Shlomo Rosenbaum: Hi. Good morning. Thank you for taking my question. I really want to focus just a little bit more on the ALM business trajectory. Just – what are you seeing in terms of like volumes coming in? I understand that the pricing is still low, but recovering. But just absolute volumes, how is that doing? And then also just understanding the Regency acquisition, like you said that it’s $100 million of TTM revenue, but obviously, it was in a downward slope similar to what you guys were seeing. Is there a run rate that you can provide to us that we can think about that in terms of how to model that thing? And then maybe just keep focusing on a little bit more, what they add to Iron Mountain? What do you mean in terms of the downstream processing? What exactly is it that they do that you do not do?
William Meaney: Okay. So, Shlomo, let me talk a little bit about the – what we see on the volume trends, and then I’ll let Barry put it together in terms of how you should think about modeling that going forward in terms of the business. I’ll also come and pick up your point about what exactly Regency ads. So in terms of the volume trends, if you look at the enterprise side of our business, is there, the synergies, and as Barry said in his remarks, almost 100% cross-selling in terms of our ALM business. Is there you see almost triple-digit year-on-year increases in terms of volume that we’re getting from our enterprise customers. So in the enterprise segment, we’re seeing a really, really good volume. If you look at the hyperscale, which is the part of the business, that we acquired through IT renewal is the one that’s most been impacted by what we see on the pricing of the components, which, as we said, is now just starting to move back north in the right direction.
Is there, we actually see year-on – if you put year-to-date volume trends of incoming equipment, is we actually see double-digit – strong double-digit growth year-on-year, year-to-date incoming volume. And so the thing that’s been muting that incoming volume, quite frankly, has been the pricing, but the good news is the pricing has started to improve. And Barry can help you think through how do you think about putting those two together as we project going forward. The last thing coming to Regency. So I’m glad you picked up on that because I probably should be more explicit on that. So Regency, first of all, they are adding a couple of customers into the portfolio that, quite frankly, we didn’t have both in government sector and retail, which I think is really interesting in terms – because a lot of the equipment gets recycled by people dropping off at their retailers.
So I think that’s a really good capability there. But more importantly, is they actually are able to recycle a lot of what I would call the things that can’t be reused directly into IT equipment. So things like we mentioned the plastics for pharmaceutical retailer. They do a lot more of that than we have historically. And the other thing, the other aspect is over the last couple of calls, we mentioned how we had signed up OEM relationships where these are laptop tablet manufacturers that are looking for people when their equipment comes off lease and needs to be recycled is they come to us and other people to actually resell – to refurbish and resell those products. And Regency has much more capability than we do in that area. They built up not only more expertise in refurbishing tablets and laptops than we have, but they also have a very nice e-commerce platform and where they can actually resell those.
So they will really accelerate those – accelerate the sales for those channels that we mentioned on the last couple of calls, signing up the OEM manufacturers. So I think their capability will be a nice complementary fit to the contracts that we had already signed.
Barry Hytinen: So Shlomo, it’s Barry. I appreciate the question. Specifically, on how to model Regency, just as a reminder, we are expecting it to close kind of around year-end or early next year for when you want to add it to your model. We noted that it’s in excess of $100 million of revenue, Shlomo, and I expect them to exit the year at that level in excess of $100 million, and we see the opportunity for it to be growing into the new year. But of course, we’ll give guidance for next year on our next call. But we feel very good about the stability of the business that it’s been generating revenue and EBITDA at the levels it’s been for some time. And as Bill alluded to, it did not see the sort of trough that our ALM business did on the hyperscale side.
It’s much more of an enterprise IT asset disposition sort of player. And in that enterprise and government services that it does its – didn’t see the level of trough that we did, and it’s come back nicely. And so we feel very good about the stability of the business at this point and feel like we’re getting a very good, very synergistic deal as Bill mentioned, they have a fair bit of incremental capacity. And so we can get synergy off of bringing Iron Mountain Enterprise clients to Regency for service going forward. I would say – I’ll just note that you can work through the math on this that it’s sort of in the low mid-20s of an EBITDA margin business. We think that, that has opportunity to expand as relative pricing in the broader market expands and through incremental capacity utilization of the footprint of what they have there.
We’ve been very impressed with the team at Regency for a long time. They’ve built a very good business with critically important relationships to clients. And we’ve got a very strong focus on sustainability. So we feel very good about Regency. And as I zoom out to broader ALM, Shlomo, I would say, just to reiterate a point Bill made, the volume is clearly kind of doing well. We are seeing incremental bookings, as I mentioned in our prepared remarks, particularly on the enterprise side, on teams having good wins on the hyperscale side as well. And our OEM relationships continue to extend. That’s an area that was a focus – has been a focus for us this year. We signed some very important relationships in that area of the market. Of course, it has – the nature of those relationships is that they take a little longer to get to revenue generating, but we are well on our way in the OEM vertical as well.
So I appreciate the comment, Shlomo.
Operator: The next question comes from Eric Luebchow of Wells Fargo. Please go ahead.
Eric Luebchow: Hi. Thanks for taking the question. So Barry, I just wanted to touch on the balance sheet, obviously, a big move in interest rates recently. So I just wanted to touch on your deployment of CapEx and the sources and uses of capital. It does look like data center CapEx, as you’ve mentioned before, maybe you could touch on the trajectory there, that’s probably going to continue to lift higher based on the leasing you’ve done year-to-date. And then maybe you could talk about your kind of achieve development yields on data center deals. It looks like those continue to move higher and how comfortable you are in terms of the excess returns you’re getting over your current cost of capital for what’s in your data center pipeline? Thank you.
William Meaney: So Eric, I’ll take the – I’ll talk about the yields that we’re getting it. And then Barry can talk about the balance sheet impact and how we’re thinking about financing it going forward. So I think on the yields, as you probably – were kind of foreshadowing in the nature of your question. We have seen yields moved up and in Barry’s prepared remarks and I think also in mind. I talked about the price improvement or the strength of pricing around data center as demand continues to ramp. So historically, if you think about the journey that you’ve watched us on, Eric, is a few years ago, we would have said, hyperscale or kind of 7 to 8. I think on the most recent calls, we said hyperscale. These are cash-on-cash returns have been 8 to 9.
