INXN InterXion Holding NV

Interxion Holding NV (NYSE: INXN), a leading European provider of carrier and cloud neutral colocation data centre services, today announced its results for the three months ended 30 June 2013.

Financial Highlights

• Revenue increased by 13% to €76.5 million (Q2 2012: €68.0 million)
• Big 4 reporting segment recurring revenue increased by 18% to €45.2 million (Q2 2012: €38.4 million)
• Adjusted EBITDA increased by 18% to €32.7 million (Q2 2012: €27.8 million)
• Adjusted EBITDA margin increased to 42.8% (Q2 2012: 40.8%)
• Net profit decreased by 24% to €6.6 million (Q2 2012: €8.7 million)
• Capital expenditure, including intangible assets, was €28.8 million
• Debt structure refinanced subsequent to quarter end to reduce interest costs and extend maturities

Operating Highlights

• Expansion projects in Copenhagen and Stockholm completed
• Equipped Space increased by 800 square metres in Q2 2013 to 78,900 square metres
• Revenue Generating Space increased by 1,200 square metres in Q2 2013 to 58,200 square metres
• Utilisation Rate at the end of the quarter increased to 74%
• New expansion projects in Stockholm, Vienna, and Zurich announced today

“Interxion’s second quarter results reflect solid execution against our market segmentation strategy, which has delivered sustained, profitable growth despite the effects of a continued unfavourable macroeconomic environment,” said Interxion Chief Executive Officer, David Ruberg. “Growth in our communities of interest and structural drivers, such as the onset of migration to cloud computing, are underpinning continued demand for Interxion’s highly connected data centres.”

Quarterly Review

Revenue in the second quarter of 2013 was €76.5 million, a 13% increase over the second quarter of 2012 and 3% up on the first quarter of 2013. Recurring revenue, which was 94% of total revenue, was €72.2 million, a 15% increase over the second quarter of 2012 and 2% up on the first quarter of 2013. Recurring revenue in the Big 4 markets was €45.2 million, an 18% increase over the second quarter of 2012 and 2% up on the first quarter of 2013.

Cost of sales in the second quarter of 2013 was €31.3 million, an 11% increase over the second quarter of 2012 and 6% up on the first quarter of 2013.

Gross profit was €45.2 million in the second quarter 2013, a 14% increase over the second quarter of 2012 and 1% up on the first quarter of 2013. Gross profit margin in the second quarter of 2013 was 59.1%, compared with 58.5% in the same quarter of 2012 and 60.2% in the first quarter of 2013.

Sales and marketing costs in the second quarter 2013 were €5.5 million, an 18% increase over the second quarter of 2012 but 0.1% lower than the first quarter of 2013.

General and administrative costs1 in the second quarter 2013 were €7.0 million, a decrease of 5% compared with the second quarter of 2012 and 8% lower than the first quarter of 2013. Depreciation and amortisation in the second quarter 2013 was €14.9 million, a 46% increase over the second quarter of 2012 and 6% up on the first quarter of 2013.

Net financing costs in the second quarter of 2013 were €7.3 million, an increase of 89% compared with the second quarter of 2012, and 14% up on the first quarter of 2013, and was primarily the result of a reduction in capitalized interest in the quarter.

Net profit was €6.6 million in the second quarter 2013, a decrease of 24% compared with the second quarter of 2012, while earnings per share were €0.10 on a weighted average of 69.4 million diluted shares, compared with €0.13 on a weighted average of 68.0 million diluted shares in the second quarter of 2012.

Adjusted EBITDA in the second quarter of 2013 was €32.7 million, up 18% year-on-year. Adjusted EBITDA margin increased to 42.8%, compared with 40.8% in the second quarter of 2012.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €24.1 million in the second quarter 2013 compared to €29.4 million in the second quarter 2012. Capital expenditure, including intangible assets, was €28.8 million in the second quarter of 2013, compared to €42.6 million in the second quarter 2012.

Cash and cash equivalents were €59.8 million at 30 June 2013, down from €68.7 million at year-end 2012. Total borrowings were €304.0 million at the end of the second quarter 2013 compared with €288.1 million at the end of 2012. During the quarter, the company entered into a €6 million mortgage in connection with one of its data centres in Amsterdam.

In July 2013, after the quarter ended, Interxion closed a refinancing transaction that replaced its €260 million 9.50% Senior Secured Notes with €325 million 6.00% Senior Secured Notes and replaced its €60.0 million revolving credit facility with a €100.0 million revolving credit facility.

Equipped Space at the end of the second quarter 2013 was 78,900 square metres, compared with 65,300 square metres at the end of the second quarter of 2012 and 78,100 square metres at the end of the first quarter of 2013. Revenue Generating Space at the end of the second quarter 2013 was 58,200 square metres, compared with 48,600 square metres at the end of the second quarter of 2012 and 57,000 square metres at the end of the first quarter of 2013. Utilisation rate, the ratio of Revenue Generating Space to Equipped Space, was 74% at the end of the quarter, the same as the second quarter of 2012 and up from 73% at the end of the first quarter of 2013.

Interxion is expanding three other data centres in its Rest of Europe segment:

In Stockholm, Interxion is constructing the second phase of STO 2 (STO 2.2) in response to continued demand in Stockholm. STO 2.2 will provide approximately 500 square metres of Equipped Space and is scheduled to be operational in the first quarter of 2014;

In Vienna, Interxion has constructed the fourth phase of VIE 1 (VIE 1.4) due to continued demand from financial services and cloud communities of interest. VIE 1.4 became operational in the third quarter of 2013 and provides approximately 400 square metres of Equipped Space;

In Zurich, Interxion is constructing the fourth phase of ZUR 1 (ZUR 1.4) in response to continued demand. ZUR 1.4 will provide approximately 500 square metres of Equipped Space and is scheduled to become operational in the fourth quarter of 2013.

The capital expenditure associated with these projects is approximately €11 million and are included in the company’s 2013 capex guidance.

Business Outlook

Interxion today reaffirmed its guidance for 2013:

  Revenue €307 million - €322 million Adjusted EBITDA €130 million - €140 million Capital expenditure (including intangibles) €130 million - €150 million  

Conference Call to Discuss Results

The company will host a conference call today at 8:30am ET (1:30pm BST, 2:30pm CET) to discuss the results.

To participate on this call, U.S. callers may dial toll free 1-866-966-9439; callers outside the U.S. may dial direct +44 (0) 1452 555 566. The conference ID for this call is 16893130. This event also will be webcast live over the Internet in listen-only mode at investors.interxion.com.

A replay of this call will be available shortly after the call concludes and will be available until 13 August 2013. To access the replay, U.S. callers may dial toll free 1-866-247-4222; callers outside the U.S. may dial direct +44 (0) 1452 550 000. The replay access number is 16893130.

Forward-looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the difficulty of reducing operating expenses in the short term, inability to utilise the capacity of newly planned data centres and data centre expansions, significant competition, the cost and supply of electrical power, data centre industry over-capacity, performance under service-level agreements, and other risks described from time to time in Interxion's filings with the Securities and Exchange Commission. Interxion does not assume any obligation to update the forward-looking information contained in this press release.

Use of Non-IFRS Information

EBITDA is defined as operating profit plus depreciation, amortization and impairment of assets. We define Adjusted EBITDA as EBITDA adjusted to exclude share-based payments, increase/decrease in provision for onerous lease contracts, and income from sub-leases on unused data centre sites. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue. We present EBITDA, Adjusted EBITDA and Adjusted EBITDA margin as additional information because we understand that they are measures used by certain investors and because they are used in our financial covenants in our current €100 million revolving credit facility and €325 million 6.00% Senior Secured Notes that were issued on 3 July 2013. However, other companies may present EBITDA, Adjusted EBITDA and Adjusted EBITDA margin differently than we do. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance under IFRS and should not be considered as an alternative to operating profit or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measure of performance derived in accordance with IFRS.

A reconciliation from Net profit to EBITDA and EBITDA to Adjusted EBITDA is provided in the notes to our consolidated income statement included elsewhere in this press release.

Interxion does not provide forward-looking estimates of Net profit, Operating profit, depreciation, amortisation, and impairments, share-based payments, or increase/decrease in provision for onerous lease contracts, and income from sub-leases on unused data centre sites, which it uses to reconcile to Adjusted EBITDA. The company is, therefore, unable to provide forward-looking reconciling information for Adjusted EBITDA.

About Interxion

Interxion (NYSE: INXN) is a leading provider of cloud and carrier-neutral colocation data centre services in Europe, serving a wide range of customers through 34 data centres in 11 European countries. Interxion’s uniformly designed, energy-efficient data centres offer customers extensive security and uptime for their mission-critical applications. With connectivity provided by over 450 fixed and mobile carriers and ISPs and 18 European Internet exchanges, Interxion has created cloud, content, finance and connectivity hubs that foster growing customer communities of interest. For more information, please visit www.interxion.com.

1 excluding depreciation, amortisation, impairments, increase/(decrease) in provision for onerous lease contracts, and share-based payments

  INTERXION HOLDING NVCONSOLIDATED INCOME STATEMENT(in €'000 ― except per share data and where stated otherwise)(unaudited)         Three Months Ended Six Months Ended Jun-30 Jun-30 Jun-30 Jun-30 2013 2012 2013 2012   Revenue 76,527 68,004 150,906 133,816 Cost of sales (31,294 ) (28,230 ) (60,909 ) (54,729 ) Gross profit 45,233 39,774 89,997 79,087 Other income 70 114 193 232 Sales and marketing costs (5,492 ) (4,664 ) (10,987 ) (9,514 ) General and administrative costs (22,751 ) (18,493 ) (45,367 ) (36,014 )         Operating profit 17,060 16,731 33,836 33,791 Net finance expense (7,330 ) (3,876 ) (13,781 ) (8,311 )         Profit before taxation 9,730 12,855 20,055 25,480 Income tax expense (3,130 ) (4,131 ) (6,485 ) (8,060 ) Net profit 6,600   8,724   13,570   17,420     Basic earnings per share: (€) 0.10 0.13 0.20 0.26 Diluted earnings per share: (€) 0.10 0.13 0.20 0.26     Number of shares outstanding at the end of the period (shares in thousands) 68,667 67,599 68,667 67,599 Weighted average number of shares for Basic EPS (shares in thousands) 68,533 67,140 68,380 66,741 Weighted average number of shares for Diluted EPS (shares in thousands) 69,375 68,021 69,224 67,693     As at Jun-30 Jun-30

Capacity metrics

2013 2012 Equipped space (in square meters) 78,900 65,300 Revenue generating space (in square meters) 58,200 48,600 Utilisation rate 74 % 74 %     INTERXION HOLDING NVNOTES TO CONSOLIDATED INCOME STATEMENT: SEGMENT INFORMATION(in €'000 ― except where stated otherwise)(unaudited)         Three Months Ended Six Months Ended Jun-30 Jun-30 Jun-30 Jun-30 2013 2012 2013 2012

Consolidated

  Recurring revenue 72,194 62,867 143,150 125,146 Non-recurring revenue 4,333   5,137   7,756   8,670   Revenue 76,527   68,004   150,906   133,816   Adjusted EBITDA 32,731   27,766   64,404   55,102   Gross margin 59.1 % 58.5 % 59.6 % 59.1 % Adjusted EBITDA margin 42.8 % 40.8 % 42.7 % 41.2 %   Total assets 838,198 774,738 838,198 774,738 Total liabilities 447,890 416,989 447,890 416,989

Capital expenditure, including intangible assets(i)

(28,779 ) (42,572 ) (61,568 ) (103,672 )  

France, Germany, the Netherlands, and the UK

  Recurring revenue 45,187 38,446 89,635 76,459 Non-recurring revenue 3,064   3,907   5,202   6,199   Revenue 48,251   42,353   94,837   82,658   Adjusted EBITDA 26,037   21,828   51,204   43,405   Gross margin 62.1 % 60.2 % 62.6 % 61.3 % Adjusted EBITDA margin 54.0 % 51.5 % 54.0 % 52.5 %   Total assets 567,593 494,213 567,593 494,213 Total liabilities 131,080 99,136 131,080 99,136

Capital expenditure, including intangible assets(i)

(21,028 ) (34,562 ) (41,721 ) (87,055 )  

Rest of Europe

  Recurring revenue 27,007 24,421 53,515 48,687 Non-recurring revenue 1,269   1,230   2,554   2,471   Revenue 28,276   25,651   56,069   51,158   Adjusted EBITDA 14,727   13,476   29,191   26,884   Gross margin 61.4 % 61.5 % 61.4 % 61.4 % Adjusted EBITDA margin 52.1 % 52.5 % 52.1 % 52.6 %   Total assets 203,229 189,219 203,229 189,219 Total liabilities 39,935 40,837 39,935 40,837

Capital expenditure, including intangible assets(i)

(7,305 ) (6,848 ) (18,554 ) (14,771 )  

Corporate and other

        Adjusted EBITDA (8,033 ) (7,538 ) (15,991 ) (15,187 )   Total assets 67,376 91,306 67,376 91,306 Total liabilities 276,875 277,016 276,875 277,016

Capital expenditure, including intangible assets(i)

(446 ) (1,162 ) (1,293 ) (1,846 )    

(i) Capital expenditure, including intangible assets, represents payments to acquire property, plant and equipment and intangible assets, as recorded in the consolidated statement of cash flows as "Purchase of property, plant and equipment" and "Purchase of intangible assets," respectively.

    INTERXION HOLDING NVNOTES TO CONSOLIDATED INCOME STATEMENT: ADJUSTED EBITDA RECONCILIATION(in €'000 ― except where stated otherwise)(unaudited)         Three Months Ended Six Months Ended Jun-30 Jun-30 Jun-30 Jun-30 2013 2012 2013 2012    

Reconciliation to Adjusted EBITDA

 

Consolidated

  Net profit 6,600 8,724 13,570 17,420 Income tax expense 3,130   4,131   6,485   8,060   Profit before taxation 9,730 12,855 20,055 25,480 Net finance expense 7,330   3,876   13,781   8,311   Operating profit 17,060 16,731 33,836 33,791 Depreciation, amortization and impairments 14,916   10,236   28,927   19,891   EBITDA 31,976 26,967 62,763 53,682 Share-based payments 825 913 1,834 1,652 Income from sub-leases on unused data center sites (70 ) (114 ) (193 ) (232 ) Adjusted EBITDA 32,731   27,766   64,404   55,102    

France, Germany, the Netherlands, and the UK

  Operating profit 16,314 16,004 32,226 32,213 Depreciation, amortization and impairments 9,784   5,776   18,907   11,101   EBITDA 26,098 21,780 51,133 43,314 Share-based payments 9 162 264 323 Income from sub-leases on unused data center sites (70 ) (114 ) (193 ) (232 ) Adjusted EBITDA 26,037   21,828   51,204   43,405    

Rest of Europe

  Operating profit 10,242 9,486 20,417 19,181 Depreciation, amortization and impairments 4,411   3,883   8,594   7,489   EBITDA 14,653 13,369 29,011 26,670 Share-based payments 74   107   180   214   Adjusted EBITDA 14,727   13,476   29,191   26,884    

Corporate and Other

  Operating profit/(loss) (9,496 ) (8,759 ) (18,807 ) (17,603 ) Depreciation, amortization and impairments 721   577   1,426   1,301   EBITDA (8,775 ) (8,182 ) (17,381 ) (16,302 ) Share-based payments 742   644   1,390   1,115   Adjusted EBITDA (8,033 ) (7,538 ) (15,991 ) (15,187 )     INTERXION HOLDING NVCONSOLIDATED BALANCE SHEET(in €'000 ― except where stated otherwise)(unaudited)             As at Jun-30 Dec-31 2013 2012 Non-current assets Property, plant and equipment 639,788 620,931 Intangible assets 18,055 18,638 Deferred tax assets 28,957 30,376 Financial fixed assets 774 774 Other non-current assets 4,679   4,959   692,253 675,678 Current assets Trade and other current assets 86,102 74,854 Cash and cash equivalents 59,843   68,692   145,945   143,546   Total assets 838,198   819,224     Shareholders’ equity Share capital 6,867 6,818 Share premium 482,128 477,326 Foreign currency translation reserve 5,665 9,403 Hedging reserve 51 - Accumulated deficit (104,403 ) (117,973 ) 390,308 375,574 Non-current liabilities Trade payables and other liabilities 11,097 11,194 Deferred tax liabilities 2,605 2,414 Provision for onerous lease contracts 6,426 7,848 Borrowings 302,191   288,085   322,319 309,541 Current liabilities Trade payables and other liabilities 115,644 127,778 Income tax liabilities 4,193 2,301 Provision for onerous lease contracts 3,948 3,978 Borrowings 1,786   52   125,571   134,109   Total liabilities 447,890   443,650   Total liabilities and shareholders’ equity 838,198   819,224       INTERXION HOLDING NVNOTES TO THE CONSOLIDATED BALANCE SHEET: BORROWINGS(in €'000 ― except where stated otherwise)(unaudited)     As at Jun-30 Dec-31 2013 2012    

Borrowings net of cash and cash equivalents

 

Cash and cash equivalents(iii)

59,843   68,692    

9.50% Senior Secured Notes due 2017(iv)

256,659 256,268 Mortgages 25,257 9,903 Financial leases 20,456 20,361 Other borrowings 1,605   1,605   Borrowings excluding Revolving Credit Facility deferred financing costs 303,977   288,137  

Revolving credit facility deferred financing costs(v)

(1,165 ) (1,371 ) Total borrowings 302,812   286,766      

Borrowings net of cash and cash equivalents(vi)

242,969   218,074      

(iii) Cash and cash equivalents include €4.9 million as of June 30, 2013 and €5.0 million as of December 31, 2012, which is restricted and held as collateral to support the issuance of bank guarantees on behalf of a number of subsidiary companies.

(iv) €260 million 9.50% Senior Secured Notes due 2017 include premium on additional issue and are shown after deducting underwriting discounts and commissions, offering fees and expenses.

(v) Deferred financing costs of €1.2 million incurred in connection with the €60 million revolving credit facility.

(vi) Deferred financing fees of €2.5 million incurred up to 30 June 2013, related to the refinancing completed on 3 July 2013 are not presented in the table. On 3 July 2013, €325 million 6.0% Senior Secured Notes due 2020 were issued. The proceeds were used to purchase and repay the 9.5% Senior Secured Notes due 2017. In addition, the €60 million revolving credit facility was replaced by a new €100 million revolving credit facility.

    INTERXION HOLDING NVCONSOLIDATED STATEMENT OF CASH FLOWS(in €'000 ― except where stated otherwise)(unaudited)         Three Months Ended Six Months Ended Jun-30 Jun-30 Jun-30 Jun-30 2013 2012 2013 2012     Profit for the period 6,600 8,724 13,570 17,420 Depreciation, amortization and impairments 14,916 10,236 28,927 19,891 Unwinding provision for onerous lease contracts (805 ) (794 ) (1,631 ) (1,579 ) Share-based payments 825 913 1,834 1,652 Net finance expense 7,330 3,876 13,781 8,311 Income tax expense 3,130   4,131   6,485   8,060   31,996 27,086 62,966 53,755 Movements in trade and other current assets (2,017 ) 3,142 (8,804 ) (3,785 ) Movements in trade and other liabilities (5,882 ) (862 ) (6,470 ) 4,815   Cash generated from operations 24,097 29,366 47,692 54,785 Interest paid (vii) (1,140 ) (157 ) (11,171 ) (10,131 ) Interest received 2 172 287 320 Income tax paid (1,634 ) (1,591 ) (2,070 ) (2,302 ) Net cash flows from operating activities 21,325 27,790 34,738 42,672 Cash flows from investing activities Purchase of property, plant and equipment (28,553 ) (41,528 ) (59,473 ) (101,223 ) Purchase of intangible assets (226 ) (1,044 ) (2,095 ) (2,449 ) Acquisition financial asset -   -   -   (774 ) Net cash flows from investing activities (28,779 ) (42,572 ) (61,568 ) (104,446 ) Cash flows from financing activities Proceeds from exercised options 1,132 2,554 2,743 5,104 Proceeds from mortgages 5,703 - 15,324 - Senior Secured Notes and RCF - (955 ) - (955 ) Other borrowings (12 ) (624 ) (25 ) (681 ) Net cash flows from financing activities 6,823 975 18,042 3,468 Effect of exchange rate changes on cash (52 ) 113   (61 ) 123   Net movement in cash and cash equivalents (683 ) (13,694 ) (8,849 ) (58,183 ) Cash and cash equivalents, beginning of period 60,526   98,180   68,692   142,669   Cash and cash equivalents, end of period 59,843   84,486   59,843   84,486    

(vii) Interest paid is reported net of cash interest capitalized, which is reported as part of “Purchase of property, plant and equipment."

    INTERXION HOLDING NV Status of Announced Expansion Projects as at 7 August 2013 with Target Open Dates in 2013 & 2014           Market Project

CAPEX(a, b)

Equipped Space(a)

Target Opening         (€ million)   (Sqm)       Frankfurt FRA 6: Phase 3 Expansion € 5 600 1Q 2013 (opened) Copenhagen CPH 1: Expansion € 2 300 2Q 2013 (opened) Stockholm STO 2: Phase 1 New Build € 11 500 2Q 2013 (opened) Vienna VIE 1: Phase 4 Expansion € 1 400 3Q 2013 (opened) Zurich ZUR 1: Phase 4 Expansion € 4 500 4Q 2013 Stockholm STO 2: Phase 2 Expansion € 6 500 1Q 2014 Frankfurt FRA 8: Phases 1 & 2 New Build € 30 1,800 1H 2014 (c) Total € 59 4,600   (a) CAPEX and Equipped Space are approximate and may change. (b) CAPEX reflects the total for the listed project at full power and capacity and may not be all invested in the current year. (c) Phase 1 scheduled to be operational in the first half of 2014;phase 2 is scheduled to be operational in 2015.  

InterxionJim Huseby, +1-813-644-9399Investor RelationsIR@interxion.com