Iron Mountain Incorporated
Q4 2008 Earnings Call Transcript

Published: 26 Feb 2009

[Operator:]

Good morning, my name is Vanda and I will be your conference operator today. At this time, I'd like to welcome everyone to the Iron Mountain fourth quarter 2008 earnings webcast. All lines have been placed on mute to prevent any backgrounds noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instruction) Thank you. Mr. Golden, you may begin your conference.

[Stephen Golden:]

Thank you. Good morning everyone and welcome to our 2008 fourth quarter and full year earnings conference call. After my announcement this morning, Bob Brennan will give his state of the company remarks, followed by Brian McKeon, who will deliver the financial review. When Brian is finished, we will open up the phones for Q&A. For those of you here in Boston, we will be presenting at the Robert Baird 2009 Business Solutions Conference at the Four Seasons Hotels later this afternoon. For our custom, we have a user-controlled slide presentation on the Investor Relations page of our website at www.ironmountain.com. Referring now to slide two. Today's earnings call and slide presentation will contain a number of forward-looking statements, most notably our outlook for our 2009 financial performance. All forward-looking statements are subject to risks and uncertainties. Please refer to today's press release or the Safe Harbor language on this slide, and our most recently filed 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, operating income before D&A or OIBDA, free cash flow before acquisitions and investments and other non-GAAP measures are metrics we speak too frequently, and ones we believe to be important in evaluating our overall financial performance. We provide additional information and the reconciliations of various 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 CEO, Bob Brennan.

[Robert Brennan:]

Thank you, Stephen. Good morning and welcome to our year-end conference call. The format of today's call

[Brian McKeon:]

Thanks Bob. Good morning everyone. Q4 was another solid quarter for Iron Mountain, highlighted by healthy internal revenue growth and strong OIBDA gains. Storage revenues, which comprised 55% of our total revenues and are a key financial driver, grew 8% organically in the quarter. Core service revenues representing another 31% of revenues posted 11% internal growth. As expected, the record recent strengthening of the U.S. dollar did lower reported revenue and OIBDA growth in Q4. Similar to Q3, unusually large exchange rate changes also recorded as to recognize charges in other expense in our booked tax provision, which lowered our reported EPS by about $0.20 per share. These factors however don’t alter the fundamental suaveness of our business, which performed well throughout the year. For the full year, we delivered against all of our financial objectives posting 8% internal revenue growth, 13% comparable OIBDA growth and significant improvements in capital efficiency. Today we will review our quarterly results and provide an update on our full year 2008 cash flow performance, capital spending and our current debt position. We will also provide an update perspective on our 2009 guidance. Let’s turn to slide four, which highlights the key messages from today’s review. The first key message you should here today is that we continue to drive solid business performance, reflecting the strength and resiliency of our business model. In Q4 we delivered 9% internal growth in combined core storage and service revenues. We also drove a 11% comparable growth in OIBDA in spite negative foreign exchange impacts and pressures from lower recycled paper pricing. We continue to execute with discipline and leverage strong Q4 performance to deliver against our 2008 financial objectives. Revenues exceeded $3 billion for the first time in our history and we delivered 8% internal revenue growth for the full year, solidly within our forecasted range. OIBDA finished the year at $783 million at the high-end of our guidance, we originally issued a year ago, 13% year-on-year growth in OIBDA excluding asset gains and losses was supported by strong gains in gross profit and tight cost controls. We also strengthened our liquidity and leverage ratio this year. At year-end we had over $775 million in total liquidity including more than $500 million of availability under our revolving credit facility, which is supported by well-diversified bank group. We ended the year with a consolidated leverage ratio of 3.8 times OIBDA moderately below our long-term target range, reflecting our heightened focus on cash management. We have a free cash flow positive business before acquisition, so these positions should continue to strengthen in the absence of significant acquisition activity. We intend to build on our financial progress in 2009 with goals for solid underlying operating performance. Our outlook in corporate expectations for continued solid momentum in our North American business where we are driving strengthened returns to enhance focus on execution. As noted on our last conference call, the unusual strengthening of the U.S. dollar in recent months will pressure our reporting results in 2009. At current rates we expect foreign exchange will lower reported growth by about 7%. Large recent declines in commodity such as recycled paper will also constrain near-term results. We’ll review our updated 2009 guidance in more detail today, isolating impacts from these factors to highlight the underlying strength of our financial outlook. Let’s begin with the review of the details of our Q4 performance starting with a look at our revenue growth performance in slide five. Slide five breaks down our overall revenue growth. It shows internal growth by major service line as well as the impact of acquisitions in foreign exchange. As a remainder, we removed the 2007 and 2008 revenues associated with the divested product sales business from our internal growth calculations. Overall, we drove solid growth in the quarter although reported revenue gains were constrained by negative foreign exchange rate impacts and lower benefits from acquisitions. Internal revenue growth for the quarter was solid at 7%. As noted core internal revenue growth was up a strong 9% supported by 8% storage growth and a 11% core service growth. Storage gains were solid across our key businesses. Strong core service growth was supported by gains in North America including benefits from fuel surcharges and strengthened pricing. Overall internal revenue growth gains were moderated by 6% decline in complementary revenues. As expected, we saw pressure in Q4 due to the completion of a major European public service contract over the last year that resulted in $5 million reduction in revenues in the quarter. While recycle paper prices also impacted complementary service revenue in the quarter by approximately $4 million. Together these factors caused a 9% negative impact to Q4 complementary revenue growth. We’ve also seen lower growth in areas such as fulfillment services and software license sales, which are areas more likely to be impacted by economic conditions. As we noted in the past, complementary service revenue, which represents about 14% of overall revenues can fluctuate over time, given fluctuations in demand and timing for special project activity as well as variations in factors such as recycled paper pricing. Despite these impacts, our overall internal growth rates remained solid throughout the year and we delivered against our full year internal growth goals. Slide six compares the P&L results for this quarter to Q4 2007 and brings down our revenue growth by business segment. As shown here, we delivered solid OIBDA gains despite pressure from foreign exchange and lower complementary revenues. Reported revenues reached $753 million in Q4, up 4% supported by solid storage growth across our business. On a constant dollar basis, revenues grew 8% while OIBDA grew 13%. Our largest segment, North America Physical posted strong core revenue internal growth of 10% and 7% internal growth overall. We saw solid growth across our records management and data protection and secure shredding product lines. Overall growth was supported by solid storage gains and strengthened core service revenues. These gains were offset by declining recycled paper prices and anticipated softness in more discretionary areas such as special projects and fulfillment revenues. Our International Physical business reported internal growth of 4% supported by continued strength in our Latin American business and solid storage internal growth in Europe As expected, we saw declines in complementary service revenues in Europe as the second major project we have been speaking was concluded in the third quarter. These declines reduced International revenues by $5 million or about 3% in the quarter. In addition, significantly weakened foreign currencies reduced our reported results in the segment by approximately 11 percentage points. Our Digital segment also drove strong revenue growth with 26% gains overall supported by a 11% internal growth and continued solid performance from Stratify. We saw solid growth in storage revenues and as expected some weakness in more discretionary purchase areas such as software license sales. Operational gains in our North American Physical segment drove improvement in gross profit. Gross margins were up a 150 basis points for the quarter, compared to the same prior year period, supported by productivity gains and improved storage gross margins in North America. Gross margins also benefitted from the sale of the low margin data product sales business. Year-on-year SG&A growth was 3% in the quarter slightly below the rate of revenue growth. SG&A cost growth moderated as expected in the fourth quarter reflecting our tight focus on execution and cost control. OIBDA, which grew 9% on a reported basis to $199 million in Q4 of 2008, included $3 million of asset write-offs related to building moves in North America. Note that our Q4 2007 results included a $1 million net gain on asset dispositions. On a comparable basis, excluding asset gains and losses, OIBDA grew 11% in Q4 2008 compared to Q4 2007. Depreciation was $64 million and amortization was $9 million for the quarter. The year-on-year increase in D&A was driven primarily by amortization related to the Stratify acquisition completed in December 2007. Operating income was $126 million for Q4, up 10% versus the prior year, in line with our OIBDA gains. Slide seven bridges our Q4 operating income and net income and EPS results. While we drove solid operating income gains in Q4, our net income and EPS were negatively impacted by charges related to large recent changes in foreign currency exchange rates. As noted operating income for that quarter was up 10% to $226 million, supported by strong gains on the gross profit line in moderating growth and depreciation, reflecting tight capital controls and the absence of acquisitions in the quarter. Our Q4 interest expense was $57 million, down 3% from Q4 2007 due primarily to decreases in our net debt and weighted average interest rate. These gains were offset by impact of other expense in our effective tax rate from changes in FX rates since the end of the third quarter, which reduce net income by $40 million, or $0.20 per diluted share in Q4. As a result, we reported net income for the quarter of $1 million or $0.01 per diluted share. As we discussed in our last earnings call, large fluctuations in foreign currencies during a quarter can result in meaningful accounting effects as we mark our forward contracts in debt to market, and record the appropriate tax effects from these changes. In Q4, FX changes drove us net $16 million charge in other expense. We also recorded a $24 million tax provision on these amounts, reflecting both foreign currency gain and losses incurred in different tax jurisdictions. As noted on our last call, well large changes in FX can impact our reported results. Two economic impacts to our business are mitigated by some key factors. First as a service company, our costs are matched with our revenues in local currencies. We’ve also aligned our international assets and liabilities in the same currency with international net asset positions at 90% hedged. Finally, our International businesses are funded with local currency cash flows and debt financing. As such we are not exposed to reliance and repatriation of funds from our international operations. We’ll continue to highlight the discrete impact from FX changes and reporting our results to reinforce the strength of our underlying business performance. In Q4, the impact of foreign currency rate changes increased our effective tax rate by about 60 basis points. Discrete items such as FIN 48 interest addition to tax reserves and other adjustments also added in that 5% to our effective tax rate in the quarter. For the full year, our tax rate before the impact of foreign currency rate changes and other discrete items was 38%. We are estimating our tax rate before the impact of foreign currency rate changes and other discrete items for 2009 to be approximately 39%. Let’s now turn to slide eight to look at our full year performance. Our solid Q4 performance supported strong full year results at the high-end of our original full year goals for revenue and OIBDA growth. For the full year, we achieved all of our stated financial goals

[Operator:]

(Operator Instructions) Your first question comes from the line of Ashwin Shirvaikar with Citi.

[Ashwin Shirvaikar:]

Hi guys. I wanted to ask about pricing on the storage side. Are you seeing any pushback on getting these 32% effective price increases in this environment and to what is that in your internal growth guidance?

[Brian McKeon:]

Its in our projections Ashwin I think fundamentally the way that we’re going about during is really very – that our customers recognize that it is a function of investments that we’ve made it really in our value proposition, we’ve been investing aggressively if you go back a few years we talked about the need to invest in security and how we are making those investments and that we wont go to realize value having full investments are in place. It wasn’t a competitive issue right, we were already more secure than in our competition in this market requirement. So we found it very much to the investment that were making we’re really not seeing any material push back because of the marked upon – is very slight majority in individual customer.

[Ashwin Shirvaikar:]

Okay guided and Bob you mentioned your presence in the healthcare segment in your prepared remarks as this may be too early to do this, but it might still be what – your could either size or qualitatively address the potential impact of healthcare record conversation specifically with the larger. I want to laid out in the Obama.

[Brian McKeon:]

Well there is a great opportunity there again we have – to business in the last couple of year now have a dedicated focussed, this tremendous amount of opportunity, we have a strategy and placed ago after that we’ll relatively small compared to the market opportunity and as we go forward quarter-in-quarter, we described how we’re advancing that strategy, but there is a lot of business to be had there over the medium plant.

[Ashwin Shirvaikar:]

Okay thank you more to come I guess very good quarter. Thank you guys.

[Brian McKeon:]

Thanks Ashwin.

[Ashwin Shirvaikar:]

Thank you. Operator

[Vance Edelson:]

Hi thanks a lot. Just back on the 20 or 21 million for facilitating the capital leases, I just want to make sure that’s baked into the ’09 the EBITDA guidance and therefore if we wanted to be -- on an accounting basis with ’08. We’re just lot 20 million of the guidance range right.

[Brian McKeon:]

That is accurate as – 8 to 13% growth include in our 3 point – change.

[Vance Edelson:]

We won’t have a change, we won’t have million packed on net income or EPS because we have offset and depreciation and interest lines. Got it and sort of bigger picture question on the cross selling progress can you give us a few for how many cost of merge maybe on a percentage basis or taking multiple services how many you are just taking in a one core service and so far. Thanks.

[Brian McKeon:]

We continue to make that steady progress on that advance as that the I don’t have that state to breakout for this one with may lot of progress in cross selling in our customers. I will tell you that – that relative to our past we’ve improve relative to our potential at see a tremendous opportunity and improving or go to market effectiveness. Again over a long period of time.

[Vance Edelson:]

Okay, great and you mentioned differing some data center CapEx into ’09, when you look forward based on what’s you are planned we accomplish in ’09 with that be the bulk of what’s to plan to expensive within next two to three years in that regard or with the ’09 data center CapEx bigger run rate for 2010, 2011 so far.

[Brian McKeon:]

Yeah, I think it’s a where the ladder we’re going to be continuing is growth capital support additional business and I think we are tried to highlight some of the more discrete items that are impact in the ’09 number which are the advancement in rationalizing our – real estate and the incremental investment in the growth opportunities, which is around complaint federal records but I think our underlying growth rate we’re very pleased with the progress and making an improving efficiency and I will look at system are going forward.

[Vance Edelson:]

Okay, that helps. Thanks.

[Brian McKeon:]

Thanks.

[Operator:]

Your next question comes from the line of Andrea Wirth with Robert W. Baird.

[Andrea Wirth:]

Good morning.

[Brian McKeon:]

Good morning.

[Andrea Wirth:]

When you could address a little bit what’s you are seeing with your customers in the financial sector and a last analyst say, you have talk about how you actually thought about turmoil in the financial sector would actually could actually being that positive for you could you talk about those customers still growing in lined with your core business are they lagging are they actually growing a little bit faster?

[Brian McKeon:]

Our storage remains very solid we are seeing pressure Andrea on discretionary projects – there are some deferrals as it relates to imaging projects and new endeavors by in terms of our underlying business it remains very solid I do believe will be an net beneficiary overtime simply because regulations will prove – risk has to reduced cost has to reduced that is our value proposition. But right now its fairly distractive sector the good news is our the core business

[Andrea Wirth:]

And then just a quick question on fuel could you remind us what fuel is as a percent of your cost and then when you look at it – mentioned commodity cost in total of how about at 2% impact I am assume the vast majority of that’s paper but could your break that down between paper and fuel.

[Brian McKeon:]

All right our energy cost as we talk in the past year about 3% of revenues that half of that is related to transportation and half of that’s relates to utilities and our facilities you are correct when we talked about commodity pricing we realized a benefit of this year probably a little sales of 1% of our overall revenue from higher fuel surcharges that’s changed quite a bit and as we look forward we are anticipating lower fuel surcharges next year so that 2% impact number the combination of paper on lower fuel pricing I just want to fuel surcharge pricing do want to highlight that the net impact of changes in energy cost are somewhat neutral for our business in that the fuel surcharges are intend to offset change in transportation energy cost so we net don’t see a significant impact on that front and we would anticipate in some benefits on hopefully in the utility side over the time that will support our gross margin outlook further. The profit impact from fuel changes is somewhat significant for us.

[Andrea Wirth:]

Just one final question just what was the overall pricing contribution to revenue this quarter.

[Robert Brennan:]

We don’t break that out for a company what I would say is overall because obviously saw a variety of different price product and services globally. We have highlighted in the past the trends on our records management storage pricing and as we finished this year on o year-over-year basis our run rate is we are up about 3% year-on-year which is where we were hoping to get to we think that's a good level and that is incorporated into the break out look that we have for next year. And we feel very good about our ability to sustain that kind of value proposition.

[Andrea Wirth:]

Thank you a nice quarter.

[Robert Brennan:]

Thank you.

[Operator:]

You next question comes from the line of Kevin Mcveigh with Credit Suisse.

[Kevin Mcveigh:]

Great thanks.

[Robert Brennan:]

Hi, Kevin.

[Kevin Mcveigh:]

Hey, how are you? Real nice job. Given the headwind against commodity cost in the fourth quarter you saw real nice margin expansion overall could you kind of just help us understand what's the most incremental draw before?

[Brian McKeon:]

In couple of different factors and the gross margin line Bob talked about this in his comments but we are really driving net driving excellent this year in North American business on a number of fronts we just spoke to some enhancements to our pricing trends productivity initiatives I hope to improve storage margins, the efforts we are putting against transportation improvement or helping with our labor efficiencies and on the gross margin line also all contributors and as the highlighted earlier in the year, we’ve going to our overhang cost early in there are really driven acquisition integration more than anything as well as investments we initiated late in 2007, what we have been executing very discipline approaching as our investments and cost management this year and we saw the benefit that in Q4, with the moderate in growth rate, so safety we’ve drive in business – hard. This business has a lot of potential and we’ve been using this share to get very focused on organic execution and its paying off and we will going to build on that is we are going forward.

[Kevin Mcveigh:]

Great and then the CapEx shift from the incremental data center moves how much was add in ’08 into ’09.

[Brian McKeon:]

It’s a roughly $10 million.

[Robert Brennan:]

Okay, we just want to highlight we obviously at – came into the March number that we are report casting few months ago and this want to highlight that is one of the factors going that improvement.

[Kevin Mcveigh:]

Great thank you.

[Operator:]

Your next question comes from the line of Andrew Steinerman with JP Morgan.

[Andrew Steinerman:]

Hello, gentlemen. I want to talk about the margin expansion that’s implied in 2009 by clipping your revenue growth by 2 point in keep EBITDA growth at 18% to 30% obviously you are catch on some margin expansion here, could you talk about do you think you are seeing more in the gross margin line SG&A leverage what did you confidence in the ability to product margin expansion here.

[Brian McKeon:]

Yeah, and Andrew, just want to build on in earlier question from events keep in mind that about three points on the gain as related to the that vehicle lease change, if you peal that are out of our internal growth is 5 to 7, we’re employed constant dollar at the growth is 5 to 10 so its moderate margin improvement, we have couple of different dynamics going on. We expect to sustain solid gross margin as we work into next year there will be some impact obviously related to the changes in recycle paper pricing that sets something we can address overtime but in this short-term that’s the high margin revenue that will decline and so that is offsetting that a bit and so that we are looking to sustain our gross margins and we think that will the source of our margin improvement as we move forward on the SG&A [prompt] we are looking to sustain our revenue roughly in lined with our cost growth roughly in lined with our revenue growth and the higher balanced approach there and I think there was a key point Bob was forcing in his comments is that were driving efficiencies but we are also looking to invest in the future businesses well and you got in the balance later.

[Robert Brennan:]

And the strategy is the same strategy Andrew that will in place for you are trying I mean we are repetitive with focussing on growth returns and our three phases but it – dividends when you stayed focussed on that same strategy for long time.

[Brian McKeon:]

And we feel pretty good about our – put forth numbers that imply a profit add are above the rate of revenue despite some of these [Christopher] highlighting the – recycle paper we are very committed to improve the underlying returns in business.

[Andrew Steinerman:]

Right did you have change anything over the last couple of months to achieve that particularly I am talking about the gross margin line or is this what you had been planning ever since kind of late 2008.

[Brian McKeon:]

I would say it reflects plans that we’ve had in place since 2007 that we we’ve – against we’ve been last few month clearly like any company we’ve been revisiting our investment plans to make sure that we are lined with our growth outlook and we are getting tighter about that but I think we’re…

[Robert Brennan:]

We already had this upon in our operating rhythm, but we become more and more and more discipline in light of the conditions that we see in the pressure on the complementary revenue sure.

[Andrew Steinerman:]

That’s very responsible. Thank you so much.

[Brian McKeon:]

Thanks Andrew.

[Andrew Steinerman:]

Welcome.

[Operator:]

Your next question comes from the line of Edward Atorino with Benchmark.

[Edward Atorino:]

Talked about your acquisition thoughts – down and not really looking – lot of stuff if we do not make acquisitions would free cash flow go up even with the little jump in CapEx and is that CapEx number – as it looks like did like last year.

[Brian McKeon:]

Yes I am afraid one of use of – down is really describing our customer is related to new purchases where no way hunger down, I want to impress upon the listeners that we’re very aggressive in intend on expanding our business and our growth – that will include some acquisitions especially as we see some shakeout environment where we expect prices to become cheaper. We do not expect, we opposed the acquisitions today is in our core North American business in our core business in general, most of all, we do internationally is true joint ventures and that really we just focussed on where there’re opportunities – add to our platform from DMS prospective in a digital prospective. We don’t still the need to move right now, we think the market coming to us. We will be careful about watching our targets and to look at our past from a DMS or from a digital prospective. We generally have existing partnership with people that we are look expander deepened our partnership so we generally telegraphed these things.

[Edward Atorino:]

You have Stratify, which is sort of one note play in the eDiscovery business is that an area that's right to be and we rolled up in the sense but sort of expand I guess in that position we will expand laterally I suppose in the eDiscovery business?

[Brian McKeon:]

I think you are right at there are opportunities laterally we do see what we with Stratify is eDiscovery services as a platform radar and that's why its gotten the attention of PriceWaterHouseCoopers and Navigant. But you are correct I think that there is lateral expansion opportunities but some of that is organic right we have a tremendous amount of intellectual property in that business so some of our expansion that will have in organically but we expect to shake out in that business further it's a smaller fragmented market.

[Edward Atorino:]

Yes.

[Brian McKeon:]

And, I would expect prices to run away on us. Anything that will come to us.

[Edward Atorino:]

And on the CapEx question.

[Brian McKeon:]

I am sorry.

[Edward Atorino:]

In CapEx it's looks a jumping up in '09 over '08 is it kind to go back to the 13% of revenues or is it likely the sort of trend down going forward.

[Brian McKeon:]

Well I think I will step back and say that '09 and midpoint of our guidance is basically 12.5%

[Edward Atorino:]

Okay

[Brian McKeon:]

CapEx excluding real estate is a percentage of sales, which is….

[Edward Atorino:]

Lower yeah.

[Brian McKeon:]

We actually exceeded our targets in driving capital efficiency in '08 and so I would there are some increase that are desecrate to kind of growth in rationalization we are making but we combined we are $110 million to lower to combine '08 and '09 capital we shared in the investor day so we are driving lot of capital efficiency right now.

[Edward Atorino:]

Thank you very much.

[Operator:]

Thank you. You last question comes from the line of Franco Turrinelli with William Blair and company.

[Franco Turrinelli:]

Can you hear me?

[Brian McKeon:]

Franco.

[Robert Brennan:]

Hi, Franco.

[Franco Turrinelli:]

Although when I going to back to one observation which is in the North American, not makes the businesses performing its seems exceptionally well, but it seem like we’ve so being talking about Europe on international business can you set for some time and I guess I would like to go back over some of things your do a specially to improve the performance to the international business in when we’ve might see some improvement back.

[Brian McKeon:]

Sure, so it does take time we haven’t talking about some time just you give us some perspective on it we’ve essentially upgraded the entire management team across a European business in the last two years putting infrastructure related to reporting systems as well as just some of the productivity initiatives that – we’ve actually been doing for years in North America and we are seeing in the gains from that we’ve been putting I mean in place over the last couple years. And because its really three different groups of businesses, right you’ve got joint venture partners you’ve got small acquisitions in countries we were still subscale, when you’ve got the large businesses in Australia an UK and so we think about in three different [crosstrees]. And how we manage those, I feel very good that that were positioned in UK and Australia, you will start to see the return improvements it takes longer with our joint ventures and out smaller country positions just you guesses the scale issues but, we do have a long view on this front and we believe that we can peruse North American life return over time but it is the – that is taking a little longer than – then we thought of two years ago, but I absolutely confident that we got there.

[Franco Turrinelli:]

Just on goal, it is an fundamental differences that we should be aware of – growth backwards from exciting customers which is although see big part of the U.S. business is growth or pricing or rather things that we should understand from growth point of view.

[Brian McKeon:]

From a pricing perspective I think some of the dynamics of the same that we have significant competitive advantage, and where we have both that presence in this large market by U.K. and Australia we have that competitive advantage, it doesn’t exist to the same extend where we have very small presence. The other opportunity that exist internationally is that there – but for a helping customers with what inside the box which is have a describe our document management solutions business this will be a bigger part of our growth going forward and we feel that that it is very much build are be in the – information and that there is the our value proposition resin it on worldwide basis.

[Robert Brennan:]

Its part in do way a very small presence.

[Brian McKeon:]

So, scaling those areas is critical to us. In general I think you can see as peruse over time, the kind of returns that you are start to see in the North America.

[Franco Turrinelli:]

Thanks Bob.

[Robert Brennan:]

Thanks Franco. Well, thank you all for your time and attention today we’re started to ran a few minutes over I may hope you have good rest of today.

[Operator:]

Thank you. This concludes today's Iron Mountain’s fourth quarter 2009 earnings webcast. You may now disconnect.