INXN InterXion Holding NV

Interxion Holding NV (NYSE: INXN), a leading European provider of carrier-neutral colocation data centre services, announced its results today for the three months ended 30 June 2012.

Highlights

• Revenue for the quarter increased by 13% to €68.0 million (Q2 2011: €60.0 million)
• Adjusted EBITDA for the quarter increased by 19% to €27.8 million (Q2 2011: €23.3 million)
• Adjusted EBITDA margin for the quarter increased to 40.8% (Q2 2011: 38.9%)
• Net profit increased by 67% to €8.7 million (Q2 2011: €5.2 million)
• Capital expenditure, including intangible assets, was €42.6 million

“Interxion continued its strong execution in the second quarter, delivering financial results that were consistent with our expectations,” said Interxion Chief Executive Officer, David Ruberg. “We continue to see broad-based customer demand for our high quality, connectivity driven data centres, and we are pleased to have announced the opening of the initial phases of new data centres in the London and Paris markets.”

Quarterly Review

Revenue for the second quarter of 2012 was €68.0 million, a 13% increase over the second quarter of 2011 and a 3% increase over the first quarter of 2012. Recurring revenue was €62.9 million, a 12% increase over the second quarter of 2011 and a 1% increase over the first quarter of 2012. Recurring revenue was 92% of total revenue.

Cost of sales for the second quarter increased by 11% to €28.2 million, compared with the second quarter of 2011. Gross profit margin increased to 58.5%, compared with 57.5% in the same quarter of 2011. Sales and marketing costs in the second quarter were €4.7 million, up 2% compared with the same quarter in the previous year. General and administrative costs, excluding depreciation, amortisation, impairments, increase in provision for onerous lease contracts, and share-based payments, were €7.3 million, an increase of 11% compared with the second quarter of 2011. Depreciation, amortisation, and impairments increased by 7%, compared with the previous-year second quarter, to €10.2 million.

Net financing costs for the second quarter of 2012 were €3.9 million, compared with €6.0 million in the second quarter of 2011, primarily as a result of higher interest capitalization because of increased data centre construction.

Net profit was €8.7 million in the second quarter of 2012, up 67% from the second quarter of 2011. Earnings per share in the second quarter of 2012 were €0.13, an increase of 63%, on a weighted average of 68.0 million diluted shares compared to €0.08 on a weighted average of 67.5 million diluted shares in the second quarter of 2011.

Adjusted EBITDA for the second quarter of 2012 was €27.8 million, up 19% year-on-year. Adjusted EBITDA margin expanded to 40.8%, compared with 38.9% in the second quarter of the previous year.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €29.4 million, up 27% year-on-year. Capital Expenditure, including intangible assets, was €42.6 million in the second quarter 2012.

Cash and cash equivalents were €84.5 million at 30 June 2012, down from €142.7 million at year-end 2011. The company’s revolving credit facility was amended during the quarter and remains undrawn.

Equipped space at the end of the second quarter 2012 was 65,300 square metres compared with 61,500 square metres at the end of the second quarter of 2011 and 64,800 square metres at the end of the first quarter of 2012. Revenue generating space was 48,600 square metres at the end of the second quarter 2012, compared to 45,300 square metres at the end of the second quarter of 2011 and 47,500 square metres at the end of the first quarter of 2012. Utilisation rate, the ratio of revenue-generating space to equipped space, was 74%, the same as the second quarter of 2011, and up from 73% in the first quarter of 2012.

Business Outlook

The company today reaffirmed its guidance for 2012:

Revenue     €275 million – €285 million Adjusted EBITDA €112 million – €120 million Capital Expenditure (including intangibles) €170 million – €190 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 in this call, US callers may dial toll free, 1-866-966-9439; callers outside the US may dial direct, +44 (0)1452 555 566. The conference ID for this call is 97898814. This event will also be webcast live over the Internet in listen-only mode at investors.interxion.com.

A replay of the call will be available from shortly after it ends until 14 August 2012. To access the replay, US callers may dial toll free, 1-866-247-4222; callers outside the US may dial direct, +44 (0)1452 550 000. The replay access number is 97898814#.

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, IPO transaction costs, 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 €60 million revolving credit facility and €260 million 9.50% Senior Secured Notes due 2017. 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 Operating Profit to EBITDA and Adjusted EBITDA is provided in the Notes to Consolidated Income Statement: Adjusted EBITDA reconciliation later in this press release.

Interxion does not provide forward-looking estimates of Operating Profit, Depreciation, Amortization, and Impairments, Share-based Payments, or increase/decrease in provision for onerous lease contracts, IPO transaction costs, abandoned transaction costs, income from sub-leases on unused data centre sites and net insurance compensation benefit, which it uses to reconcile to Adjusted EBITDA. The Company is, therefore, unable to provide reconciling information for Adjusted EBITDA.

About Interxion

Interxion (NYSE: INXN) is a leading provider of carrier-neutral colocation data centre services in Europe, serving a wide range of customers through 31 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 400 carriers and ISPs and 18 European Internet exchanges across its footprint, Interxion has created content and connectivity hubs that foster growing customer communities of interest. For more information, please visit www.interxion.com.

  INTERXION HOLDING NV CONSOLIDATED INCOME STATEMENT (in €'000 - except per share data and where stated otherwise) (unaudited)             Three Months Ended Six Months Ended 30-Jun 30-Jun 30-Jun 30-Jun 2012 2011 2012 2011   Revenue 68,004 60,023 133,816 117,915 Cost of sales (28,230 ) (25,522 ) (54,729 ) (50,302 ) Gross profit 39,774 34,501 79,087 67,613 Other income 114 115 232 242 Sales and marketing costs (4,664 ) (4,591 ) (9,514 ) (8,803 ) General and administrative costs (18,493 ) (16,496 ) (36,014 ) (33,795 ) Operating profit 16,731 13,529 33,791 25,257 Net finance expense (3,876 ) (5,986 ) (8,311 ) (12,574 ) Profit before taxation 12,855 7,543 25,480 12,683 Income tax expense (4,131 ) (2,319 ) (8,060 ) (4,651 ) Net profit 8,724   5,224   17,420   8,032     Basic earnings per share: (€) 0.13 0.08 0.26 0.13 Diluted earnings per share: (€) 0.13 0.08 0.26 0.12     Number of shares outstanding at the end of the period (shares in thousands) 67,599 65,619 67,599 65,619 Weighted average number of shares for Basic EPS (shares in thousands) 67,140 65,579 66,741 62,398 Weighted average number of shares for Diluted EPS (shares in thousands) 68,021 67,536 67,693 64,534       Capacity Metrics Equipped space (in square meters) 65,300 61,500 65,300 61,500 Revenue generating space (in square meters) 48,600 45,300 48,600 45,300 Utilisation rate 74 % 74 % 74 % 74 %   INTERXION HOLDING NV   NOTES TO CONSOLIDATED INCOME STATEMENT: SEGMENT INFORMATION (in €'000 - except where stated otherwise) (unaudited)             Three Months Ended   Six Months Ended 30-Jun 30-Jun 30-Jun 30-Jun 2012 2011 2012 2011 Consolidated   Recurring revenue 62,867 56,244 125,146 110,386 Non-recurring Revenue 5,137   3,779   8,670   7,529  

Revenue

68,004   60,023   133,816   117,915   Adjusted EBITDA 27,766   23,321   55,102   45,531   Gross Margin 58.5 % 57.5 % 59.1 % 57.3 % Adjusted EBITDA Margin 40.8 % 38.9 % 41.2 % 38.6 %   Total assets 774,738 702,513 774,738 702,513 Total liabilities 416,989 395,984 416,989 395,984 Capital expenditure, including intangible assets (i) (42,572 ) (18,952 ) (103,672 ) (38,470 )   France, Germany, Netherlands, and UK   Recurring revenue 38,446 33,561 76,459 65,806 Non-recurring Revenue 3,907   2,535   6,199   4,962   Revenue 42,353   36,096   82,658   70,768   Adjusted EBITDA 21,828   17,964   43,405   34,743   Gross Margin 60.2 % 58.5 % 61.3 % 58.5 % Adjusted EBITDA Margin 51.5 % 49.8 % 52.5 % 49.1 %   Total assets 494,213 296,740 494,213 296,740 Total liabilities 99,136 86,519 99,136 86,519 Capital expenditure, including intangible assets (i) (34,562 ) (9,479 ) (87,055 ) (21,819 )   Rest of Europe   Recurring revenue 24,421 22,683 48,687 44,580 Non-recurring Revenue 1,230   1,244   2,471   2,567   Revenue 25,651   23,927   51,158   47,147   Adjusted EBITDA 13,476   12,165   26,884   24,267   Gross Margin 61.5 % 61.0 % 61.4 % 61.0 % Adjusted EBITDA Margin 52.5 % 50.8 % 52.6 % 51.5 %   Total assets 189,219 160,436 189,219 160,436 Total liabilities 40,837 37,139 40,837 37,139 Capital expenditure, including intangible assets (i) (6,848 ) (8,539 ) (14,771 ) (14,803 )   Corporate and Other         Adjusted EBITDA (7,538 ) (6,808 ) (15,187 ) (13,479 )   Total assets 91,306 245,337 91,306 245,337 Total liabilities 277,016 272,326 277,016 272,326 Capital expenditure, including intangible assets (i) (1,162 ) (934 ) (1,846 ) (1,848 )    

(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 NV   NOTES TO CONSOLIDATED INCOME STATEMENT: Adjusted EBITDA reconciliation (in €'000 - except where stated otherwise) (unaudited)             Three Months Ended   Six Months Ended 30-Jun 30-Jun 30-Jun 30-Jun 2012 2011 2012 2011     Reconciliation to adjusted EBITDA   Consolidated   Operating profit 16,731 13,529 33,791 25,257 Depreciation, amortization and impairments 10,236   9,568   19,891   18,094   EBITDA 26,967 23,097 53,682 43,351 Share-based payments 913 339 1,652 679 Increase/(decrease) in provision for onerous lease contracts - - - 18 IPO transaction costs (ii) - - - 1,725 Income from sub-leases on unused data center sites (114 ) (115 ) (232 ) (242 ) Adjusted EBITDA 27,766   23,321   55,102   45,531     France, Germany, Netherlands, and UK   Operating profit 16,004 12,265 32,213 23,915 Depreciation, amortization and impairments 5,776   5,753   11,101   10,899   EBITDA 21,780 18,018 43,314 34,814 Share-based payments 162 61 323 153 Increase/(decrease) in provision for onerous lease contracts - - - 18 Income from sub-leases on unused data center sites (114 ) (115 ) (232 ) (242 ) Adjusted EBITDA 21,828   17,964   43,405   34,743     Rest of Europe   Operating profit 9,486

 

8,835

 

19,181

 

17,858 Depreciation, amortization and impairments 3,883  

 

3,289  

 

7,489  

 

6,287   EBITDA 13,369

 

12,124

 

26,670

 

24,145 Share-based payments 107  

 

41  

 

214  

 

122   Adjusted EBITDA 13,476  

 

12,165  

 

26,884  

 

24,267     Corporate and Other   Operating Profit/(Loss) (8,759 )

 

(7,571 )

 

(17,603 )

 

(16,516 ) Depreciation, amortization and impairments 577  

 

526  

 

1,301  

 

908   EBITDA (8,182 )

 

(7,045 )

 

(16,302 )

 

(15,608 ) Share-based payments 644

 

237

 

1,115

 

404 IPO transaction costs (ii) -  

 

-  

 

-  

 

1,725   Adjusted EBITDA (7,538 )

 

(6,808 )

 

(15,187 )

 

(13,479 )   (ii) The IPO transaction costs represent the write off of the proportion of the IPO costs allocated to the selling shareholders at the Initial Public Offering.   INTERXION HOLDING NV CONSOLIDATED BALANCE SHEET (in €'000 - except where stated otherwise) (unaudited)                 As at 30-Jun 31-Dec 2012 2011 Non-current Assets Property, plant and equipment 562,122 477,798 Intangible assets 17,330 12,542 Deferred tax assets 33,919 39,557 Financial fixed assets 774 – Other non-current assets 4,575   3,841   618,720 533,738 Current Assets Trade and other current assets 71,532 67,874 Cash and cash equivalents 84,486   142,669   156,018   210,543   Total Assets 774,738   744,281     Shareholders’ Equity Share capital 6,760 6,613 Share premium 472,775 466,166 Foreign currency translation reserve 10,398 7,386 Accumulated deficit (132,184 ) (149,604 ) 357,749 330,561 Non-current Liabilities Trade payables and other liabilities 10,893 10,294 Deferred tax liabilities 1,995 1,742 Provision for onerous lease contracts 9,237 10,618 Borrowings 257,594   257,267   279,719 279,921 Current Liabilities Trade payables and other liabilities 130,984 127,639 Income tax liabilities 3,002 2,249 Provision for onerous lease contracts 3,136 3,108 Borrowings 148   803   137,270   133,799   Total Liabilities 416,989   413,720   Total Liabilities and Shareholders’ Equity 774,738   744,281     INTERXION HOLDING NV NOTES TO THE CONSOLIDATED BALANCE SHEET: BORROWINGS (in €'000 - except where stated otherwise) (unaudited)               As at 30-Jun 31-Dec 2012 2011     Borrowings Net of Cash and Cash Equivalents   Cash and Cash Equivalents (iii) 84,486   142,669     9.5% Senior Secured Notes due 2017 (iv) 255,914 255,560 Financial Leases 223 337 Other Borrowings 1,605   2,173   Borrowings Excluding Revolving Credit Facility Deferred Financing Costs 257,742   258,070   Revolving credit facility deferred financing costs (v) (1,523 ) (667 ) Total Borrowings 256,219   257,403       Borrowings Net of Cash and Cash Equivalents 171,733   114,734       (iii) Cash and cash equivalents includes €4.9 million as of June 30, 2012 and €4.8 million as of December 31, 2011, 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 9.5% 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 €1.5 million incurred in connection with the €60 million revolving credit facility, which is currently undrawn.   INTERXION HOLDING NV CONSOLIDATED STATEMENT OF CASH FLOWS (in €'000 - except where stated otherwise) (unaudited)             Three Months Ended   Six Months Ended 30-Jun 30-Jun 30-Jun 30-Jun 2012 2011 2012 2011     Profit for the period 8,724 5,224 17,420 8,032 Depreciation, amortization and impairments 10,236 9,568 19,891 18,094 IPO transaction costs - - - 1,725 Unwinding provision for onerous lease contracts (794 ) (779 ) (1,579 ) (1,553 ) Share-based payments 913 339 1,652 679 Net finance expense 3,876 5,986 8,311 12,574 Income tax expense 4,131   2,319   8,060   4,651   27,086 22,657 53,755 44,202 Movements in trade and other current assets 3,142 1,603 (3,785 ) (5,680 ) Movements in trade and other liabilities (862 ) (1,225 ) 4,815   5,190   Cash Generated from Operations 29,366 23,035 54,785 43,712 Interest paid (157 ) (421 ) (10,131 ) (12,580 ) Interest received 172 266 320 537 Income tax paid (1,591 ) (465 ) (2,302 ) (1,152 ) Net Cash Flows from Operating Activities 27,790 22,415 42,672 30,517 Cash Flow from Investing Activities Purchase of property, plant and equipment (41,528 ) (16,240 ) (101,223 ) (35,364 ) Disposals of property, plant and equipment - 945 - 945 Purchase of intangible assets (1,044 ) (2,712 ) (2,449 ) (3,106 ) Acquisition financial fixed assets - - (774 ) - Movement in short-term investments -   (90,000 ) -   (90,000 ) Net Cash Flows from Investing Activities (42,572 ) (108,007 ) (104,446 ) (127,525 ) Cash Flow from Financing Activities Proceeds from exercised options 2,554 - 5,104 2,324 Proceeds from issuance of new shares - (400 ) - 142,952 Repayment of "Liquidation Price" to former preferred shareholders - - - (3,055 ) Proceeds from Senior Secured Notes and RCF (955 ) (206 ) (955 ) (645 ) Other Borrowings (624 ) (849 ) (681 ) (1,588 ) Net Cash Flows from Financing Activities 975 (1,455 ) 3,468 139,988 Effect of exchange rate changes on cash 113   (241 ) 123   (124 ) Net Movement in Cash and Cash Equivalents (13,694 ) (87,288 ) (58,183 ) 42,856 Cash and cash equivalents, beginning of period 98,180   229,259   142,669   99,115   Cash and Cash Equivalents, End of Period 84,486   141,971   84,486   141,971     INTERXION HOLDING NV Announced Expansion Projects with Target Open Dates in 2012 & 2013                     Market Project

CAPEX (a, b)

Equipped Space (a) Target Opening     (€ million) (Sqm)     Stockholm STO 1: Phase 4 Expansion € 5 500 1Q 2012 (opened) Frankfurt FRA 7: New Build € 21 1,500 1Q 2012 (opened) Paris PAR 7 : Phase 1 New Build € 70 4,500 2Q 2012 (opened) (c) London LON 2: New Build € 38 1,600 3Q 2012 (opened) (d) Amsterdam AMS 6: New Build € 60 4,000 4Q 2012 Madrid MAD 2: New Build € 10 800 1Q 2013 Total € 204 12,900   (a) CAPEX and Equipped Space are approximate and may change after project completion. (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) 500 sqm opened in 2Q 2012; 1500 sqm to be opened in 3Q 2012; remainder by end of 1Q 2013 (d) 500 sqm opened in July; additional 400 sqm to open in August; remaining 700 sqm to open by year end 2012.