consolidated subsidiaries of IMI. IMIM retains the responsibility of servicing the accounts receivable balances pledged as collateral for the Accounts Receivable Securitization Program and IMI provides a performance guaranty. The maximum availability allowed is limited by eligible accounts receivable, as defined under the terms of the Accounts Receivable Securitization Program. The Accounts Receivable Securitization Program is secured by a substantial majority of our net receivables in the United States.

On June 8, 2023, we amended the Accounts Receivable Securitization Program to increase the maximum borrowing capacity from $325.0 million to $360.0 million. As of December 31, 2023, we had $358.5 million outstanding under the Accounts Receivable Securitization Program. The interest rate in effect under the Accounts Receivable Securitization Program was 6.4% as of December 31, 2023. Commitment fees at a rate of 35 basis points are charged on amounts made available but not borrowed under the Accounts Receivable Securitization Program.

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CASH POOLING

Certain of our subsidiaries participate in cash pooling arrangements (the "Cash Pools") to help manage global liquidity requirements. We utilize the following Cash Pools: (i) two Cash Pools with Bank Mendes Gans, an independently operated wholly owned subsidiary of ING Group, one of which we use to manage global liquidity requirements for our QRSs and the other for our TRSs, (ii) two Cash Pools with JP Morgan Chase Bank, N.A. ("JPM"), one of which we use to manage liquidity requirements for our QRSs in the Asia Pacific region and the other for our TRSs in the Asia Pacific region and (iii) two Cash Pools with JPM, one of which we use to manage liquidity requirements for our QRSs in the Europe, Middle East, and Africa regions and the other for our TRSs in the Europe, Middle East, and Africa regions.

Under each of the Cash Pools, cash deposited by participating subsidiaries with certain financial institutions is pledged as security against the debit balances of other participating subsidiaries with legal rights of offset provided to the financial institutions. Therefore, such amounts are presented in our Consolidated Balance Sheets on a net basis. Each subsidiary receives interest on the cash balances held on deposit or pays interest on its debit balances based on an applicable rate as defined in the Cash Pools.

LETTERS OF CREDIT

As of December 31, 2023, we had outstanding letters of credit totaling $38.8 million, of which $4.8 million reduce our borrowing capacity under the Revolving Credit Facility (as described above). The letters of credit expire at various dates between January 2024 and March 2025.

DEBT COVENANTS

The Credit Agreement, our bond indentures and other agreements governing our indebtedness contain certain restrictive financial and operating covenants, including covenants that restrict our ability to complete acquisitions, pay cash dividends, incur indebtedness, make investments, sell assets and take other specified corporate actions. The covenants do not contain a rating trigger. Therefore, a change in our debt rating would not trigger a default under the Credit Agreement, our bond indentures or other agreements governing our indebtedness. The Credit Agreement requires that we satisfy a net total lease adjusted leverage ratio and a fixed charge coverage ratio on a quarterly basis, and our bond indentures require that, among other things, we satisfy a leverage ratio (not lease adjusted) or a fixed charge coverage ratio (not lease adjusted), as a condition to taking actions such as paying dividends and incurring indebtedness.

The Credit Agreement uses EBITDAR-based calculations and the bond indentures use earnings before interest, taxes, depreciation and amortization ("EBITDA") based calculations as the primary measures of financial performance for purposes of calculating leverage and fixed charge coverage ratios. The EBITDAR- and EBITDA-based leverage calculations include our consolidated subsidiaries, other than those we have designated as "Unrestricted Subsidiaries" as defined in the Credit Agreement and bond indentures. Generally, the Credit Agreement and the bond indentures use a trailing four fiscal quarter basis for purposes of the relevant calculations and require certain adjustments and exclusions for purposes of those calculations, which make the calculation of financial performance for purposes of those calculations under the Credit Agreement and bond indentures not directly comparable to Adjusted EBITDA as presented herein. These adjustments can be significant. For example, the calculation of financial performance under the Credit Agreement and certain of our bond indentures includes (subject to specified exceptions and caps) adjustments for non-cash charges and for expected benefits associated with (i) completed acquisitions, (ii) certain executed lease agreements associated with our data center business that have yet to commence and (iii) restructuring and other strategic initiatives. The calculation of financial performance under our other bond indentures includes, for example, adjustments for non-cash charges and for expected benefits associated with (i) completed acquisitions, and (ii) events that are extraordinary, unusual or non-recurring.

Our leverage and fixed charge coverage ratios under the Credit Agreement as of December 31, 2023 are as follows:

We are in compliance with our leverage and fixed charge coverage ratios under the Credit Agreement, our bond indentures and other agreements governing our indebtedness as of December 31, 2023. Noncompliance with these leverage and fixed charge coverage ratios would have a material adverse effect on our financial condition and liquidity.

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Our ability to pay interest on or to refinance our indebtedness depends on our future performance, working capital levels and capital structure, which are subject to general economic, financial, competitive, legislative, regulatory and other factors which may be beyond our control. There can be no assurance that we will generate sufficient cash flow from our operations or that future financings will be available on acceptable terms or in amounts sufficient to enable us to service or refinance our indebtedness or to make necessary capital expenditures.

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Part II

DERIVATIVE INSTRUMENTS

INTEREST RATE SWAP AGREEMENTS

We utilize interest rate swap agreements designated as cash flow hedges to limit our exposure to changes in interest rates on a portion of our floating rate indebtedness. Certain of our interest rate swap agreements have notional amounts that will increase with the underlying hedged transaction. Under our interest rate swap agreements, we receive variable rate interest payments associated with the notional amount of each interest rate swap, based upon the one-month SOFR, in exchange for the payment of fixed interest rates as specified in the interest rate swap agreements. Our interest rate swap agreements are marked to market at the end of each reporting period, representing the fair values of the interest rate swap agreements, and any changes in fair value are recognized as a component of Accumulated other comprehensive items, net. Unrealized gains are recognized as assets, while unrealized losses are recognized as liabilities.

In April 2023, in anticipation of the discontinuance of the LIBOR reference rate on June 30, 2023, we terminated interest rate swap agreements with notional amounts totaling $350.0 million that were indexed to the one-month LIBOR benchmark rate. The terminated swap agreements had associated unrealized gains at the termination date of approximately $10.1 million. These gains are included in Accumulated other comprehensive items, net and will be reclassified into earnings as reductions to interest expense from the termination date through March 2024, the original maturity date of these interest rate swap agreements.

As of December 31, 2023 and 2022, we have approximately $520.0 million and $354.8 million, respectively, in notional value outstanding on our interest rate swap agreements, with maturity dates ranging from October 2025 through February 2026.

CROSS-CURRENCY SWAP AGREEMENTS

We utilize cross-currency interest rate swaps to hedge the variability of exchange rate impacts between the United States dollar and the Euro. As of December 31, 2023 and 2022, we have approximately $509.2 million and $469.2 million, respectively, in notional value outstanding on cross-currency interest rate swaps, with maturity dates ranging from August 2024 through February 2026.

We have designated these cross-currency swap agreements as hedges of net investments in certain of our Euro denominated subsidiaries and they require an exchange of the notional amounts at maturity. These cross-currency swap agreements are marked to market at the end of each reporting period, representing the fair values of the cross-currency swap agreements, and any changes in fair value are recognized as a component of Accumulated other comprehensive items, net. Unrealized gains are recognized as assets while unrealized losses are recognized as liabilities. The excluded component of our cross-currency swap agreements is recorded in Accumulated other comprehensive items, net and amortized to interest expense on a straight-line basis.

See Note 6 to Notes to Consolidated Financial Statements included in this Annual Report for additional information on our derivative instruments.

ACQUISITIONS

See Note 3 to Notes to Consolidated Financial Statements included in this Annual Report for information regarding our acquisitions.

WEB WERKS

On July 7, 2023, we made our final contractual investment in the Web Werks JV (as defined below) of approximately 3,750.0 million Indian rupees (or approximately $45.3 million, based upon the exchange rate between the United States dollar and Indian rupee on the closing date of this investment) (the "Web Werks Transaction"). As a result of the Web Werks Transaction, our interest in the Web Werks JV increased to 63.39%, we assumed control of its board of directors and the financial results of the Web Werks JV are now consolidated within our Global Data Center Business segment. We recognized noncontrolling interests of approximately $78.6 million based upon the fair value attributable to these interests at the time of the Web Werks Transaction, of which approximately $18.1 million of the noncontrolling interests were determined to be a current liability and included as a component of Accrued expenses and other current liabilities on our Consolidated Balance Sheet at December 31, 2023.

CLUTTER

On June 29, 2023, in order to further expand our on-demand consumer storage business, we acquired 100% of the outstanding shares of Clutter Intermediate, Inc. and control of all assets of the Clutter JV (collectively, "Clutter") for total consideration of $60.6 million (the “Clutter Acquisition”). The financial results of the Clutter JV are now consolidated within our Global RIM Business segment. In October 2023, we sold 15% of the equity interests in Clutter to certain former stakeholders of the Clutter JV for total consideration of $7.5 million, which represents the fair value attributable to these interests, which is included as a component of Redeemable Noncontrolling Interests on our Consolidated Balance Sheet at December 31, 2023.

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Part II

REGENCY TECHNOLOGIES

On January 3, 2024, in order to expand our ALM business, we acquired RSR Partners, LLC (doing business as Regency Technologies), an IT asset disposition services provider with operations throughout the United States, for an initial purchase price of approximately $200.0 million, with $125.0 million paid at closing, funded by borrowings under the Revolving Credit Facility, and the remaining amount to be paid in 2025 (the "Regency Transaction"). The agreement for the Regency Transaction also includes potential performance-based contingent consideration, which would be payable in 2027, if earned.

INVESTMENTS

See Note 5 to Notes to Consolidated Financial Statements included in this Annual Report for information regarding our joint ventures.

CLUTTER JOINT VENTURE

In February 2022, the joint venture formed by MakeSpace Labs, Inc. and us (the "MakeSpace JV") entered into an agreement with Clutter, Inc. pursuant to which the equityholders of the MakeSpace JV contributed their ownership interests in the MakeSpace JV, and Clutter, Inc.’s shareholders contributed their ownership interests in Clutter, Inc., to create a newly formed venture (the "Clutter JV"). In exchange for our 49.99% interest in the MakeSpace JV, we received an approximate 27% interest in the Clutter JV (the "Clutter Transaction"). As a result of the Clutter Transaction, we recognized a gain related to our contributed interest in the MakeSpace JV of approximately $35.8 million, which was recorded to Other, net, a component of Other expense (income), net, during the year ended December 31, 2022.

On June 29, 2023, we completed the Clutter Acquisition. In connection with the Clutter Acquisition, our previously held approximately 27% interest in the Clutter JV was remeasured to fair value at the closing date of the Clutter Acquisition. As a result, we recognized a loss of approximately $38.0 million to Other, net, a component of Other expense (income), net, during the second quarter of 2023.

WEB WERKS JOINT VENTURE

In April 2021, we closed on an agreement to form a joint venture (the "Web Werks JV") with the shareholders of Web Werks India Private Limited, a colocation data center provider in India. During the years ended December 31, 2022 and 2021, we made two investments totaling approximately 7,500.0 million Indian rupees (or approximately $96.2 million, based upon the exchange rates between the United States dollar and Indian rupee on the closing date of each investment) in exchange for a noncontrolling interest in the form of convertible preference shares in the Web Werks JV. In July 2023, we made our final contractual investment in the Web Werks JV, as described above.

JOINT VENTURE SUMMARY

The following joint venture is accounted for as an equity method investment and is presented as a component of Other within Other assets, net in our Consolidated Balance Sheets. The carrying value and equity interest in our joint venture at December 31, 2023 is as follows (in thousands):

NET OPERATING LOSSES

At December 31, 2023, we have federal net operating loss carryforwards of $109.6 million which can be carried forward indefinitely, of which $88.7 million is expected to be realized to reduce future federal taxable income. We have assets for foreign net operating losses of $133.5 million, with various expiration dates (and in some cases no expiration date), subject to a valuation allowance of approximately 73.8%.

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