Good morning. My name is Anita, and I will be your conference operator today. At this time, I would like to welcome everyone to the Iron Mountain Q1 2012 Earnings Call Webcast. [Operator Instructions] Thank you. Mr. Golden, you may now begin your conference.

Thank you, and welcome, everyone, to our 2012 First Quarter Earnings Conference Call. Joining me this morning are Richard Reese, our Chairman and CEO; and Brian McKeon, our Chief Financial Officer. After their prepared remarks, we'll open up the phones for your questions. Per our custom, we have a user-controlled slide presentation at the Investor Relations page of our website at www.ironmountain.com. Referring now to Slide 2. Today's earnings call and slide presentation will contain a number of forward-looking statements, most notably our outlook for our 2012 financial performance. All forward-looking statements are subject to risks and uncertainties. Please refer to today's press release, the Safe Harbor language on this slide and our most recently filed annual report on Form 10-K for a discussion of the major risk factors that could cause our actual results to be materially different from those contemplated in our forward-looking statements. As you know, we use several non-GAAP measures when presenting our financial results. Adjusted OIBDA, adjusted EPS and free cash flow before acquisitions and investments, among others, are metrics we speak to frequently and ones we believe to be important in evaluating our overall financial performance. We provide additional information and the reconciliations of these non-GAAP measures to the appropriate GAAP measures, as required by Reg G at the Investor Relations page of our website, as well as in today's press release. With that, I would like to introduce our Chairman and CEO, Richard Reese.

Thank you, Stephen, and good morning. And thank you, everyone, for joining us. As you've seen from our press release this morning, our business performance is really pretty clean and as we forecasted, and since we spoke about our business to you only about 2 months ago, maybe with a little luck, this call may be shorter than usual. But we'll get started, and let's see where it takes us. But before we get started and deep dive into the business, I want to update you on the status of our special committee work. The progress is ongoing, and we will meet our commitment to report the Board's conclusions and rationale for its conclusions no later than June 9. Since we're close to reaching a conclusion, we will not be entertaining any questions on this topic today or in any future meeting until we come forth with the final answers. So having said that, I realize that may disappoint some of you, but we are getting down to the short strokes, and we're going to have to keep anything close to our vest, and I realize many of you will try to ask questions or want to ask questions to try to get some insight to how we're thinking about it, but we're just going to have to be pretty disciplined and basically, we're not going to answer them. So just be prepared for this. One year ago, I returned as CEO, and we announced the new 3-year plan, which was focused on driving returns on capital and returning capital in excess of that required to operate our strategy to you, our shareholders. We have made excellent progress in all fronts. At the time, I committed to giving you a report card on our progress against our plan, and since…

Thanks, Richard. Slide 3 highlights the key messages from today's financial review. We delivered solid performance in Q1, in line with our plans, reflecting consistent business trends. Our financial results were again, supported by solid storage revenue growth and strong performance in our International business. Reported revenues for Q1 were $746 million, up 1% on a constant currency basis as 3% storage gains were offset by moderate service declines, including the impact of lower recycled paper prices. Profit performance was in line with our expectations, with results supported by strong gains in our International segment and sustained high margins in North America. Adjusted OIBDA for the quarter was $221 million, up 2% on a constant currency basis. International adjusted OIBDA margins increased by 200 basis points to -- compared to Q1 of 2011, keeping us on track to achieve our margin improvement goal of 700 basis-point improvement by the end of 2013. Adjusted EPS was $0.29 in Q1, and reported EPS was $0.35 including the impact of foreign exchange gains and discrete tax items. We continue to expand our International business while driving higher returns, consistent with our 3-year strategic plan. Adjusted OIBDA in the International segment increased 15% on a constant currency basis in Q1, supported by strong growth in emerging markets and benefits from cost improvement initiatives in Latin America and Western Europe. As Richard noted, we recently acquired Grupo Store in Brazil, which will position us well to build on this momentum. We're off to good start to the year and are on track towards our full year financial goals. Today, we're reiterating our full year 2012 outlook and adding the impact to the recently completed store acquisition for the balance of the year. We continue to plan for 1% to 3% internal growth excluding the effect…

[Operator Instructions] And your first question comes from the line of Andrew Steinerman with JPMorgan. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: I want to ask about core services. We're flat now. We've been flat for 2 quarters. The forecast for the year is unchanged at negative 4 to 0. I surely heard that you had a couple of things moving around there and that activities, meaning moving boxes around, is still dead, at least in North America. But why after being flat this quarter and flat in the fourth quarter, is the forecast for the year kind of unchanged to be -- being 0 to minus 4? The very least, you would feel better about the high end of that.

Well, as you know, it's early in the year, Andrew, and we are within the range. I think there is always noise on those type of numbers at the margin. As Richard said, we're off to a good start to the year. We feel good about the track that we're on and...

We don't like to predict things we don't see for sure either, Andrew, but basically, we didn't focus on making a change there. It's in the range. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: Right. And maybe let me just ask the question one more time. Is the flat, the 0, more a function of how strong hybrid is? Or has there been some improvement, meaning less negative in terms of moving stuff around?

A couple of things. We're getting about 1 point benefit from fuel surcharges. It helps a little bit. The -- it's more similar trends than different trends. I think our International business is doing well, and I think the activity trends in International are relatively stronger than what we've seen in North America. I think North America has been a very similar place. We do record, as you know, some of the hybrid revenues through the -- we record some of that in our core service, the more recurring nature where we have more recurring projects, and that's a double-digit growth. We're doing very well on that front. So that's [indiscernible]. But on balance, more similar than different, but I think we do have some positives.

And Andrew, the International business is much less of its portfolio has any in healthcare in it. And healthcare is the major drag factor in North America.

Your next question will come from the line of James Samford with Citigroup.

I just wanted to, I guess if I could just follow-up on that a little bit. If you could just sort of frame the activity cycle in terms of the macro environment, I'm just sort of curious whether activity internationally is a function of -- if there's a lot of changes going on there and that's sort of driving activity levels. I just want to sort of frame it on from a macro perspective.

Yes. Look, no. I think International is more driven by the 7% storage growth, and that drags along with it more services. Newer records are far more active, and they age fairly quickly in terms of activity patterns. So the faster you grow on them, the greater the amount of newer records you got, and therefore the more active they are. And plus part of that activity is the charges of bringing things in, so if you're growing faster, you got more service activity to assess or bring things in. No, I don't think it's an economic impact. Although services have -- do respond to the economy quicker than storage. Storage growth is a real lag on an economic rebound. And like in North America, we've seen no real clear trends in the economy. And we expect to be an 18-month or so lagger there. On services, we would pick up a little faster.

What's tough for us parse, too, is just obviously, the first quarter in North America, you had better weather. And I think when weather is bad, you hear about the negative side of it. When it's good, no one's saying that's helping to support performance. But that could be at the margin. Something is helping us a bit. I don't -- to Rich's point, I don't think we've seen kind of a change in the economic environment. It's more reflective of kind of what's going on underlying it.

And just a quick follow up on -- it looks like volume growth picked up a little bit here. You got stabilization on the output and distractions. I think the organic piece, is that International organic? Or how should we think about sort of the mix of volume growth on the Records Management side?

It's very, again, very similar. I think you're looking at our encashment where we show kind of the quarterly numbers annualized. It's very similar in the U.S., kind of flat volume trends. We're seeing benefits from the sales and marketing initiatives that we advanced and that's helping us to stabilize the incoming volume, which was down a bit. And now, it's more in the stable zone in which we feel very good about. And international is in a similar zone of solid growth. There is some seasonality in the quarterly numbers. We do tend to see more add lots in the first quarter, and so when you seasonal-ize those numbers, that's part of the dynamic you see there, but it's a similar trend. We feel good that we've moved from where we had more pressure on our growth to where we're more stable and seeing positive flowthrough from some of the investments, and looking forward to building on that.

And that we spoke a little bit about the investment sales and market. It's a long cycle to see it come through. But we're seeing better performance. We're seeing better pipeline growth. We're seeing better conversion ratios. We're seeing a variety of things that make us feel like we've kind of pulled out of the bottom and we started back in another direction. But it's very, very slow cycle. And I really caution people that this is not a business that you can take sort of a data point and sort of draw line up or line down. It's a flywheel, it takes a while that move either way. But I think we feel like it's moving in a better direction now than it was moving in say, a year's plus or so ago. But I would -- again caution you, don't go re-forecasting things. You'll be absolutely wrong.

Your next question will come from the line of Kevin McVeigh with Macquarie.

Richard, did you tend to talk about a kind of a longer-term trend on the storage side in terms of revenue growth? And was it low single-digits, or was that within storage itself? Or just -- can you put some context around that?

Yes. What I'm really saying is I think we can keep our business overall growing in those ranges but build on a foundation of storage, annuity-based kinds of businesses in effect. And we're going through some shifts and changes. We've talked about healthcare restructuring itself. Look our healthcare business is growing, but the big service component is coming out of it, it was our most active business. It will take a while take for them to absorb. I know people believe that, that foreshadows what's going happen in the rest of the market. They're wrong. Not that -- we have records aren't going to get less active. Like we've announced, we have been doing that for 30 years, and they will for over the next 30, 40 years. But not at the same pace as healthcare. But we've got those headwinds, and those headwinds of healthcare will take a while for us to eat through, but we've got a bunch of other positive things and we got some new things in the hopper. And if we look out over the long haul, and we've done quite a bit of work on this and look at a very long period of time, what we're saying is we believe net-net, we have the opportunity set, and we have the tools, staying within our core business, not going throwing big, long passes or anything. Staying with that core business to keep the core -- keep our business, all annuity-based by and large, growing in the low single-digits. And that's why we talk a lot about confidence around the ability to sustain the flywheel and sustain the cash generation capabilities of the business.

Understood. And then just -- it seems like on a relative basis, acquisitions are starting to pick up a little bit. Is that just purely opportunity? Kind of how you're feeling about the business overall? Or just any thoughts on that?

I have been saying around here for a couple of years that we're going to see -- if we're going to see another mini consolidation wave in North America and like everything else I predicted, it takes a long time for it to happen. That's our business. It's starting to happen. That is the nature in North America of just the -- the impact of the first consolidation wave was to consolidate the market, create a bunch of new competitors. Now, there's new competitors. We have a reasonable number of them. I have been out there a while, invested capital for a long time, and looking to monetize. It's just the cycle. I think we'll go through that cycle again. And we will play that opportunity cycle because unlike the last time when we were a driver of that cycle, we were building footprint. This time, we're not building footprint. We're building returns, and we're going to do it by -- if it's a great consolidation economics and it's a good, clean business, in a fair price to both parties, we'll do it. If it's not, we'll pass on it. And so on, okay? But we are in the market. But we want to make sure the market hears us that way, and if anybody's interested in selling, you can get my phone number, you know how to call, we'll talk to you. Now that's North America. International, although in certain parts of International, there's some of that same dynamic but a much smaller scale. The other part of International, it's about us being a bit more targeted around our strategy that says market leadership. Where we -- where there are great markets particularly those with lots of growth left. And yes, I've spoken before and now a lot of…

Understood. And then just one final, if I could? Within the context of overall capital return, kind of M&A versus kind of dividend and buyback in aggregate, out of 100%, how would that play out over the next couple of years?

Well, you're really talking the capital allocation strategy going forward, and I'm not going to comment on that because that just gets wrapped up into the whole issue of what we do next. And so we'll talk about that sometime between now and June 9.

Your next question will come from the line of Gary Bisbee with Barclays Capital.

As I was going through the 10-K, one thing jumped out that maybe I'm making too big a deal out of. But it was interesting to me that on your cash flow statement, the portion of the customer acquisition costs that you capitalize, that addition to customer relationship/acquisition cost line, it was larger in absolute terms than as a percent of revenue, than any point is better in the last 10 years, and yet -- revenue growth is pretty slow. I guess I wondered, is this may be another sign that the sales investments you've done are working? Or is there something that's changed that would be driving that, maybe like higher customer turnover, but you're doing a better job of adding to offset that or something?

We have a lot of tools in terms of how we build new business and in some cases, we will acquire business, what we call a pick-up-and-moves. So basically, we're acquiring businesses from competitors without necessarily taking the real estate...

You'd be buying a portfolio of customers basically, and moving them into existing sites.

And that is an area where it's a similar judgment in terms of deploying capital and looking at returns, and we've had opportunities on their front, and that is an area that we'll continue to deploy to grow as well. And we understand the economics of those types of investments very, very well as you might imagine because it's clearly defined. And we can swab that into areas where we have excess capacity and help to manage our facility utilization. So that's what it's reflective of.

Okay. Great. And then, I was thinking back to, I guess now, 1.5 year ago, your last investor day, and I remember one of the themes of that, that was a focus on where you could be more targeted in trying to get pricing? Has there been any change in that? Or is it sort of the economy where it is, and not having gotten better enough, kept you from making any major moves towards that strategy you talked about?

Well, we restructured pricing in not all of our business, but a reasonable amount of our business in over the last say, 3 years or so, where we went to more list price and then discount off a list and try to rationalize pricing, and looked across the board at the value proposition, and so forth. That would be the sort of the, what you might call a big move in effect of things. And since then, if you think about it, we have a significant part of our revenue where it's a sort of on an annual cycle and we're going through those annual increases. But we also have a significant part of revenue that's on multi-year contracts that are indexed by-and-large, one way or the other inflation. But in the last few years, those indexes have been down and so that puts a limit on just the natural limit on price. The flip side of it is, if you believe we will see inflation in the future, we'll be well-protected on the way back up. So...

Strategically, we're increasing our focus on being more segmented in our offering by a customer vertical and looking across the scope of the services that we offer and linking that into our pricing strategy. So I think we're looking for ways to increase the value that we bring to customers and capture that through the pricing strategies. That's really the next wave. Building on what Richard said, I think we've got a very good foundational structure for how we approach pricing and are advancing the same strategy, and trying to look at ways to increase our value add through segmented approaches to growth. And that will be the next wave and where we might be able to get some incremental value out of our pricing approach.

Okay, great. And then just one last one. Everybody's noticed that Brambles didn't sell recall at the price or the timing they wondered -- they wanted to. I wondered if you had any comment if that would be something that might make sense as something for Iron Mountain to look at? Or maybe would be willing to say if you have not really been involved in that or not?

We have not been in the process. I think, it was Brambles' choice. It's not that we wouldn't have been interested in looking because we would have. If I think for their own reasons, and probably good reasons, they chose that -- not to bring us into the process. So we're are sitting on the sidelines and watching like everybody else.

Your next question will come from the line of Andrew Wittmann with Robert W. Baird & Co. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: I'm just curious on the pick-up-and-moves. I'm just curious if you can just talk about, quantify how much of the volume growth you're seeing is as a result that today, and given that it just sounds like this is a little bit of a shift there, and kind of what was it maybe a few years ago?

You said a relatively similar range. I think it's less than 1% on the margin. I do think we're increasing our focus across a number of areas, including acquisitions in terms of growth. But I don't think it's a fundamental change from where we've been. We'll take a closer look at that. But it does go up and down depending on the nature of the opportunities that are out there. And I think we've seen a better pipeline more recently. This just tie into some of the themes that's Richard's talking about with -- in North America, more things being available for sale. This is a -- in many ways, a different form of the sale for smaller businesses.

And we -- as we go forward, we will use various tools that keep the drive and the sustainability of the business. As a company, the theme we said is, for this year and for our 3-year plan, is to refocus back on our core physical business. The reason we stated it that way is, looking prior to that, and it's not that we lost focus on the business, but there's a few tools we had put down and just weren't using, and this is one of them. We just -- we were not looking at any form or fashion to speak of -- particularly North America, the opportunity set that came up. And so we're just opening up and looking at those sort of things. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Makes sense. And just on the service business, Richard, are there any knobs that you have on your arsenal to maybe induce some level services there? Is there a pricing strategy that maybe lines up the marginal costs and marginal revenues there better? Or is there anything you're doing today to maybe offset some of the headwinds you're seeing there?

There are some new services that we have introduced, and they're getting traction. But like everything, they take a long time. I mean, that's the good and bad side of our business. What I'm -- for example in the healthcare space is an approach to pathology customers. It's -- we've repackaged and come up with a better value proposition, and we're getting good traction on it. But it takes a few years before you see any major impact under that. So we're doing things like that, and it's more about the theme of vertical-izing our services and being much more specific around specific industry needs. And we had some other new service programs or new product programs related to our core in what I'd call beta phases. We're not going to pound a table on them for a while until they turn real, but yes, some of them look very promising, and some could be substantial big businesses over time. And so rather than coming out and hyping them, what we're going to do is go through some betas and get into the markets a little bit. And when we have some real results that's significant, we'll come back to talk to you about them, and so forth. And that's all part of us maturing as a company, learning how to look across our own customer base, and we've been evolving those skills in project management-type skills, and so forth, to be able to verticalize, to be able to be more creative and look for opportunity sets and custom-design what we do and then repeat it over and over, and so forth. And we're getting better at that. We'll have to keep getting better at it, and that's where a reasonable amount of money has been invested in the last few years, and I think we'll continue doing that. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: And then just kind of another one, just touching on -- in your sales process here a little bit. On the digital business, it's been out of your portfolio now for a while. Can you talk a little bit about kind of how the new relationship with your digital vendors is going, maybe what you've learned from that process? And maybe Brian, can you give us -- or quantify how much of revenue we're seeing today from you selling digital services that are not assets or technologies that you own?

That's a small number.

It's a small number. We -- because we shifted 100% of the sales force that sold the technology services, and chose not to rebuild that sales force. Having said that though, we are selling a lot more connected [indiscernible].

It's a very small number. Immaterial.

And what we did was is -- frankly, at the request of my leadership in North America, they asked me to slow down on doing that. Not slow down on selling it per se, but on focus because what they found was that they really wanted to get their sales force refocused and requoted back towards the core business. We had -- the quarters in focusing on very much towards the new services side. And that's one of the reasons that storage started to come off and by refocusing and making people focused on going back and digging out the storage, they're doing it. We just didn't want to confuse people.

We continue to own in the intellectual property management business, which is a great business for us, and it's roughly $30 million of revenues. So that was part of the digital business that was doing well.

And we've -- look, we were coming back. Some of those the beta services talking to you have a strong partner technology component potential. But we're going to take our time, and we're not going to spend a god-awful amount of money trying to do this stuff. So I think that's the last question, operator, in my understanding. So -- hey, I was right, we finished 5 minutes earlier, so that's a record for me. So thank you very much. As I said, the business is performing as we expected. We're off to a good start for the quarter, and hopefully, the rest of the calls this year will be equally good if not better, and so forth. We are really busy though. There's a lot going on between, I'd like to say looking at an acquisition pipeline and looking at -- and so forth. But the real focus of the, some of the organization, is on being prepared to have a conversation with you prior to June 9. And I know everybody's eager to hear us talk and we will be prepared, and we'll let you know, probably the day of or some number of, when we come forth and talk. So we look forward to talking to you again in the next couple of months. Thank you very much for your support, and we will talk to you later.

Thank you for your participation. This does conclude today's conference call. You may now disconnect.