The Dark Side of Iron Mountain: from a Melting Ice Cube, to a House on Fire

GOTHAM CITY RESEARCH’S OPINIONS

• IRM manipulates adjusted leverage & EBITDA to artificially reduce reported leverage to 5x when we calculate it as 9x.

• IRM is under scrutiny from government agencies and facing lawsuits over its suspect accounting and exploitative business practices. We expect these to intensify.

• Should our estimate of IRM’s true leverage and cash flow be correct, IRM will face higher financing costs and/or a dividend cut. we believe shares are uninvestible.

• We believe shares are worth no more than $23-$41 per share, implying 54-74% downside from current price levels.

SUMMARY OF THE BASES OF OPINIONS

• IRM claims its Adj EBITDA margins have been improving, leverage declining. We estimate Adj EBITDA is overstated by 25%-35%, margins have declined & leverage has worsened.

• We estimate volumes for the core business has declined over the last few years, and that mixshift has worsened.

• We calculate American and Europe volumes have declined whereas Other International, grown. Other International is 30-54% less profitable vs NA + Europe on a per unit basis.

• 2024 & 2025 pricing documents reveal 30%-400% price increases in core services, such as Shredding & Scanning.

• Lawsuits and Customer complaints have escalated over the last 12-24 months.

• The Company claims ‘Digital’ is a ‘Growth business’ and like SaaS but formers say ‘Digital’ is actually 99% scanning, a lowtech, labor-intensive service.

• AFFO & Adj EBITDA show improvement since 2019, while Net income has declined and free cash flow, negative.

• We find IRM’s adjustments to Adj EBITDA 2x-3x larger than DLR/EQIX’s adjustments to Adj EBITDA.

• Your typical REIT’s AFFO is 15-20% lower than its FFO. IRM’s reported AFFO is 2x greater than its FFO.

• IRM’s AFFO has exceeded its FFO every year since it became a REIT 10ish years ago.

• IRM claims a 60% Dividend payout ratio, yet cash flow has not covered dividends for 12 years. We estimate payout ratio has been typically over 200% over the last 12 years.

• IRM has reported Restructuring costs for 10 years as operating expense yet oddly adds them back to Adj EBITDA.

• The SEC has started asking questions about its Adj EBITDA earlier this year, via a series of correspondence letters.

• We estimate recurring capex is closer to $300-$350 million per year not $140 million as IRM claims.

• IRM’s COO retired in March 2024, and 40 executives have left IRM since then. Insiders have sold $215 million of stock over the last few years, more than half just this year alone.

For the full report:

2025 11 19 - The Dark Side of Iron Mountain - FINAL TO PRINT.pdf

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