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 8 of this Annual Report.
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OVERVIEW
PROJECT MATTERHORN
In 2025, we completed our investments in Project Matterhorn, a global program designed to accelerate the growth of our business, which we announced in September 2022. Project Matterhorn investments focused on transforming our operating model to a global operating model. Project Matterhorn enabled the development of a solution-based sales approach that allowed us to optimize our shared services and best practices to better serve our customers' needs. As part of this, we invested to accelerate growth and to capture a greater share of the large, global addressable markets in which we operate. We incurred approximately $574.4 million in Restructuring and other transformation costs related to Project Matterhorn since its inception. During the years ended December 31, 2025 and 2024, we incurred approximately $195.9 million and $161.4 million, respectively, in Restructuring and other transformation costs related to Project Matterhorn. Costs were comprised of (1) restructuring costs, which included (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 included professional fees such as project management costs and costs for third party consultants who assisted in the enablement of our growth initiatives.
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 driven by new and existing digital offerings, traditional records management services and services in our asset lifecycle management ("ALM") business, all of which we expect to grow in the near term and benefit our organic service revenue growth in 2026.
• We expect continued total revenue and Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") growth in 2026 as a result of our focus on new product and service offerings, cross-selling opportunities, innovation, customer solutions and market expansion in line with our growth strategies.
Our revenues consist of storage rental revenues and 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) secure shredding of sensitive documents and the subsequent sale of shredded paper for recycling, the price of which can fluctuate from period to period; (3) the decommissioning, data erasure, processing and disposition, and recycling or sale of IT hardware and component assets; and (4) digital solutions, including the scanning, imaging and document conversion services of active and inactive records, consulting services and the sale of software as a service, including our Digital Experience Platform.
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), data center pass-through power costs, 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, 2025 consists of the following:
COST OF SALES
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
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;
• the levels of utilization of these properties; and
• data center power costs.
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.
Our depreciation charges result primarily from depreciation related to storage systems, which include buildings, building and leasehold improvements, data center infrastructure, racking structures and computer systems hardware and software. Our amortization charges relate 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 2024 results at the 2025 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:
PERCENTAGE OF
UNITED STATES DOLLAR-
REPORTED REVENUE FOR THE
YEAR ENDED DECEMBER 31,
AVERAGE EXCHANGE RATES
FOR THE YEAR ENDED
DECEMBER 31,
PERCENTAGE
(WEAKENING) / STRENGTHENING OF
FOREIGN CURRENCY
Australian dollar
British pound sterling
Canadian dollar
Euro
The percentage of United States dollar-reported revenues for all other foreign currencies was 13.0% and 13.6% for the years ended December 31, 2025 and 2024, respectively.
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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:
EXCLUDED
• Acquisition and Integration Costs (as defined below)
• Restructuring and other transformation
• Loss (gain) on disposal/write-down of property, plant and equipment, net (including real estate)
• Other expense (income), net
• Stock-based compensation expense
• Intangible impairments
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):
YEAR ENDED DECEMBER 31,
Net Income (Loss)
Add/(Deduct):
Interest expense, net
Provision (benefit) for income taxes
Depreciation and amortization
Acquisition and Integration Costs (1)
Restructuring and other transformation
Loss (gain) on disposal/write-down of property, plant and equipment, net (including real estate)
Other expense (income), net, excluding our share of losses (gains) from our unconsolidated joint ventures (2)
Stock-based compensation expense
Our share of Adjusted EBITDA reconciling items from our unconsolidated joint ventures
Adjusted EBITDA
(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:
EXCLUDED
• Acquisition and Integration Costs
• Restructuring and other transformation
• Loss (gain) on disposal/write-down of property, plant and equipment, net (including real estate)
• Other expense (income), net
• Stock-based compensation expense
• Non-cash amortization related to derivative instruments
• Tax impact of reconciling items and discrete tax items
• Amortization related to the write-off of certain customer relationship intangible assets
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:
YEAR ENDED DECEMBER 31,
Reported EPS—Fully Diluted from Net Income (Loss) Attributable to Iron Mountain Incorporated
Add/(Deduct):
Acquisition and Integration Costs
Restructuring and other transformation
Loss (gain) on disposal/write-down of property, plant and equipment, net (including real estate)
Other expense (income), net, excluding our share of losses (gains) from our unconsolidated joint ventures
Stock-based compensation expense
Non-cash amortization related to derivative instruments (1)
Tax impact of reconciling items and discrete tax items (2)
Income (Loss) Attributable to Noncontrolling Interests
Adjusted EPS—Fully Diluted from Net Income (Loss) Attributable to Iron Mountain Incorporated (3)
(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, 2025 and 2024 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, 2025 and 2024 was 13.1% and 15.6%, 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:
EXCLUDED
• Acquisition and Integration Costs
• Restructuring and other transformation
• Loss (gain) on disposal/write-down of property, plant and equipment, net (excluding real estate)
• Other expense (income), net
• Stock-based compensation expense
• Non-cash amortization related to derivative instruments
• Real estate financing lease depreciation
• Tax impact of reconciling items and discrete tax items
• Intangible impairments
• (Income) loss from discontinued operations, net of tax
RECONCILIATION OF NET INCOME (LOSS) TO FFO (NAREIT) AND FFO (NORMALIZED) (IN THOUSANDS):
YEAR ENDED DECEMBER 31,
Net Income (Loss)
Add/(Deduct):
Real estate depreciation (1)
(Gain) loss on sale of real estate, net of tax (2)
Data center lease-based intangible assets amortization (3)
Our share of FFO (Nareit) reconciling items from our unconsolidated joint ventures
FFO (Nareit)
Add/(Deduct):
Acquisition and Integration Costs
Restructuring and other transformation
Loss (gain) on disposal/write-down of property, plant and equipment, net (excluding real estate)
Other expense (income), net, excluding our share of losses (gains) from our unconsolidated joint ventures
Stock-based compensation expense
Non-cash amortization related to derivative instruments
Real estate financing lease depreciation
Tax impact of reconciling items and discrete tax items (4)
Our share of FFO (Normalized) reconciling items from our unconsolidated joint ventures
FFO (Normalized)
(1) Includes depreciation expense related to owned real estate assets (land improvements, buildings, building and leasehold improvements, data center infrastructure and racking structures), excluding depreciation related to real estate financing leases.
(2) Tax (benefit) expense associated with the gain on sale of real estate for the years ended December 31, 2025 and 2024 was approximately $(0.2) million and $1.1 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 provision (benefit) for income taxes of $2.0 million and $(6.2) million for the years ended December 31, 2025 and 2024, 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. The majority of our revenue is recognized in accordance with Accounting Standards Codification ("ASC") Topic 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. Storage revenue for our Global Data Center Business is recognized in accordance with ASC Topic 842, Leases.
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.
Certain costs to fulfill or obtain customer contracts and certain initial direct costs of obtaining leases, including the costs associated with the initial movement of customer records into physical storage and certain commission expenses, are collectively referred to as "Contract Costs". Contract Costs are capitalized and amortized as a component of depreciation and amortization in our Consolidated Statements of Operations, generally over a three year term, which we have determined is consistent with the transfer of the underlying performance obligations to which the assets relate or the lease term. 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 buildings, building and 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 data center infrastructure and 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 data center infrastructure and 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 owned buildings, including data center infrastructure and 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. When estimating fair values 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 .
The fair value of the deferred purchase obligation associated with the Regency Transaction (as defined in Note 3 to Notes to Consolidated Financial Statements included in this Annual Report) was initially established 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 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.
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. There were no material acquisitions in 2025.
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS
ASSETS SUBJECT TO DEPRECIATION OR AMORTIZATION
We review long-lived assets, including 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, 2025 and 2024.
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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, 2025 and 2024. We concluded that as of October 1, 2025 and 2024, goodwill was not impaired.
Our reporting units at which level we performed our goodwill impairment analysis as of October 1, 2025 were as follows:
• North American Records and Information Management reporting unit ("North America RIM")
• Europe Records and Information Management reporting unit ("Europe RIM")
• Latin America Records and Information Management reporting unit ("Latin America RIM")
• Asia, Australia and New Zealand Records and Information Management reporting unit ("APAC RIM")
• Media and Archive Services
• Global Data Center
• Fine Arts
• ALM
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, 2025, all of our reporting units had estimated fair values exceeding their carrying values. The ALM reporting unit represented approximately $780.3 million, or 14.8%, of our consolidated goodwill balance at December 31, 2025, and its fair value is sensitive to changes in our assumptions. The following is a summary of the ALM reporting unit including the goodwill balance (in thousands), the percentage by which the fair value of the reporting unit exceeded its carrying value and certain key assumptions used by us in determining the fair value of the reporting unit as of October 1, 2025:
REPORTING UNIT
GOODWILL
BALANCE AT
OCTOBER 1,
PERCENTAGE BY
WHICH THE FAIR VALUE
OF THE REPORTING
UNIT EXCEEDED THE
REPORTING UNIT
CARRYING VALUE AS OF
OCTOBER 1, 2025
KEY ASSUMPTIONS IN THE FAIR VALUE OF REPORTING UNIT
MEASUREMENT AS OF OCTOBER 1, 2025
DISCOUNT
RATE
AVERAGE ANNUAL
ADJUSTED EBITDA
MARGIN USED IN
DISCOUNTED
CASH FLOW
AVERAGE
ANNUAL CAPITAL
EXPENDITURES AS
PERCENTAGE OF
REVENUE (1)
TERMINAL
GROWTH
RATE (2)
ALM
(1) For purposes of our goodwill impairment analysis, the term "capital expenditures" includes both growth investment and recurring capital expenditures.
(2) Terminal growth rates are applied after year 10 of our discounted cash flow analysis.
The following includes supplemental information to the table above for the ALM reporting unit where the estimated fair value exceeded its carrying value by approximately 93.7% as of October 1, 2025. 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 and (iv) market pricing trends of IT hardware and component assets.
ALM
Our ALM business provides hyperscale and corporate IT infrastructure managers with services and solutions that enable the decommissioning, data erasure, processing and disposition, and recycling 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 market pricing for IT hardware and component assets that is consistent with the normalized pricing we observed in the current year.
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KEY ASSUMPTIONS FOR ALL REPORTING UNITS
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. 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, (iii) adverse actions or assessment by regulators and (iv) changes in market trends due to the evolution of technology, 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, 2025.
We noted that, based on the estimated fair value of our reporting units determined as of October 1, 2025:
• 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, 2025 by a range of approximately 9.4% to 10.6% 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, 2025 by a range of approximately 3.3% to 10.9% but would not, however, have resulted in the carrying value of any of our reporting units exceeding their estimated fair value.
At December 31, 2025, no factors were identified that would alter the conclusions of our October 1, 2025 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.
INCOME TAXES
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, 2025, we have federal net operating loss carryforwards of $116.2 million and disallowed interest expense carryforwards of $185.9 million, both of which can be carried forward indefinitely, and of which $109.9 million and $64.6 million, respectively, are expected to be realized to reduce future federal taxable income. We have assets for foreign net operating losses of $146.3 million and foreign disallowed interest expense carryforwards of $46.6 million, with various expiration dates (and in some cases no expiration date), subject to valuation allowances of approximately 77.5% and 26.8%, respectively. 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.
We provide for foreign withholding taxes on the undistributed earnings of our foreign TRSs because it is not our intention to reinvest the 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.
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RESULTS OF OPERATIONS
The following information summarizes our results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of our results for the year ended December 31, 2024 compared to the year ended December 31, 2023, 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 14, 2025.
COMPARISON OF YEAR ENDED DECEMBER 31, 2025 TO YEAR ENDED DECEMBER 31, 2024
(IN THOUSANDS):
YEAR ENDED DECEMBER 31,
DOLLAR
CHANGE
PERCENTAGE
CHANGE
Revenues
Operating Expenses
Operating Income
Other Expenses, Net
Net Income (Loss)
Net Income (Loss) Attributable to Noncontrolling Interests
Net Income (Loss) Attributable to Iron Mountain Incorporated
Adjusted EBITDA (1)
Adjusted EBITDA Margin (1)
(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):
YEAR ENDED DECEMBER 31,
PERCENTAGE CHANGE
DOLLAR
CHANGE
ACTUAL
CONSTANT
CURRENCY (1)
IMPACT OF ACQUISITIONS
ORGANIC
GROWTH (2)
Storage Rental
Service
Total Revenues
(1) Constant currency growth rate, which is a non-GAAP measure, is calculated by translating the 2024 results at the 2025 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, 2025, the increase in reported revenue was primarily driven by reported storage rental revenue growth and reported service revenue growth.
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, 2025 compared to the year ended December 31, 2024 include the following:
STORAGE RENTAL REVENUE
• organic storage rental revenue growth driven by revenue management in our Global RIM Business segment and lease commencements and improved pricing in our Global Data Center Business segment.
SERVICE REVENUE
• organic service revenue growth driven by increases in Global Digital Solutions and traditional service activity levels in our Global RIM Business segment and growth from new and existing customers in our ALM business; and
• an increase of $87.5 million due to acquisitions in our ALM business.
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OPERATING EXPENSES
COST OF SALES
Cost of sales (excluding depreciation and amortization) consists of the following expenses (in thousands):
YEAR ENDED DECEMBER 31,
PERCENTAGE CHANGE
CONSOLIDATED
REVENUES
PERCENTAGE
CHANGE
(FAVORABLE)/
UNFAVORABLE
DOLLAR CHANGE
ACTUAL
CONSTANT
CURRENCY
Labor
Facilities
Transportation
Product Cost of Sales and Other
Total Cost of sales
Primary factors influencing the change in reported Cost of sales for the year ended December 31, 2025 compared to the year ended December 31, 2024 include the following:
• an increase in labor costs driven by an increase in service activity, primarily within our Global RIM Business segment and ALM business, including the impact of recent acquisitions;
• an increase in facilities expenses, primarily driven by higher real estate taxes in our Global Data Center Business segment, and increases in utilities and rent expense; and
• an increase in product cost of sales and other in our ALM business in line with product sales increases from new and existing customers.
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses consists of the following expenses (in thousands):
YEAR ENDED DECEMBER 31,
PERCENTAGE CHANGE
CONSOLIDATED
REVENUES
PERCENTAGE
CHANGE
(FAVORABLE)/
UNFAVORABLE
DOLLAR
CHANGE
ACTUAL
CONSTANT
CURRENCY
General, Administrative and Other
Sales, Marketing and Account Management
Total Selling, general and administrative expenses
Primary factors influencing the change in reported Selling, general and administrative expenses for the year ended December 31, 2025 compared to the year ended December 31, 2024 include the following:
• an increase in general, administrative and other expenses, primarily driven by higher compensation expense; and
• an increase in sales, marketing and account management expenses, primarily driven by higher compensation expense, and increased marketing costs.
DEPRECIATION AND AMORTIZATION
Our depreciation and amortization charges result primarily from depreciation related to storage systems, which include buildings, building and leasehold improvements, data center infrastructure, racking structures 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 $101.6 million, or 16.1%, on a reported dollar basis for the year ended December 31, 2025 compared to the year ended December 31, 2024. 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 $21.9 million, or 8.1%, on a reported dollar basis for the year ended December 31, 2025 compared to the year ended December 31, 2024.
ACQUISITION AND INTEGRATION COSTS
Acquisition and Integration Costs for the years ended December 31, 2025 and 2024 were approximately $19.5 million and $35.8 million, respectively.
RESTRUCTURING AND OTHER TRANSFORMATION
Restructuring and other transformation costs for the years ended December 31, 2025 and 2024 were approximately $195.9 million and $161.4 million, respectively, and related to operating expenses associated with the implementation of Project Matterhorn.
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 years ended December 31, 2025 and 2024 was approximately $24.6 million and $6.2 million, respectively.
OTHER EXPENSES, NET
INTEREST EXPENSE, NET
Interest expense, net increased $107.8 million to $829.3 million in the year ended December 31, 2025 from $721.6 million in the year ended December 31, 2024. The increase is primarily due to higher average debt outstanding during the year ended December 31, 2025 compared to the prior year period. Our weighted average interest rate, inclusive of the fees associated with our outstanding letters of credit, was 5.6% and 5.7% at December 31, 2025 and 2024, respectively. See Note 6 to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding our indebtedness.
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OTHER EXPENSE (INCOME), NET
Other expense (income), net consists of the following (in thousands):
YEAR ENDED DECEMBER 31,
DOLLAR
CHANGE
DESCRIPTION
Foreign currency transaction losses (gains), net (1)
Debt extinguishment expense
Other, net
Other expense (income), net
(1) We recorded net foreign currency transaction losses of $105.6 million in the year ended December 31, 2025, based on period-end exchange rates. These losses resulted primarily from the impact of changes in the exchange rate of the British pound sterling and the Euro against the United States dollar compared to December 31, 2024 on our intercompany balances with and between certain of our subsidiaries.
PROVISION (BENEFIT) FOR INCOME TAXES
We have been organized and have operated as a REIT beginning with our taxable year ended December 31, 2014.
Our effective tax rates for the years ended December 31, 2025 and 2024 were 27.9% and 24.9%, 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 and interest expenses 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:
YEAR ENDED DECEMBER 31,
The lack of tax benefits recognized for the foreign exchange losses of $26.9 million and ordinary losses and disallowed interest expenses of certain entities of $16.7 million, as well as withholding tax expenses of $15.2 million, partially offset by the net benefits derived from the dividends paid deduction of $52.6 million.
The lack of tax benefits recognized for the ordinary losses and disallowed interest expenses of certain entities of $37.0 million and differences in the tax rates to which our foreign earnings are subject of $13.3 million, partially offset by the benefits derived from the dividends paid deduction of $33.9 million. In addition, we recorded gains and losses in Other expense (income), net during the period, for which there was no tax impact.
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.
The OECD has issued proposals that change long-standing tax principles, including a global minimum tax rate of 15% ("Pillar Two"). While the United States has not enacted legislation to effectuate Pillar Two, Iron Mountain operates in many foreign jurisdictions that have enacted legislation to implement Pillar Two. Pillar Two became applicable for Iron Mountain beginning in 2024. Recent G7 Country (Canada, France, Germany, Italy, Japan and the UK) statements released a side-by-side ("SbS") safe harbor that exempts certain U.S.-parented groups from these rules. The side-by-side Safe Harbor provides that Multinational Enterprise G Groups with an Ultimate Parent Entity in a jurisdiction with qualified SbS regime will not be subject to the Income Inclusion Rule and Undertaxed Profits Rule if they elect the SbS Safe Harbor, applicable as of the beginning of 2026. Since we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, we are not expecting a material impact on our effective tax rate, corporate tax liabilities or cash tax liabilities. We continue to monitor United States and global legislative actions as well as administrative guidance related to Pillar Two for potential impacts.
On July 4, 2025, President Trump signed into law the reconciliation bill, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"). The OBBBA introduces several changes to U.S. federal income tax law, such as suspending the capitalization and amortization of domestic research and development expenditures and reinstating bonus depreciation. It also modifies the deductions available for net controlled foreign corporation tested income (formerly referred to as "global intangible low-taxed income") from non-U.S. subsidiaries and changes the limitations on deductible interest. Under the prior law, not more than 20% of the value of a REIT’s total assets at the end of any quarter could be represented by securities of one or more taxable REIT subsidiaries; the OBBBA increased this threshold to 25% effective January 1, 2026. The effective dates of the OBBBA provisions range from 2025 through 2027. We do not expect the OBBBA provisions to have a material impact on our consolidated financial statements.
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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):
YEAR ENDED DECEMBER 31,
DOLLAR
CHANGE
PERCENTAGE
CHANGE
Net Income (Loss)
Net Income (Loss) as a percentage of Revenue
Adjusted EBITDA
Adjusted EBITDA Margin
Adjusted EBITDA Margin for the year ended December 31, 2025 increased 90 basis points from the prior year driven by favorable overhead management, offset by changes in our revenue mix.
↑ INCREASED BY $337.6 MILLION
Adjusted EBITDA
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SEGMENT ANALYSIS
See the discussion of Business Segments under Item I and Note 10 to Notes to Consolidated Financial Statements, both included in this Annual Report, for a description of our reportable segments.
GLOBAL RIM BUSINESS (IN THOUSANDS)
YEAR ENDED DECEMBER 31,
PERCENTAGE CHANGE
DOLLAR
CHANGE
ACTUAL
CONSTANT
CURRENCY
IMPACT OF
ACQUISITIONS
ORGANIC
GROWTH
Storage Rental
Service
Segment Revenue
Segment Adjusted EBITDA
Segment Adjusted EBITDA Margin
SEGMENT ANALYSIS: GLOBAL RIM BUSINESS (IN MILLIONS)
Storage Rental
Revenue
Service
Revenue
Segment
Revenue
Segment Adjusted
EBITDA
Primary factors influencing the change in revenue and Adjusted EBITDA Margin in our Global RIM Business segment for the year ended December 31, 2025 compared to the year ended December 31, 2024 include the following:
• organic storage rental revenue growth driven by revenue management;
• organic service revenue growth primarily driven by increases in our Global Digital Solutions and growth in our traditional service activity levels; and
• a 10 basis point increase in Adjusted EBITDA Margin primarily driven by ongoing cost containment measures and revenue management.
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GLOBAL DATA CENTER BUSINESS (IN THOUSANDS)
YEAR ENDED DECEMBER 31,
PERCENTAGE CHANGE
IMPACT OF ACQUISITIONS
ORGANIC
GROWTH
DOLLAR
CHANGE
ACTUAL
CONSTANT
CURRENCY
Storage Rental
Service
Segment Revenue
Segment Adjusted EBITDA
Segment Adjusted EBITDA Margin
SEGMENT ANALYSIS: GLOBAL DATA CENTER BUSINESS (IN MILLIONS)
Storage Rental
Revenue
Service
Revenue
Segment
Revenue
Segment Adjusted
EBITDA
Primary factors influencing the change in revenue and Adjusted EBITDA Margin in our Global Data Center Business segment for the year ended December 31, 2025 compared to the year ended December 31, 2024 include the following:
• organic storage rental revenue growth from leases that commenced during 2025 and in prior periods, improved pricing and increased usage of pass-through power;
• an increase in Adjusted EBITDA primarily driven by organic storage rental revenue growth; and
• a 620 basis point increase in Adjusted EBITDA Margin reflecting recent lease commencements, improved pricing and cost containment.
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CORPORATE AND OTHER (IN THOUSANDS)
YEAR ENDED DECEMBER 31,
PERCENTAGE CHANGE
IMPACT OF
ACQUISITIONS
ORGANIC
GROWTH
DOLLAR
CHANGE
ACTUAL
CONSTANT
CURRENCY
Storage Rental
Service
Revenue
Adjusted EBITDA
Primary factors influencing the change in revenue and Adjusted EBITDA in Corporate and Other for the year ended December 31, 2025 compared to the year ended December 31, 2024 include the following:
• an increase in service revenue of $87.5 million due to acquisitions in our ALM business;
• organic service revenue growth in our ALM business driven by growth from new and existing customers and improved component pricing trends; and
• an improvement in Adjusted EBITDA driven by service revenue improvement 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, as of December 31, 2025, we completed our investments in Project Matterhorn. We incurred approximately $574.4 million in Restructuring and other transformation costs related to Project Matterhorn since its inception. During the years ended December 31, 2025 and 2024, we incurred approximately $195.9 million and $161.4 million, respectively, in Restructuring and other transformation costs related to Project Matterhorn, which were comprised of (1) restructuring costs, which included (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 included professional fees such as project management costs and costs for third party consultants who assisted in the enablement of 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,
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Cash and Cash Equivalents, End of Year
A. CASH FLOWS FROM OPERATING ACTIVITIES
For the year ended December 31, 2025, net cash flows provided by operating activities increased by $143.3 million compared to the prior year period primarily due to an increase in net income (loss) (excluding non-cash charges) of $131.4 million and an increase in cash from working capital of $11.9 million.
B. CASH FLOWS FROM INVESTING ACTIVITIES
Our significant investing activities during the year ended December 31, 2025 included:
• Cash paid for capital expenditures of $2,271.6 million. Additional details of our capital spending are included in the "Capital Expenditures" section below.
• Cash paid for acquisitions, net of cash acquired, of $101.6 million, primarily funded by borrowings under the Revolving Credit Facility (as defined below).
C. CASH FLOWS FROM FINANCING ACTIVITIES
Our significant financing activities during the year ended December 31, 2025 included:
• Net proceeds of approximately $1,390.7 million associated with the issuance of the Euro Notes (as defined below).
• Net proceeds of approximately $1,006.4 million, primarily associated with borrowings under our Credit Agreement (as defined below) and our data center credit facilities, which were used to partially finance the construction of our data centers, offset by the repayment of the 3.875% GBP Senior Notes due 2025 (the "GBP Notes").
• Payment of dividends in the amount of $919.4 million on our common stock.
• Payments of deferred purchase obligations and other deferred payments of $240.7 million.
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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 and 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 new products and services as well as computer hardware and software to drive revenue growth, expand capacity or to achieve operational cost efficiencies in businesses other than our data center business. 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 and 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 2025 and 2024 organized by the type of the spending as described above:
NATURE OF CAPITAL SPEND (IN THOUSANDS)
Growth Investment Capital Expenditures:
Data Center
Real Estate
Innovation and Other
Total Growth Investment Capital Expenditures
Recurring Capital Expenditures:
Data Center
Real Estate
Non-Real Estate
Total Recurring Capital Expenditures
Total Capital Spend (on accrual basis)
Net (decrease) increase in prepaid capital expenditures
Net (increase) decrease in accrued capital expenditures
Total Capital Spend (on cash basis)
Excluding capital expenditures associated with potential future acquisitions, we expect total capital expenditures of approximately $2,200.0 million for the year ending December 31, 2026. Of this, we expect capital expenditures for growth investment of approximately $2,050.0 million and recurring capital expenditures of approximately $150.0 million.
DIVIDENDS
See Note 8 to Notes to Consolidated Financial Statements included in this Annual Report for information on dividends.
NONCONTROLLING INTERESTS
In December 2025, we entered into an agreement with a partner to form our Iron Mountain Data Centers Arizona 3 JV, LP joint venture, which resulted in an initial Noncontrolling interest of approximately $74.8 million recorded in our Consolidated Balance Sheet at December 31, 2025.
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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. We had no significant concentrations of liquid investments as of December 31, 2025.
Long-term debt as of December 31, 2025 is as follows (in thousands):
DECEMBER 31, 2025
DEBT (INCLUSIVE
OF DISCOUNT)
UNAMORTIZED
DEFERRED
FINANCING COSTS
CARRYING
AMOUNT
Revolving Credit Facility
Term Loan A
Term Loan B
Virginia 3 Term Loans
Virginia 6 Term Loans
Virginia 7 Term Loans
Virginia 4/5 Term Loans due 2030
Australian Dollar Term Loan (the "AUD Term Loan")
UK Revolving Credit Facility
4 7 / 8 % Senior Notes due 2027 (the "4 7 / 8 % Notes due 2027")
5 1 / 4 % Senior Notes due 2028 (the "5 1 / 4 % Notes due 2028")
5% Senior Notes due 2028 (the "5% Notes due 2028")
7% Senior Notes due 2029 (the "7% Notes")
4 7 / 8 % Senior Notes due 2029 (the "4 7 / 8 % Notes due 2029")
5 1 / 4 % Senior Notes due 2030 (the "5 1 / 4 % Notes due 2030")
4 1 / 2 % Senior Notes due 2031 (the "4 1 / 2 % Notes")
5% Senior Notes due 2032 (the "5% Notes due 2032")
5 5 / 8 % Senior Notes due 2032 (the "5 5 / 8 % Notes")
6 1 / 4 % Senior Notes due 2033 (the "6 1 / 4 % Notes")
4 3 / 4 % Euro Senior Notes due 2034 (the "Euro Notes")
Real Estate Mortgages, Financing Lease Liabilities and Other
Accounts Receivable Securitization Program
Total Long-term Debt
Less Current Portion
Long-term Debt, Net of Current Portion
See Note 6 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 a term loan B facility (the "Term Loan B").
During the year ended December 31, 2025, we took the following actions regarding our Credit Agreement:
• On June 18, 2025, we amended the Credit Agreement, which resulted in:
◦ an increase in the principal amount of the Term Loan A from approximately $218.8 million to $500.0 million.
• On November 13, 2025, we amended the Credit Agreement, which resulted in:
◦ an increase in the principal amount of the Term Loan B from approximately $1,836.7 million to $2,036.7 million.
In connection with the November 13, 2025 amendment, we paid original issue discount fees of approximately $1.8 million.
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The Revolving Credit Facility and the Term Loan A are scheduled to mature on March 18, 2030, at which point all obligations become due. The Term Loan B is scheduled to mature on January 31, 2031, at which point all obligations become due. As of December 31, 2025, we had $751.5 million, $487.5 million and $2,031.5 million outstanding under the Revolving Credit Facility, the Term Loan A and the Term Loan B, respectively. As of December 31, 2025, we had various outstanding letters of credit totaling $12.4 million under the Revolving Credit Facility. The remaining amount available for borrowing under the Revolving Credit Facility as of December 31, 2025, 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 $1,986.1 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 weighted average interest rate in effect under the Revolving Credit Facility as of December 31, 2025 was 5.7%. The interest rates in effect under the Term Loan A and the Term Loan B as of December 31, 2025 were 5.5% and 5.8%, respectively.
DATA CENTER DEBT AGREEMENTS
As our Global Data Center Business continues to expand, we have entered into debt agreements in order to partially finance the construction of various data centers. These agreements primarily consist of term loan facilities with the following terms (in thousands):
AGREEMENT
MAXIMUM BORROWING
AMOUNT
OUTSTANDING BORROWINGS AS OF DECEMBER 31, 2025
DIRECT
OBLIGOR
CONTRACTUAL INTEREST RATE
UNUSED COMMITMENT FEE
MATURITY DATE (2)
Virginia 3 Term Loans (1)(2)
Iron Mountain Data Centers Virginia 3, LLC
SOFR plus 2.50%
August 31, 2026
Virginia 7 Term Loans (1)(2)
Iron Mountain Data Centers Virginia 7, LLC
SOFR plus 2.50%
April 12, 2027
Virginia 6 Term Loans (1)(2)
Iron Mountain Data Centers Virginia 6, LLC
SOFR plus 2.75%
May 3, 2027
Virginia 4/5 Term Loans due 2030 (2)
Iron Mountain Data Centers Virginia 4/5 Subsidiary, LLC
November 1, 2030
(1) The term loans are indexed to the one-month Secured Overnight Financing Rate ("SOFR") benchmark rate.
(2) All obligations will become due on the specified maturity dates. Each agreement, with the exception of the Virginia 4/5 Term Loans due 2030, includes two one-year options that allow us to extend the initial maturity date, subject to the conditions specified in the agreements.
See Note 6 to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding these agreements.
AUSTRALIAN DOLLAR TERM LOAN
On June 25, 2025, Iron Mountain Australia Group Pty, Ltd., a wholly-owned subsidiary of IMI, amended its AUD Term Loan, which resulted in:
• an extension of the maturity date from September 30, 2026 to September 30, 2030, at which point all obligations become due,
• an increase in the original principal amount from 350.0 million Australian dollars to 400.0 million Australian dollars and
• a decrease in the interest rate from BBSY (an Australian benchmark variable interest rate) plus 3.625% to BBSY plus 3.500%.
The amended loan was issued at 99.5% of par. Principal payments on the AUD Term Loan are to be paid in quarterly installments in an aggregate amount of 10.0 million Australian dollars per year, with the remaining balance due September 2030. As of December 31, 2025, we had 395.0 million Australian dollars (or $263.9 million, based upon the exchange rate between the United States dollar and the Australian dollar as of December 31, 2025) outstanding on the AUD Term Loan and the interest rate in effect under the AUD Term Loan was 7.3%.
See Note 6 to Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding this agreement.
SEPTEMBER 2025 OFFERING
On September 10, 2025, IMI completed a private offering of (in thousands):
SERIES OF NOTES
AGGREGATE PRINCIPAL AMOUNT
MATURITY DATE
INTEREST PAYMENT DUE
PAR CALL DATE (1)
Euro Notes
January 15, 2034
January 15 and July 15
September 10, 2030
(1) We may redeem the Euro Notes at any time, at our option, in whole or in part. Prior to the par call date, we may redeem the Euro Notes at the redemption price or make-whole premium specified in the indenture governing the Euro Notes, together with accrued and unpaid interest to, but excluding, the redemption date. On or after the par call date, we may redeem the Euro Notes at a price equal to 100% of the principal amount being redeemed, together with accrued and unpaid interest to, but excluding, the redemption date.
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The Euro Notes were issued at par and have a contractual interest rate of 4.75%. The total net proceeds from the issuance, after deducting the initial purchasers' commissions, of approximately 1,188.0 million Euros (or $1,390.7 million, based upon the exchange rate between the Euro and the United States dollar on September 10, 2025 (the settlement date for the Euro Notes)), were used to repay the GBP Notes and a portion of the outstanding borrowings under the Revolving Credit Facility. As of December 31, 2025, we had 1,200.0 million Euros (or $1,408.8 million, based upon the exchange rate between the United States dollar and the Euro as of December 31, 2025) outstanding on the Euro Notes.
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 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 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, 2025 are as follows:
DECEMBER 31, 2025
MAXIMUM/MINIMUM ALLOWABLE
Net total lease adjusted leverage ratio
Maximum allowable of 7.0
Fixed charge coverage ratio
Minimum allowable of 1.5
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, 2025. Noncompliance with these leverage and fixed charge coverage ratios would have a material adverse effect on our financial condition and liquidity.
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.
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.
As of December 31, 2025 and 2024, we have approximately $1,349.0 million and $1,482.0 million, respectively, in notional value outstanding on our interest rate swap agreements. As of December 31, 2025, our interest rate swap agreements have maturity dates ranging from February 2026 through May 2027.
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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 certain of our foreign functional currencies, including the Euro and the Canadian dollar. As of December 31, 2025, our cross-currency interest rate swap agreements have maturity dates ranging from February 2026 through November 2026.
The notional values of our cross-currency interest rate swaps, by currency, as of December 31, 2025 and 2024 are as follows (in thousands):
YEAR ENDED DECEMBER 31,
Euro
Canadian dollar
We have designated these cross-currency swap agreements as hedges of net investments in our Euro and Canadian dollar 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 5 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.
INVESTMENTS
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 unconsolidated joint venture at December 31, 2025 is as follows (in thousands):
DECEMBER 31, 2025
CARRYING VALUE
EQUITY INTEREST
Joint venture with AGC Equity Partners
NET OPERATING LOSSES
At December 31, 2025, we have federal net operating loss carryforwards of $116.2 million and disallowed interest expense carryforwards of $185.9 million, both of which can be carried forward indefinitely, and of which $109.9 million and $64.6 million, respectively, are expected to be realized to reduce future federal taxable income. We have assets for foreign net operating losses of $146.3 million and foreign disallowed interest expense carryforwards of $46.6 million, with various expiration dates (and in some cases no expiration date), subject to valuation allowances of approximately 77.5% and 26.8%, respectively.
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