Iron Mountain Incorporated (IRM) Earnings Call Transcript & Summary

Okay. I think we're good to go. Welcome to all of you that are listening in. With me, I have the CFO of Iron Mountain, Barry Hytinen; and also the Head of Investor Relations, Greer Aviv. The plan is to kind of go through a list of questions I prepared for the Iron Mountain team, but if there's anything that anyone wants to ask, please put it in the Zoom box and it will go to my e-mail, and I can try and incorporate it into the dialogue.

So maybe just starting out, thank you guys. Thanks for being here. Maybe just one for Barry. We should probably start high level. Obviously, 2020 was a challenging year. Fundamentals seem to be improving quite nicely as we are in 2021 now. Maybe you can just speak to customer behavior changes over the last year, what have you seen in the last few months and what's your expectation, I guess, for the summer.

Okay. Thanks, Nate, and thanks for having us at the conference. And Greer will be adding on to and helping me through the Q&A here. We really appreciate the interest. So I would say, as you've seen over the last 12 months, we have -- you're right, the business has rebounded nicely from where we had the most substantial impact from the pandemic in the very late first quarter but really most pronounced, in a reporting basis, clearly in the second quarter. As you know, services is where we saw the disproportionate amount of the impact in our business. Our storage business has been very solid throughout the pandemic and, in fact, outperformed our expectations at this time last year, throughout the year, with volume being very durable, very stable and pricing activity continuing to be quite strong. Services is where we were more impacted as you would expect and, as I mentioned a moment ago, was most substantially in the second quarter of last year, I think as mostly clients were figuring out really just how to operate. As you think about it now, we've all been doing virtual meetings for so long, but in the early days of the pandemic, I think a lot of clients were just really figuring out how to get set up at home. And so economic activity was more substantially impacted. And then we saw a gradual recovery as we move through the second half of last year with the impact at a high level on our services being half the level of impact in the second half of the year. And we saw that trend continue to improve. We mentioned on the most recent call that actually, in March, it was the first month since the beginning of the pandemic that we were actually up year-on-year on our services. I think this speaks to the fact that there's a gradual recovery and clients have figured out how to use services and they've also adapted to the environment as have we. Our team has developed new and innovative services that we talked about on some of the calls as well as we've seen a nice step-up in customer demand for our global digital solutions. We've talked about that the last couple of quarters. Where I would say -- if you broaden out beyond our core records business, look at our data center business, that has continued to be strong quarter in and quarter out throughout the pandemic, I think the team has done a phenomenal job there and our bookings have been quite strong throughout, and that continued in the first quarter. We have a very positive outlook for our data center business going forward. We have a very positive outlook for our global digital solutions business going forward. We think the pandemic, while it certainly has changed the way some customers do business, we certainly see more and more of them starting to get back into offices as the vaccination rates have increased and the relative impact, particularly in the U.S. and some of the other economies that have seen vaccination rates rise, starts to have a positive impact on clients going into office. In some of the other geographies where it isn't quite as along as it is in, let's say, the U.S., we naturally see some level of gradual recovery but not quite as pronounced. But all of that is -- it is really flowing, Nate, very consistent with the way, if not ahead of, what we expected at the beginning of the year. That's one of the reasons why we were able to raise our guidance on the most recent call because both the first quarter started better than we expected and we've also had a couple of tuck-in acquisitions. I would say customer behavior is really -- we haven't seen the pandemic -- we don't see reasons why the pandemic have significantly changed the way customers interact with us. While there certainly is some level of incremental desire for digital solution to be able to work with files remotely, they're continuing to send us boxes, they're continuing to rely on our services and we feel very good about where we are here as we move forward.

Yes. I think that's a good starting kind of overview. I use the word boxes there, I guess, maybe you can kind of address investor thoughts about the business becoming more digital and just needing less paper over time. I think we've seen through what you've reported that volumes continue to hold steady across your different business lines. But maybe you can kind of help investors understand the outlook for kind of paper storage and digital storage and how maybe digital offsets if paper's declining. I guess, just give us a sense of your view on that.

Sure. We think that as we look at the way customers are acting and operating with us over a long period of time, we expect volume in our core to be -- kind of continue the trends that we've been seeing both pre-pandemic and largely throughout the pandemic, which is that they're continuing to send us records to store. Certainly, the pandemic impacted the services, as I mentioned a moment ago, and it has resulted in some level of incremental adoption of our global digital solutions, which represented about, call it, 7% of total revenue at the end of last year. That business is growing quite quickly, as we mentioned on the first quarter call, and we expect it to generate at least an incremental $50 million of revenue this year alone. If you look at how our -- other elements of our growth strategy are playing out, we look at it and say we've got some very attractive growth markets, whether it be in data center, whether it be in secure IT, asset destruction and also our fine arts and entertainment businesses, all of which have been adding to our top line and our profits over the last few quarters. We expect to see accelerated enterprise growth as we move forward. We're certainly gaining traction in a variety of markets and how we go to market. Our global strategic accounts business has been a real significant driver of continuing to penetrate those deep customer relationships we already have with both broader penetration of our existing products and services and into broader geographic points within our customer base. So long story short, Nate, we expect our core volume to kind of continue in the level of trends that it's been in but to be significantly augmented by some of those other elements of volume, like consumer and our adjacent businesses, which have been nice adders to volume over the last few quarters. Together with that, we have very good revenue management in place. And our program there around pricing year in and year out, driving 2 to 3 points of price opportunity, is very strong and very stable. I noted on the last call that we expect to see a very nice contribution from pricing this year. And in fact, all of the benefits that are required in our guidance, all of the actions to drive those benefits were in place as of the end of the last quarter. So we feel very good about both what we're seeing from clients, how they're adopting our digital solutions and our continued opportunity to price.

Yes. The one thing I'd add, Nate, on the pricing that Barry talked about, so that pricing power is based on, number one, our competitive position, our customer fragmentation. And the amount of spend that we represent for each customer is relatively small compared to some other line items.

So if we're thinking maybe longer-term pricing on the storage side, are we talking in the range of 2%, plus or minus? Or does it fluctuate based on what's kind of coming up for renewal that year? Or what's kind of -- and so more to kind of say what's the same-store growth, so to speak, of the storage business? What would you -- how would you answer it, I guess?

Yes. Sure, Nate. So a couple of thoughts there. One, I'd say the team here on our revenue management program is very, very thoughtful, and they have been driving very nice incremental EBITDA and top line for some time. And as we look out in terms of the clients that we have and the various, if you will, cohorts, I don't see anything that would suggest that we can't continue to drive 2 to 3 points kind of consistently year in and year out. Frankly, there's been a lot of made about what's going on in the broader economy around inflation and things like that. I actually think that, that is a little bit of an incremental adder for us. It's certainly a positive as it relates to our revenue management program because, generally speaking -- and you follow the company well, our pricing strategy is to -- at that 2 to 3 points a year, that's generally kind of slightly below some of the benchmarks of other players that some of our customers might benchmark us against, like couriers, that might be in the 1 point or 2 even beyond that, albeit they probably peel back a touch. And so we have the ability to be consistent or just underneath those sorts of other competitive benchmarks on the logistics side and continue to drive very nice margin because, as you know, the vast majority of our margin is coming out of the storage business, which while it has some impact from things like inflation, our margin structure, both on the storage and the service, is very strong. So it gives us the opportunity to use pricing to continue to power incremental EBITDA going forward. And so those are some thoughts there.

I appreciate that. Maybe just a follow-up kind of on the word inflation. Obviously, you have a much larger labor force than most REITs. I guess what are you guys seeing on the ground right now in terms of supply for labor and maybe other input costs? And maybe you can kind of integrate what you're doing with projects on there right now and kind of where we are along that cost initiative.

Okay. Sure. A couple of questions in there. So I would say on cost inflation, we certainly embedded in our guidance, as I talked about on the fourth quarter call and again on the first quarter call, that we expected a level of inflation. The types of -- where we would see inflation as traditional wage and there will be some level of rent inflation, other costs, et cetera. Nothing that I've seen so far, Nate, this year or the projections that I've seen is substantially out of alignment with what we've put in the guidance. I feel very comfortable with where we are and what we -- the way we started planning the year in light of what we're seeing here, as I mentioned on the last call. And that's part of the reason why we were able to raise the guidance because the top line and the flow-through that we saw and profitability offset against the fact that we had already embedded a level of inflation. You are correct. We do employ a fair number of people. We have a great team with a lot of tenure on the team, a lot of very committed team members. But like every business, it's always important -- your team members are incredibly important, they're incredibly important to us. They're the face of our service to our customers, going into customers every day. So we're very focused on maintaining a very positive relationship with our workforce and looking at keeping up with and providing for that team. I would say as it relates to Project Summit, it is proceeding very well. As you know, last year, in the first quarter, we increased the expectation of the benefits from Project Summit and expect to generate about $375 million of EBITDA benefit. We generated about $165 million of that last year, and we expect to generate about $150 million more this year, with the balance in 2022. We expect to exit this year with the entire benefit in the run rate. And so in the first quarter, the team delivered about $50 million worth of benefit year-on-year. And much of that, by the way, showed up in cost of sales. I mentioned on the last call that I do think the team's performance in our gross margin is a real standout in the quarter. It's two factors, principally. It's, of course, our pricing and our revenue management program, which will continue to generate benefits through the year. And it's also Project Summit playing through on our cost of sales because, actually, our cost of sales were actually down year-on-year despite sales being up, which speaks to the fact that Project Summit is really creating a considerable amount of benefit on that cost of sales line. You'll recall last year, we talked a lot about service level agreement changes and ways to become more productive and more efficient in our cost of sales. We're certainly starting to see that come through on that line. And I expect to see that continue to occur throughout the year, Nate, and into next year. So we feel very good about where Project Summit is at this stage. And so thanks for that question.

No. I appreciate it. Maybe just one last one on the inflation topic. And you have the -- sometimes you get asked about paper pricing and the shred business. Just curious what you're putting in guidance for paper prices? And then I've also been asked in the past, is that even a business line that you could spin out just because of the volatility that it sometimes creates on EBITDA either positively in a good year or negatively in a bad pricing year?

Yes. Sure. So for this year, for 2021, we embedded about a $10 million headwind from paper in our guidance, Nate. And the largest impact in the quarter year-on-year would be in the second quarter because you'll recall last year, around this time, people were starting to try to -- or maybe beyond starting, they were stockpiling toilet paper and various other things like that. And we certainly did see prices for recycled paper go up dramatically in that March to April, May time frame. I believe May was -- Greer can correct me, I think May was the peak and it tapered a little bit in April before coming off in the back half of 2020 some, back to kind of parity with where it started the year. This year -- so you've got -- we had a little bit of impact in the first quarter, we'll have more of the impact in the second quarter and that will become less of an impact based on where we're projecting paper prices to go for the remainder of the year. I never comment generally on potential M&A or divestitures, Nate, but I would say that it is certainly a business that the team is operating very well with. We've driven considerable amount of efficiencies in the shredding operation. And while it was also, like all of our services, impacted during the pandemic, it has certainly also been coming back month-by-month, quarter-by-quarter as we've seen more and more client activity. And my guess is, as more folks get into office, there'll be even -- that business has the potential to come back even more because, as you know, that business for us has multiple lines of business, if you will, both on the destruction side as well as taking third-party paper and recycling.

No, that's helpful. Maybe we can switch to one of the higher growth areas of the business, just data centers. I think some people that follow you may track data centers closely. They may not. So maybe you could just give a kind of overview of what's the percent of business today that's related to DCs? Where do you maybe see that in 5 years? And maybe just speak to kind of the demand and pricing dynamics that you're seeing today in the markets that you're currently operating in.

Sure. So it's, round numbers, high-single-digit, call it, 6%, 7% of sales; higher percentage of our EBITDA, closing in on 10%. And over time, Nate, we see the opportunity for our data center business to become a larger and larger slice of the total company. That certainly is the goal of the strategy. As you know, we've been significantly increasing our capacity. We had almost a 20% increase in total megawatt capacity in the last quarter, thanks to improvement in our relative density in our Northern Virginia campus as well as an increasing -- a large parcel that we picked up. And then we've seen very strong improvement in customer demand over the last 1.5 years, 2 years. The team is doing a great job in our data center business as it relates to aggregating customers, and our bookings trajectory throughout last year and into this year has been strong. The other -- one of the really nice things about that business is, it gives, as you know, very good forward visibility. So while the first quarter, on a revenue basis, was up about 6% reported, we have strong visibility that we'll be able to deliver the revenue guidance that we gave for our data center business this year, which is kind of that low double digits into mid-teens, and with increasing rates of growth in the second quarter and beyond because we've got good confidence and visibility into when the bookings from last year will commence, and that's mostly a second quarter and second half element. So we feel very good about where the general data center business is headed. And then on a geographic basis, as you know, we've got exposure to several markets and we have a global footprint. So we've got good exposure in North America in the form of Arizona, in Northern Virginia, New Jersey, a few other locations. And then we're in the process of building our new facility, which we've joint ventured in Frankfurt. We've got a great facility in Amsterdam. We've got a growing and a second facility in London started. And then we also have exposure in Singapore. And recently, we made a strategic investment in Web Werks in India, which gives us a platform over time. We're currently a minority investor in that but with the opportunity, over the next couple of years, to get into a majority position. We really like the markets we're exposed to, and including India, which is a market that we've been looking for the right partner to enter that market for the better part of 4 or 5 years. As you know, on the records management side, we have, call it, 2,500 employees in India, all in, between our corporate infrastructure and our record management program, and we've been operating in that market for a long, long time. So we know the market. We have a large base of clients, and so we're really excited to open the data center business up there for us. We think that's another long-term secular growth play.

And Nate, just to answer your question in terms of pricing. In the markets that we're currently exposed to, what we've seen has actually been stable to slightly up, if you want to kind of exclude any one-off mark-to-markets that have resulted from some legacy acquisitions, but we feel relatively good about where the pricing is right now.

Okay. Maybe the one thing that might be different about you guys compared to the other data center companies is that you have so many customers in the storage business that you could potentially cross-sell to. So maybe you could just speak to how much of that data center leasing would you describe as achieved from maybe that cross-selling opportunity and maybe how it helps you get more leasing than you otherwise would.

Yes. So I think that is a very key part of the story, Nate, because we have been doing business with so many clients for such a long period of time. As a company, Iron Mountain is very much trusted by its clients. That's why they continue to send us records and have done business with us for such a long period of time. And obviously, on the data center side, trust and confidence in your supplier is critically important. In addition, as you know, from both that client base as well as how we operate with clients, whether it be records management, data management, et cetera, we have the ability to pass very good warm leads over to our data center sales force. And on our retail colo, and Greer can keep me honest on this, it would be something in the vicinity of 35% to 40% of our leads in our pipeline is coming over on a cross-sell directly. And even more so, if you look at, say, on the hyperscale side, while we -- those are already -- many of them are already clients for us in other parts of our business. If I added that on top, that would just speak even further to the cross-sell opportunity. But if you look at specifically within the pipeline of more of our retail colo business, it would be at that level. And I think that's an element that others in the industry just can't replicate.

That's helpful. Maybe you can talk about -- because, obviously, it's a high growth area for the company, and you've done some JVs, like you did a big JV in Frankfurt, maybe you can just -- and that was at an earlier stage, and you continue to get bigger and you're going to continue to get bigger. How are you guys viewing retaining data center capacity on balance sheet versus maybe giving it up, so to speak, to a JV? Because you do have a lot of capital sources you can use now to kind of fund the business. So I'm just kind of curious, going forward, if you put stuff into a JV, it limits that percentage of the business that's DCs, and that's growing well. So has the view changed at all over the last maybe 2 years on the thinking on that? Or maybe just speak to your use of the JVs on the data center side.

Yes. It's a good question, Nate. Thank you. I would say that the view hasn't evolved. But what you saw in Frankfurt is a unique situation whereby we said, okay, the dynamics of that deal were such that it made sense to joint venture. But let me be very clear, our goal is to have data center become a larger and larger piece of our company. And to your point, keeping it on balance sheet is the, if you will, fastest way to do that. Now I'd never say never. If there are unique opportunities where it might make sense from a specific of a unique deal, like Frankfurt, would we joint venture again? That's conceivable. But the vast majority of our focus is on building our data center business, top line and bottom line, on balance sheet. And so when we look at -- so you might ask, well, what are some of the unique elements of Frankfurt. Well, that was a fully leased up, very long-term deal with a single hyperscale player in a market that we hadn't even broken ground on -- it was just barely just beginning to break ground, I should say. And together with where the financing market was and the interest in the specifics of the client relationship, it made sense to generate a very nice return and then recycle that capital into our other data center growth. But I don't foresee a lot of situations like that. Again, never say never. We do see the opportunity to really build our data center business, and that's one of the reasons why we made the investments we did here recently in terms of purchasing additional land and continuing to build out our capacity. And together with that, I'll say, and this may be part of what's behind your question, we have continued to find, and I think we will continue to find, very ample means to fund our growth, whether that be in the form of industrial recycling or otherwise. I feel very confident in our capability to continue to plow considerable amounts of money into our data center development within our existing capital allocation frame, which includes, over time, lowering our relative debt.

Yes. That's helpful. Maybe you could just speak to the wall of capital that's behind the JV curtain, so to speak. So if, for example, the capital markets seized up, the public capital markets, and you wanted to continue the business, maybe you could just talk to what the amount of capital is behind a potential JV so you could continue to build out data centers even if the other sources were not at your disposal. And I guess maybe the question would be, the partner you used for Frankfurt, would they -- I think Bill might have made the comment on one of the calls that they would be open to doing stuff in many markets with you if it made sense. So go ahead.

So I'm a little reticent to speak on behalf of anybody else or any specific financing sources, as you would appreciate, but I'll answer it this way. We ran a competitive process when we did the Frankfurt joint venture, and we had a tremendous amount of interest in the asset. We had a tremendous amount of -- and very deep pockets. As you know, there is a considerable amount of capital with relatively lower return expectations just based on where their capital is coming from, and there were very significant ample sources of capital for that asset and then some. And from my passing glance at what's continued to go on in the industry as well as just inbound inquiries, I would say that, that interest is definitely still there, if not building. And so that said, I would say, maybe an even more important part of the answer is I don't see joint venturing data center as being a requisite to continue to build our development pipeline. We're dedicating $300 million plus this year to data center development alone. That's not even including the Web Werks investment. And that's thanks to the fact that we're continuing to grow EBITDA, and our Project Summit is working very well and we've got a very strong cash-generative business in this company. And so we feel very confident in our ability to build out the data center pipeline, maintain our dividend at this sustainable level and lower leverage. And I think that's going to be a very winning proposition.

Yes. No, that's helpful. I mean maybe you can just expand on the dividend, you mentioned it there at the end. And obviously, there's -- sometimes we get questions about why don't they just cut the dividend in half, the yield is higher than it needs to be compared to the data center comps and that's hundreds of millions of dollars they could potentially use to fund the data center growth. So why, I guess, not do it? And so, I guess, what would be your response?

Well, so we certainly were getting more of those questions about a year ago, but I haven't had that question too many times -- actually at all real recently. However, my answer is kind of the same. We feel very good about where the dividend is at this level. It's a very sustainable level for the company. We certainly have investors that are invested partly for the dividend, and we appreciate that. The dividend is important to us. And we continue to see the opportunity to glide into our targeted payout range, which is, I think, low to mid-60s as a percent of AFFO. Now, last year, obviously, we were appreciably higher than that what with the pandemic. And if you work through my forward guidance this year, we'll make nice progress into the probably low- to mid-70s as a percent. And then over the next couple of years, as we finish up Summit and continue to grow top line and EBITDA and then that flows through to AFFO, I expect, over the next couple of years, we'll get into that targeted range. And the important part about that is, at that point, the dividend will start to grow again with the growth in AFFO because that will be our target payout range. I would say, incidentally, that also would approximate, roughly speaking, the REIT minimum. So the opportunity, if you will, over the very transitory period to have possibly reduced the dividend to use some incremental proceeds to fund something, that would have been temporary in nature if we had pursued it. And we didn't view it as necessary. As you can see over the last, call it, 18 months, we've been able to invest in our development, find additional sources of capital through industrial recycling and what have you, together with growing EBITDA. So we really feel the dividend -- we're very confident in the dividend. It's very sustainable at this level. And over the next couple of years, we'll get down into our targeted payout ratio, and then we'll start to grow it again.

Okay. Yes, that's helpful. I think you also mentioned the industrial sales in there. How much do you have to sell? How much are you willing to sell longer term? I guess how many years do you kind of have where you can use that as a funding source, I guess? I know it's a large piece right now. So it's seemingly many, many years if you were to continue to sell at the pace you are. But maybe you can just give us some context in just what pricing has been. I mean we know that industrial pricing has been really strong, but what have you seen, I guess, this year?

Sure. So we certainly see recycling of industrial assets as one of the levers to fund growth. We like that trade because of where cap rates are, as you alluded to in the question. When you look at the value of our global portfolio, you'd be thinking something well north of $2 billion, maybe even pressing $2.5 billion or more, and that's after the recent sales. And then if you look at our target for industrial recycling, I would say we'll certainly give you guidance year by year. But as I mentioned at the beginning of this year, we expected to recycle about $125 million this year. Going forward, that's probably not a bad place to put a mark for the next few years. Of course, it's always dependent upon what the market is for industrial assets. But the direction that pricing has been going, we feel really good about the opportunity to recycle a relatively small portion of our industrial assets and then put that money to work into higher IRR projects like data center. An important part of our industrial asset recycling program, Nate, is that we maintain long-term control of the facilities. So in this market, we have the ability to offer one or a portfolio of properties together with what we accept as a lease. So these are sale/leasebacks, but they're leasebacks in a form that give us effective control for a very long period of time, think kind of 10-year leases with multiple renewal options at our option on terms that we like as it relates to escalators and others. So we effectively have control, and we get the capital now to go invest in our development pipeline. In terms of where cap rates have been, of course, it varies some by market and what you have to offer. But broadly speaking, they certainly have been coming down. You've seen the kind of levels that we hit with our recycling last year. Our team there and the real estate group has done a great job, I think, like sub-4.5% cap rate on our larger recycling last year. So at that level, we feel it's super compelling to continue to do that, and you should expect us to be doing that this year.

Okay. Yes, that's helpful color on that. I think, last week, you had that announcement that you sold the IPM business. How many more things are there like that, I guess, that you could maybe sell as a capital source? Or how should we think about that sale, I guess?

Yes. Thank you, Nate. So we did announce the proposed divestiture of our software escrow business, which we call intellectual property management business. It's a relatively small business in the scheme of Iron Mountain. You probably haven't heard us talk about it too much over the years. It's, call it, $33 million of revenue, good margin business. From the standpoint of the way we look at that, it was somewhat unique in our portfolio. When we look at the vast majority of our business, it's very complementary, things go together. Obviously, we're the largest player in records management. We've got emerging good-sized growing data center business, et cetera. So the IPM business was a little bit unique, and we had contemplated over time the opportunity to divest it or how to monetize it better. But we wanted to make sure that we got a deal that we felt very good about in terms of the price and also the buyer in terms of kind of, if you will, taking care of the team and the business that's transferring over. So the way to think about it is, I would say, it's a one-off unique opportunity where we had a part of our business that was really noncore. And when we look at the growth profile for software escrow over the next few years, we felt that the value we could generate through a sale at this time and then to dedicate a portion of those proceeds into our development pipeline was a very good trade for us. So we were very pleased to get the deal done. The team did a great job with that. We haven't closed the deal, as you know, it's pending. But we expect it to close this quarter.

Okay. Yes, thanks for kind of the details on that. Maybe kind of just to put a bow in the capital funding bucket. There's certainly people that ask us about the likelihood of any equity issuance at these levels just given that you're at all-time highs. I think yesterday, I know you had a response on the last quarterly call, but I think it would be helpful for those who maybe didn't hear it to hear it again from you.

I appreciate that. And I think you asked me that question on the last quarterly call as well. So you gave me a good practice here. I would say, first thing, Nate, is we feel very good about our plan and our ability to fund our growth within that plan. And that's a plan that's built off of growth in EBITDA, driven off of the team's performance on continuing to improve sales as well as drive profitability through our Project Summit. That is having very significant impact on our business, and we see the opportunity to continue to price, as we've talked about on this call. And as you know, the business is highly cash generative, so there's a lot of cash coming out of that business and increasingly so going forward. Secondly, we are augmenting our EBITDA growth with respect to things like capital recycling, call it, $125 million or so this year. We just talked about the IPM transaction, which will be another adder to incremental cash for development this year. So I think in light of where our cap rates are, in light of where our business is trending, in light of the Project Summit benefits, we feel very good about the framework we have to fund our growth. And so I guess I'd never say never, but I just don't see a need or an interest in equity.

Okay. That's helpful. Maybe just a high-level one that I think we might have skipped over in the beginning is just, for the storage business, how should we think about volumes globally, just the U.S. versus international? Just maybe it'd be helpful for people to get a sense of the maybe unvended opportunity that's out there. And the federal piece, that used to dominate calls a few years ago when I covered you guys. Has there been any -- because they had to freeze the footprint, I think, years ago. And just curious, is there anything that's changed with the new administration that would maybe unlock some things there? And then even on the data center side, I think -- maybe you can speak to if you do any business with the federal government or contractors because I think some of the other data center providers would say that the federal builds in data center are generally higher yielding just given the specs that are required. So I know there was a lot in that question, but...

There was, and I'll let Greer help me out if I miss any of it. But look, in total, for this year, we expect our organic volume to be flat to slightly up. Now that's driven off of our core being flat to slightly down. You saw, in the most recent quarter, we saw improving trends in terms of volume on the core. It was down but down a lot less than, let's say, the trends from last year, and we expect that we will perform this year in a better fashion as we come out of the pandemic than the prior year. In addition, we had good performance, as I mentioned earlier in the conference call, on consumer and our adjacent businesses. Geographically, Nate, the trends have been very consistent with the prior periods and over the last couple of years. While there is some level of wobble in light of where the pandemic is and the relative coming out of it, I would say directionally, we haven't seen any significant change in geographic trends. And I could say the same, by the way, as it relates to pricing. We've been able to price pretty much everywhere. We don't generally comment on individual clients or verticals within, like, for example, your question about federal within data center, but I will say the unvended opportunity that you're asking about, we think, is a very large one. The federal government is generally a very large one as well. That's been a tougher nut to crack, but the team is continuing to work on it. And when we look out and say, globally, how much volume is out there that's unvended, it is a considerable amount. And I think as a lot of investors sometimes ask about digital transformation and things coming out of the pandemic, I think there's also an opportunity there for clients to potentially consider more vended solutions in light of -- as they think about what they're doing with their own office space. So I am very bullish on the opportunity as it relates to our total volume in light of some of the secular growth plays that we have together with keeping our expectations on core, kind of in that same vicinity that I was speaking to a moment ago. Greer, did you want to add anything?

Yes, I mean the only thing I'd add is, Nate, if you just look at the kind of the total market, you can focus on North America right now, it's about 2 billion cubic feet is the estimate. There's about 720 million of that unvended. So there's that opportunity. And I'd just point out that does not include federal, which we size at about another 125 million to 130 million cubic feet. If you just think about our North American business, it's north of 400 million cubic feet. So that gives you an idea of the opportunity.

Okay. That's helpful. I mean I think we're up against the time here, but is there anything that we didn't touch on that has been top of mind with investors lately or anything else that you wanted to convey that maybe I didn't ask?

I think we covered a lot of ground, Nate. I appreciate you inviting us. We feel very good about where the business is at this point. We had a good start to the year. We feel good about our trajectory. We've got emerging -- we talked a little bit about the fact that our total addressable market has expanded appreciably over the last few years in light of some of the new products and services that our team has brought to market. Our data center business continues to track very well, and we see the opportunity this year to build out our development considerably while lowering our leverage modestly year-on-year. So we feel very good about where we are at, and we feel very good about the next several years.

Okay. I appreciate the time. Thank you.

Thank you.

Thank you.