Cyxtera (NASDAQ: CYXT), a global leader in data center
colocation and interconnection services, today released financial
results for the quarter ended September 30, 2022.
“We are pleased to report strong performance in the third
quarter, including our 11th consecutive quarter of positive net
bookings,” said Nelson Fonseca, Cyxtera’s Chief Executive Officer.
“Our Q3 results reflect the robust demand for our global platform
of highly interconnected data centers, our innovative approach to
cloud-like colocation, our strong and diversified customer base,
and our unwavering focus on delivering value to our customers.”
Q3 2022 Financial
Highlights
- Total revenue increased by $9.5 million, or 5.4% year over
year, to $186.6 million.
- On a constant currency basis, total revenue increased by $14.1
million, or 8.0% year over year.
- Recurring revenue increased by $8.8 million, or 5.2% year over
year, to $178.1 million.
- Core revenue increased by $11.8 million, or 7.3% year over
year, to $172.8 million.
- Net Loss of $55.9 million in the quarter; Transaction Adjusted
EBITDA[1] increased by $0.4 million, or 0.8% year over year, to
$58.5 million and increased by $2.8 million, or 4.9% year over
year, on a constant currency basis.
1 A complete reconciliation of Net Loss to Transaction Adjusted
EBITDA is included in the financial tables included in this
release.
Q3 2022 Business
Highlights
- Annualized Core bookings increased 20% sequentially.
- Average monthly Core churn of 0.8% in the third quarter.
- Stabilized occupancy increased 480 basis points year over year
to 73.7%.
- Net financial leverage declined 10 basis points and 20 basis
points year over year and sequentially, respectively, to 3.6x.
- Closed an accounts receivable securitization facility of $37.5
million with PNC Bank, N.A., providing increased availability and
reduced interest expense.
- Announced the intention to convert to a Real Estate Investment
Trust (REIT).
“Cyxtera’s team once again delivered solid financial results in
the third quarter, as we move through the second half of the year,”
said Carlos Sagasta, Cyxtera’s Chief Financial Officer. “The
fundamentals of our business remain healthy, including strong
constant currency revenue growth, low churn rates and resilient
demand across our key markets. We believe this positive momentum
positions us well to mitigate some of the macroeconomic trends,
including rising utility costs, higher interest rates, and FX
volatility.”
2022 Outlook
Cyxtera affirmed its full-year 2022 guidance; details are
summarized in the table below.
2022 Guidance
($ in millions)
2022E
2021A
Y/Y %
Change
Revenue
$730 - $760
$703.7
4% - 8%
Transaction Adjusted EBITDA
$232 - $242
$224.4
3% - 8%
Maintenance Capital Expenditures
$26 - $28
$21.3
22% - 32%
% of Revenue
3.6% - 3.7%
3.0%
60 bps - 70 bps
Expansion Capital Expenditures
$102 - $127
$67.3
52% - 89%
Q3 2022 Results Conference Call and Replay
Information
Cyxtera will host a conference call and webcast to discuss its
quarterly results for the period ended September 30, 2022 on
Tuesday, November 8, 2022, at 8:30 a.m. Eastern Time. The live
webcast of the call can be accessed at the Cyxtera Investor
Relations website at https://ir.cyxtera.com/ along with the
Company’s earnings press release and earnings presentation designed
to accompany the discussion of the financial results. Participants
can also register for the webcast at
https://www.netroadshow.com/events/login?show=30398dbb&confId=43051.
The U.S. dial-in for the call is 1-833-927-1758 (1-929-526-1599
for non-U.S. callers); access code 403952. A replay of the
conference call will be available until November 15, 2022, at 11:59
p.m. Eastern Time, while an archived version of the webcast will be
available on Cyxtera’s Investor Relations website for one year. The
U.S. dial-in for the conference call replay is 1-866-813-9403
(+44-204-525-0658). The replay access code is 208250.
Investor Presentation and Supplemental Financial
Information
Concurrently with holding its conference call, Cyxtera will make
available on its website a presentation designed to accompany the
discussion of the company’s financial results along with
supplemental financial information. When available, the
presentation and supplemental financial information can be accessed
on the Cyxtera Investor Relations website at
https://ir.cyxtera.com/.
Upcoming Conferences and Events
- Nareit REITworld 2022 Annual Conference
- Raymond James 2022 Technology Investors Conference
- UBS 50th annual Global TMT Conference
About Cyxtera
Cyxtera is a global leader in colocation and interconnection
services, with a footprint of more than 60 data centers in over 30
markets. With IT infrastructure becoming increasingly hybrid,
complex, and distributed, Cyxtera continues to expand its portfolio
beyond space and power to deliver more cloud-like and flexible
infrastructure solutions across its global data center platform and
robust partner ecosystem. Today, Cyxtera provides more than 2,300
enterprise and government customers with the technology solutions
they need to scale faster, achieve financial goals, and gain a
competitive advantage. For more information, please visit
www.cyxtera.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the federal securities laws. Forward- looking
statements contained in this press release include statements
concerning Cyxtera’s estimated financial performance for 2022 and
its plans to convert to a REIT. Because forward-looking statements
are predictions, projections and other statements about future
events that are based on current expectations and assumptions, they
are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and many of which are
outside of Cyxtera’s control. Actual results and conditions
(financial or otherwise) may differ materially from those indicated
in the forward-looking statements. These forward-looking statements
are subject to a number of risks and uncertainties that could cause
actual results and conditions to differ materially from those
indicated in the forward-looking statements, including, but not
limited to, the effects of the COVID-19 pandemic on Cyxtera’s
business or future results, including supply chain disruptions;
Cyxtera’s ability to maintain its credit ratings; Cyxtera’s ability
to access external sources of capital on favorable terms or at all,
which could limit Cyxtera’s ability to execute its business and
growth strategies; increases in interest rates; fluctuations in
energy prices; fluctuations in foreign currency exchange rates in
the markets in which Cyxtera operates internationally; inflation;
prolonged power outages, shortages or capacity constraints;
physical and electronic security breaches and cyber-attacks, which
could disrupt Cyxtera’s operations; any failure of Cyxtera’s
physical infrastructure or negative impact on its ability to
provide its services, or damage to customer infrastructure within
its data centers; inadequate or inaccurate external and internal
information, including budget and planning data, which could lead
to inaccurate financial forecasts and inappropriate financial
decisions; Cyxtera’s fluctuating operating results; Cyxtera’s
government contracts, which are subject to early termination,
audits, investigations, sanctions and penalties; Cyxtera’s reliance
on third parties to provide internet connectivity to its data
centers; the incurrence of goodwill and other intangible asset
impairment charges, or impairment charges to Cyxtera’s property and
equipment, which could result in a significant reduction to its
earnings; the requirements of being a public company, including
maintaining adequate internal controls over financial and
management systems; Cyxtera’s ability to manage its growth;
volatility of the market price of Cyxtera’s Class A common stock;
future sales, or the perception of future sales, of Cyxtera Class A
common stock by existing securityholders in the public market,
which could cause the market price for Cyxtera’s Class A common
stock to decline; Cyxtera’s ability to use its United States
federal and state net operating losses to offset future United
States federal and applicable state taxable income may be subject
to certain limitations that could accelerate or permanently
increase taxes owed; Cyxtera’s ability to address the significant
implementation and operational complexities required to complete a
conversion to a REIT, including, without limitation, completing
internal reorganizations and modifying accounting and information
technology systems, and receiving any necessary stakeholder and
other approvals; Cyxtera’s ability to apply highly technical and
complex provisions of the US Internal Revenue Code, as amended, to
its operations; and the timing to complete conversion to a REIT, if
at all. The foregoing list of factors is not exhaustive. You should
carefully consider the foregoing factors and the “Risk Factors”
disclosed in Cyxtera’s filings with the Securities and Exchange
Commission (“SEC”) from time to time. There may be additional risks
that Cyxtera does not presently know or that it currently believes
are immaterial that could also cause actual results to differ from
those contained in the forward-looking statements. In addition,
forward-looking statements reflect Cyxtera’s expectations, plans or
forecasts of future events and views as of the date of this press
release. Accordingly, you should not place undue reliance upon any
such forward-looking statements in this press release. Neither
Cyxtera nor any of its affiliates assume any obligation to update
this press release, except as required by law.
Statement Regarding Non-GAAP Financial Measures
This press release contains Transaction Adjusted EBITDA, which
is a supplemental measure that is not required by, or presented in
accordance with, accounting principles generally accepted in the
United States (“GAAP”). Transaction Adjusted EBITDA represents the
measure of EBITDA disclosed to SVAC in connection with its
consideration of the business combination transaction between
Starboard Value Acquisition Corp. (“SVAC”) and Cyxtera. Cyxtera
defines Transaction Adjusted EBITDA as net income (loss) before the
following items: depreciation and amortization, interest and other
expenses, net, income tax expense (benefit), equity-based
compensation, straight-line rent adjustment, amortization of
favorable / unfavorable leasehold interest & asset retirement
obligation accretion, stand-up separation & other,
restructuring costs & other, and change in fair value of
warrant liabilities. As a non-GAAP financial measure, Transaction
Adjusted EBITDA excludes items that are significant in
understanding and assessing Cyxtera’s financial results or
position. Therefore, this measure should not be considered in
isolation or as an alternative to net income, cash flows from
operations or other measures of profitability, liquidity or
performance under GAAP. You should be aware that Cyxtera’s
presentation of this measure may not be comparable to
similarly-titled measures used by other companies. You should
review Cyxtera’s unaudited financial statements and the
reconciliation of the non-GAAP financial measures included in this
press release to the most directly comparable GAAP financial
measures provided in this release and not rely on any single
financial measure to evaluate Cyxtera’s business.
This press release also includes certain projections of non-GAAP
financial measures concerning Cyxtera. Due to the high variability
and difficulty in making accurate forecasts and projections of some
of the information excluded from these projected measures, together
with some of the excluded information not being ascertainable or
accessible, Cyxtera is unable to quantify certain amounts that
would be required to be included in the most directly comparable
GAAP financial measures without unreasonable effort. Consequently,
no disclosure of estimated comparable GAAP measures is included and
no reconciliation of the forward-looking non-GAAP financial
measures is included.
This press release includes constant currency revenue, MRR and
Transaction Adjusted EBITDA, which are non-GAAP financial measures
and are not meant to be considered in isolation or as an
alternative to GAAP revenue and GAAP net income (loss). Cyxtera has
presented these non-GAAP financial measure to provide investors
with an additional tool to evaluate its results without the impact
of fluctuations in foreign currency exchange rates, thereby
facilitating period-to-period comparisons of Cyxtera’s business
performance. To present this information, Cyxtera’s current and
comparative prior period revenues and certain operating expenses
from entities with functional currencies other than the U.S. dollar
are converted into U.S. dollars at a consistent exchange rate for
purposes of each result being compared.
CYXTERA TECHNOLOGIES, INC.
Consolidated Balance Sheets
(unaudited, in millions, except
share information)
September 30, 2022
December 31, 2021
Assets:
Current assets:
Cash
$
86.2
$
52.4
Accounts receivable, net of allowance of
$0.2 and $0.3, respectively
20.2
18.3
Prepaid and other current assets
37.0
37.5
Total current assets
143.4
108.2
Property and equipment, net
1,636.1
1,530.8
Operating lease right-of-use assets
248.3
—
Goodwill
748.5
761.7
Intangible assets, net
441.8
519.8
Other assets
18.7
16.7
Total assets
$
3,236.8
$
2,937.2
Liabilities and shareholders’
equity:
Current liabilities:
Accounts payable
$
63.0
$
57.9
Accrued expenses
74.9
65.3
Current portion of operating lease
liabilities
33.8
—
Current portion of long-term debt, finance
leases and other financing obligations
52.6
50.3
Deferred revenue
64.1
60.7
Other current liabilities
22.3
10.0
Total current liabilities
310.7
244.2
Operating leases liabilities, net of
current portion
273.5
—
Long-term debt, net of current portion
897.0
896.5
Finance leases and other financing
obligations, net of current portion
1,075.1
937.8
Deferred income taxes
31.0
29.9
Warrant liabilities
—
64.7
Other liabilities
72.0
158.2
Total liabilities
$
2,659.3
$
2,331.3
Commitments and contingencies (Note
16)
Shareholders’ equity:
Preferred Stock, $0.0001 par value;
10,000,000 shares authorized; none issued and outstanding
—
—
Class A common stock, $0.0001 par value;
500,000,000 shares authorized; 179,587,616 and 166,207,190 shares
issued and outstanding as of September 30, 2022, and December 31,
2021, respectively
—
—
Additional paid-in capital
1,961.7
1,816.5
Accumulated other comprehensive (loss)
income
(17.9
)
10.8
Accumulated deficit
(1,366.3
)
(1,221.4
)
Total shareholders’ equity
577.5
605.9
Total liabilities and shareholders’
equity
$
3,236.8
$
2,937.2
CYXTERA TECHNOLOGIES, INC.
Consolidated Statements of
Operations
(unaudited, in millions, except
for share information)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Revenues
$
186.6
$
177.1
$
553.0
$
525.3
Operating costs and expenses
Cost of revenues, excluding depreciation
and amortization
100.3
93.5
296.7
287.4
Selling, general and administrative
expenses
37.9
29.2
103.8
79.7
Depreciation and amortization
60.0
59.4
183.1
180.6
Restructuring, impairment, site closures
and related costs
1.3
1.4
3.9
68.4
Transaction-related costs
—
5.2
—
5.2
Total operating costs and
expenses
199.5
188.7
587.5
621.3
Loss from operations
(12.9
)
(11.6
)
(34.5
)
(96.0
)
Interest expense, net
(41.1
)
(43.1
)
(118.6
)
(129.3
)
Other expenses, net
(2.4
)
(0.4
)
(2.0
)
(1.2
)
Change in fair value of warrant
liabilities
—
(2.7
)
11.8
(2.7
)
Loss from operations before income
taxes
(56.4
)
(57.8
)
(143.3
)
(229.2
)
Income tax benefit (expense)
0.5
11.1
(1.6
)
36.9
Net loss
$
(55.9
)
$
(46.7
)
$
(144.9
)
$
(192.3
)
Loss Per Share
Basic and diluted
$
(0.31
)
$
(0.32
)
$
(0.82
)
$
(1.58
)
Weighted average number of shares
outstanding
Basic and diluted
179,121,387
147,754,776
177,637,729
121,868,742
CYXTERA TECHNOLOGIES, INC.
Consolidated Statements of Cash
Flows
(unaudited, in millions)
Nine Months Ended September
30,
2022
2021
Net loss
$
(144.9
)
$
(192.3
)
Cash flows from operating
activities:
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
183.1
180.6
Restructuring, impairment, site closures
and related costs
—
2.0
Amortization of favorable/unfavorable
leasehold interests, net
—
2.9
Amortization of debt issuance costs and
fees, net
3.0
9.1
Equity-based compensation
16.0
5.4
Reversal of allowance for doubtful
accounts
(0.4
)
(1.1
)
Deferred income taxes
2.5
(37.1
)
Change of fair value of warrant
liabilities
(11.8
)
2.7
Non-cash interest expense, net
8.3
7.1
Changes in operating assets and
liabilities, excluding impact of acquisitions and dispositions:
Accounts receivable
(1.5
)
8.3
Prepaid and other current assets
0.5
3.1
Other assets
(2.4
)
8.1
Operating lease right-of-use assets
28.7
—
Operating lease liabilities
(32.3
)
—
Accounts payable
1.1
(10.5
)
Accrued expenses
9.4
(27.7
)
Due to affiliates
—
(22.8
)
Other liabilities
14.7
63.0
Net cash provided by operating
activities
74.0
0.8
Cash flows from investing
activities:
Purchases of property and equipment
(100.4
)
(44.1
)
Amounts received from affiliate (Note
18)
—
117.1
Net cash (used in) provided by
investing activities
(100.4
)
73.0
Cash flows from financing
activities:
Proceeds from issuance of long-term debt
and other financing obligations
42.0
40.0
Proceeds from recapitalization, net of
issuance costs
—
436.0
Repayment of long-term debt
(46.9
)
(459.4
)
Repayment of finance leases and other
financing obligations
(37.0
)
(49.1
)
Proceeds from sales leaseback
financing
26.7
—
Capital redemption
—
(97.9
)
Capital contribution
—
5.2
Proceeds from the exercise of warrants,
net of redemptions
1.3
—
Proceeds from the exercise of the optional
share purchase options
75.0
—
Net cash provided by (used in)
financing activities
61.1
(125.2
)
Effect of foreign currency exchange rates
on cash
(0.9
)
5.2
Net increase (decrease) in cash
33.8
(46.2
)
Cash at beginning of period
52.4
120.7
Cash at end of period
$
86.2
$
74.5
Supplemental cash flow
information:
Cash (refund) paid for income taxes,
net
$
(0.1
)
$
4.3
Cash paid for interest
$
21.9
$
67.6
Non-cash purchases of property and
equipment
$
4.1
$
19.4
CYXTERA TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(unaudited, in millions)
Three Months Ended September
30,
2022
2021
Net Loss to
EBITDA Reconciliation:
Net loss
$
(55.9
)
(46.7
)
Depreciation and amortization
60.0
59.4
Interest and other expenses, net
43.5
43.5
Income tax benefit
(0.5
)
(11.1
)
EBITDA
$
47.1
$
45.1
Transaction Adjustments
Equity-based compensation
6.2
1.8
Straight-line rent adjustment
0.4
0.6
Amortization of Favorable / Unfavorable
Leasehold Interest & ARO accretion
0.9
0.9
Stand-up separation & other
1.5
0.4
Restructuring costs & other
1.3
1.4
REIT conversion costs
1.0
—
Transaction-related costs
—
5.2
Change in fair value of warrant
liabilities
—
2.7
Total Adjustments
11.4
13.0
Transaction Adjusted EBITDA
$
58.5
$
58.1
Note: Numbers may not foot or cross-foot due to rounding
CYXTERA TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(unaudited, in millions)
Nine Months Ended September
30,
2022
2021
Net Loss to
EBITDA Reconciliation:
Net loss
$
(144.9
)
(192.3
)
Depreciation and amortization
183.1
180.6
Interest and other expenses, net
120.6
130.5
Income tax expense (benefit)
1.6
(36.9
)
EBITDA
$
160.4
$
81.9
Transaction Adjustments
Equity-based compensation
16.0
5.4
Straight-line rent adjustment
1.5
2.5
Amortization of Favorable / Unfavorable
Leasehold Interest & ARO accretion
2.7
2.6
Stand-up separation & other
2.7
3.8
Restructuring costs & other
3.9
72.3
REIT conversion costs
1.7
—
Transaction-related costs
—
5.2
Change in fair value of warrant
liabilities
(11.8
)
2.7
Total Adjustments
16.7
94.5
Transaction Adjusted EBITDA
$
177.1
$
176.4
Note: Numbers may not foot or cross-foot due to rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108005383/en/
Press Contact: Janice Clayton press@cyxtera.com
Investor Relations Contact: Greer Aviv
greer.aviv@cyxtera.com
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