INXN InterXion Holding NV

Recurring revenue grows 12% year over year

Interxion Holding NV (NYSE: INXN), a leading European provider of carrier and cloud-neutral colocation data centre services, announced its results today for the three months ended 31 March 2016.

Financial Highlights

• Revenue increased by 10% to €102.0 million (1Q 2015: €92.5 million).
• Recurring Revenue increased by 12% to €97.2 million (1Q 2015: €87.1 million).
• Adjusted EBITDA1 increased by 13% to €45.9 million (1Q 2015: €40.6 million).
• Adjusted EBITDA margin increased to 45.0% (1Q 2015: 43.9%).
• Net profit increased to €10.2 million (1Q 2015: €4.4 million).
• Adjusted net profit1 increased by 13% to €10.0 million (1Q 2015: €8.9 million).
• Earnings per diluted share were €0.14 (1Q 2015: €0.06).
• Adjusted earnings per diluted share1 were €0.14 (1Q 2015: €0.13).
• Capital Expenditures, including intangible assets2, were €50.0 million (1Q 2015: €67.6 million).
• Subsequent to the quarter end, Interxion issued €150 million of 6.00% Senior Secured Notes due 2020 at 104.50%.

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1 Adjusted EBITDA, Adjusted net profit, and Adjusted earnings per diluted share are non-IFRS figures intended to adjust for unusual items and are not measures of financial performance under IFRS. Full definitions can be found in the “Use of non-IFRS information” section later in this press release. Reconciliations of Adjusted EBITDA and Adjusted net profit to Net profit can be found in the financial tables later in this press release.

2 Capital expenditures, including intangible assets, represent 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.

Operating Highlights

• Equipped Space increased by 400 square metres to 101,600 square metres.
• Revenue Generating Space increased by 1,300 square metres to 80,400 square metres.
• Utilisation Rate at the end of the quarter was 79%.
• Interxion’s tenth data centre in Frankfurt (FRA10) opened in the first quarter, with 1,200 square metres becoming available. Interxion’s second data centre in Copenhagen (CPH2) opened subsequent to the end of the first quarter, with 500 square metres becoming available.

"Interxion again posted solid financial and operational results in the first quarter, demonstrating the value of our Communities of Interest strategy,” said David Ruberg, Interxion's Chief Executive Officer. "The demand from magnetic cloud platform providers continues to grow as enterprise use of cloud begins to migrate from the experimentation phase to the initial production phase. These key platform providers continue to value the attractiveness of our campus communities and broad Western European footprint. Interxion is well positioned to capture future demand as enterprises seek the advantages of the hybrid multi-cloud solutions, either directly or through systems integrators.”

Quarterly Review

Revenue in the first quarter of 2016 was €102.0 million, a 10% increase over the first quarter of 2015 and a 1% increase over the fourth quarter of 2015. Recurring revenue was €97.2 million, a 12% increase over the first quarter of 2015 and a 2% increase over the fourth quarter of 2015. Recurring revenue in the quarter was 95% of total revenue.

Cost of sales in the first quarter of 2016 was €39.1 million, an 8% increase over the first quarter of 2015 and a slight decrease over the fourth quarter of 2015.

Gross profit was €62.9 million in the first quarter of 2016, a 12% increase over the first quarter of 2015 and a 2% increase over the fourth quarter of 2015. Gross profit margin was 61.6% in the first quarter of 2016 compared to 60.8% in the first quarter of 2015 and 61.1% in the fourth quarter of 2015.

Sales and marketing costs in the first quarter of 2016 were €7.7 million, a 16% increase over the first quarter of 2015 and a 5% increase from the fourth quarter of 2015.

Other general and administrative costs were €9.2 million in the first quarter of 2016, a 4% increase over the first quarter of 2015 and a 1% increase from the fourth quarter of 2015. Other general and administrative costs exclude depreciation, amortisation, impairments, share-based payments, M&A transaction costs and provision for onerous lease contracts.

Adjusted EBITDA for the first quarter of 2016 was €45.9 million, a 13% increase over the first quarter of 2015 and a 2% increase over the fourth quarter of 2015. Adjusted EBITDA margin was 45.0% in the first quarter of 2016 compared to 43.9% in the first quarter of 2015 and 44.6% in the fourth quarter of 2015.

Depreciation, amortisation, and impairments in the first quarter of 2016 was €21.5 million, an increase of 18% from the first quarter of 2015 and a 6% increase from the fourth quarter of 2015.

Operating profit in the first quarter of 2016 was €22.9 million, an increase of 70% from the first quarter of 2015, and a slight increase from the fourth quarter of 2015. Each of the first quarter 2015, fourth quarter 2015, and first quarter 2016, were impacted by M&A transaction related items. Excluding these items, operating profit was €23.1 million in the first quarter of 2016, an increase of 14% over the first quarter of 2015 and a 1% decrease over the fourth quarter of 2015.

Net finance costs for the first quarter of 2016 were €8.0 million, a 21% increase over the first quarter of 2015, and a 2% decrease from the fourth quarter of 2015.

Income tax expense for the first quarter of 2016 was €4.7 million, a 94% increase over the first quarter of 2015, and an 83% increase from the fourth quarter of 2015.

Net profit was €10.2 million in the first quarter of 2016, a 131% increase over the first quarter of 2015, and a 16% decrease from the fourth quarter of 2015.

Adjusted net profit was €10.0 million in the first quarter of 2016, a 13% increase over the first quarter of 2015, and a 17% decrease from the fourth quarter of 2015.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €50.4 million in the first quarter of 2016, compared to €34.2 million in the first quarter of 2015, and €38.1 million in the fourth quarter of 2015.

Capital expenditures, including intangible assets, were €50.0 million in the first quarter of 2016 compared to €67.6 million in the first quarter of 2015 and €42.0 million in the fourth quarter of 2015.

Cash and cash equivalents were €44.6 million at 31 March 2016, compared to €58.6 million at year end 2015. Total borrowings, net of deferred revolving facility financing fees, were €554.9 million at 31 March 2016 compared to €555.1 million at year end 2015. As of 31 March 2016, the Company’s revolving credit facility was undrawn. On 11 April 2016, the Company issued €150 million of 6.00% Senior Secured Notes due 2020, raising net proceeds of approximately €155 million.

Equipped space at the end of the first quarter of 2016 was 101,600 square metres compared to 94,800 square metres at the end of the first quarter of 2015 and 101,200 square metres at the end of the fourth quarter of 2015. Utilisation rate, the ratio of revenue-generating space to equipped space, was 79% at the end of the first quarter of 2016, compared with 78% at the end of the first quarter of 2015 and 78% at the end of the fourth quarter of 2015.

Business Outlook

Interxion today reaffirms guidance for its Revenue, Adjusted EBITDA and Capital expenditures (including intangibles) for full year 2016:

Revenue     €416 million – €431 million Adjusted EBITDA €185 million – €195 million Capital expenditures (including intangibles) €200 million – €220 million

Conference Call to Discuss Results

Interxion will host a conference call today at 8:30 a.m. ET (1:30 pm BST, 2:30 pm CET) to discuss its First Quarter 2016 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 INXN. 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 17 May 2016. 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 81735348.

Forward-looking Statements

This communication contains forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such forward-looking statements. Factors that could cause actual results and future events to differ materially from Interxion’s expectations include, but are not limited to, the difficulty of reducing operating expenses in the short term, the 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, certain other risks detailed herein and other risks described from time to time in Interxion’s filings with the United States Securities and Exchange Commission (the “SEC”).

Interxion does not assume any obligation to update the forward-looking information contained in this report.

Use of Non-IFRS Information

EBITDA is defined as operating profit plus depreciation, amortisation and impairment of assets. We define Adjusted EBITDA as EBITDA adjusted to exclude share-based payments, M&A transaction costs, movement in provision for onerous lease contracts and income from sub-leases of 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 €100 million revolving facility and our 6.00% Senior Secured Notes due 2020. A reconciliation from Profit for the period attributable to shareholders (“Net profit”) to EBITDA and EBITDA to Adjusted EBITDA is provided in the notes to our condensed consolidated interim financial statements.

Adjusted net profit is defined as Net profit excluding the impact of M&A transaction costs, adjustments for onerous lease contracts, interest capitalised, and the related corporate income tax effect with respect to the foregoing items.

Other companies may, however, present EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net profit differently than we do. EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net profit 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 profit as indicators of our operating performance or any other measure of performance implemented in accordance with IFRS. Interxion does not provide forward-looking estimates of Net profit, Operating profit, depreciation, amortisation, and impairments, share-based payments, M&A transaction costs or increase/decrease in provision for onerous lease contracts, and income from sub-leases of 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 carrier and cloud-neutral colocation data centre services in Europe, serving a wide range of customers through 42 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 over 600 connectivity providers, 21 European Internet exchanges, and most leading cloud and digital media platforms across its footprint, Interxion has created connectivity, cloud, content and finance hubs that foster growing customer communities of interest. For more information, please visit www.interxion.com.

    INTERXION HOLDING NV CONSOLIDATED INCOME STATEMENTS (in €'000 ― except per share data and where stated otherwise) (unaudited)   Three Months Ended Mar-31 Mar-31 2016   2015     Revenue 102,000 92,482 Cost of sales (39,119 ) (36,282 ) Gross Profit 62,881 56,200 Other income 98 63 Sales and marketing costs (7,724 ) (6,679 ) General and administrative costs (32,386 ) (36,159 )         Operating profit 22,869 13,425 Net Finance expense (7,958 ) (6,585 )         Profit or loss before income taxes 14,911 6,840 Income tax expense (4,692 ) (2,415 ) Net income 10,219   4,425     Basic earnings per share: (€) 0.15 0.06 Diluted earnings per share: (€) 0.14 0.06     Number of shares outstanding at the end of the period (shares in thousands) 70,158 69,559 Weighted average number of shares for Basic EPS (shares in thousands) 70,011 69,393 Weighted average number of shares for Diluted EPS (shares in thousands) 70,975 70,329         As at Mar-31 Mar-31

Capacity metrics

2016   2015   Equipped space (in square meters) 101,600 94,800 Revenue generating space (in square meters) 80,400 74,000 Utilization Rate 79 % 78 %       INTERXION HOLDING NV NOTES TO CONSOLIDATED INCOME STATEMENTS: SEGMENT INFORMATION (in €'000 ― except where stated otherwise) (unaudited)   Three Months Ended Mar-31 Mar-31 2016   2015  

Consolidated

  Recurring revenue 97,211 87,051 Non-recurring revenue 4,789   5,431   Revenue 102,000   92,482   Adjusted EBITDA 45,920   40,605   Gross profit margin 61.6 % 60.8 % Adjusted EBITDA margin 45.0 % 43.9 %   Total assets 1,253,886 1,188,761 Total liabilities 738,881 731,366 Capital expenditure, including intangible assets (a) (50,002 ) (67,570 )  

France, Germany, the Netherlands, and the UK

  Recurring revenue 62,266 54,983 Non-recurring revenue 3,276   3,627   Revenue 65,542   58,610   Adjusted EBITDA 36,181   31,370   Gross profit margin 62.4 % 62.0 % Adjusted EBITDA margin 55.2 % 53.5 %   Total assets 876,049 824,515 Total liabilities 187,441 181,390 Capital expenditure, including intangible assets (a) (36,757 ) (33,766 )  

Rest of Europe

  Recurring revenue 34,945 32,068 Non-recurring revenue 1,513   1,804   Revenue 36,458   33,872   Adjusted EBITDA 21,515   18,978   Gross profit margin 66.9 % 64.6 % Adjusted EBITDA margin 59.0 % 56.0 %   Total assets 317,481 312,666 Total liabilities 56,436 58,898 Capital expenditure, including intangible assets (a) (10,282 ) (33,125 )  

Corporate and other

        Adjusted EBITDA (11,776 ) (9,743 )   Total assets 60,356 51,580 Total liabilities 495,004 491,078 Capital expenditure, including intangible assets (a) (2,963 ) (679 )     (a) 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 STATEMENTS: ADJUSTED EBITDA RECONCILIATION (in €'000 ― except where stated otherwise) (unaudited)   Three Months Ended Mar-31 Mar-31 2016   2015      

Reconciliation to Adjusted EBITDA

 

Consolidated

  Net profit 10,219 4,425 Income tax expense 4,692   2,415   Profit before taxation 14,911 6,840 Net finance expense 7,958   6,585   Operating profit 22,869 13,425 Depreciation, amortisation and impairments 21,478   18,215   EBITDA 44,347 31,640 Share-based payments 1,442 2,241 Increase/(decrease) in provision for onerous lease contracts - (100 ) M&A transaction costs (b) 229 6,887 Income from sub-leases on unused data centre sites (98 ) (63 ) Adjusted EBITDA 45,920   40,605    

France, Germany, the Netherlands, and the UK

  Operating profit 21,682 19,483 Depreciation, amortisation and impairments 14,292   11,717   EBITDA 35,974 31,200 Share-based payments 305 333 Increase/(decrease) in provision for onerous lease contracts - (100 ) Income from sub-leases on unused data centre sites (98 ) (63 ) Adjusted EBITDA 36,181   31,370    

Rest of Europe

  Operating profit 15,267 13,347 Depreciation, amortisation and impairments 6,144   5,435   EBITDA 21,411 18,782 Share-based payments 104   196   Adjusted EBITDA 21,515   18,978    

Corporate and Other

  Operating profit/(loss) (14,080 ) (19,405 ) Depreciation, amortisation and impairments 1,042   1,063   EBITDA (13,038 ) (18,342 ) Share-based payments 1,033 1,712 M&A transaction costs (a) 229   6,887   Adjusted EBITDA (11,776 ) (9,743 )     (a) M&A transaction costs are costs associated with the evaluation, diligence and conclusion or termination of merger or acquisition activity. In the quarter ended 31 March 2015, M&A transaction costs included €6.9 million related to the abandoned merger with TelecityGroup. In the quarter ended 31 March 2016, M&A transaction costs included €0.2 million related to other activity including the evaluation of potential asset acquisitions.

 

    INTERXION HOLDING NV CONSOLIDATED BALANCE SHEET (in €'000 ― except where stated otherwise) (unaudited)   As at Mar-31 Dec-31 2016   2015   Non-current assets Property, plant and equipment 1,020,125 999,072 Intangible assets 24,600 23,194 Deferred tax assets 21,705 23,024 Financial assets 924 - Other non-current assets 7,501   6,686   1,074,855 1,051,976 Current assets Trade receivables and other current assets 134,419 141,534 Cash and cash equivalents 44,612   58,554   179,031   200,088   Total assets 1,253,886   1,252,064     Shareholders’ equity Share capital 7,017 6,992 Share premium 510,598 507,296 Foreign currency translation reserve 14,972 20,865 Hedging reserve, net of tax (278 ) (213 ) Accumulated deficit (17,304 ) (27,523 ) 515,005 507,417 Non-current liabilities Trade payables and other liabilities 12,387 12,049 Deferred tax liabilities 9,251 9,951 Borrowings 550,614   550,812   572,252 572,813 Current liabilities Trade payables and other liabilities 156,301 162,629 Income tax liabilities 4,730 2,738 Provision for onerous lease contracts 647 1,517 Borrowings 4,951   4,951   166,629   171,835   Total liabilities 738,881   744,647   Total liabilities and shareholders’ equity 1,253,886   1,252,064         INTERXION HOLDING NV NOTES TO THE CONSOLIDATED BALANCE SHEET: BORROWINGS (in €'000 ― except where stated otherwise) (unaudited)   As at Mar-31 Dec-31 2016   2015      

Borrowings net of cash and cash equivalents

  Cash and cash equivalents (a) 44,612   58,554     6.00% Senior Secured Notes due 2020 (b) 475,470 475,503 Mortgages 43,800 44,073 Financial leases 34,690 34,582 Other borrowings 1,605   1,605   Borrowings excluding Revolving Facility deferred financing costs 555,565   555,763   Revolving Facility deferred financing costs (c) (639 ) (710 ) Total borrowings 554,926   555,053           Borrowings net of cash and cash equivalents 510,314   496,499       (a) Cash and cash equivalents include €4.1 million as of 31 March 2016 and €4.9 million as of 31 December 2015, which is restricted and held as collateral to support the issuance of bank guarantees on behalf of a number of subsidiary companies. (b) €475 million 6.00% Senior Secured Notes due 2020 include a premium on the additional issuance and are shown after deducting underwriting discounts and commissions, offering fees and expenses. (c) Deferred financing costs of €0.6 million as of 31 March 2016 were incurred in connection with the €100 million revolving facility.       INTERXION HOLDING NV CONSOLIDATED STATEMENTS OF CASH FLOWS (in €'000 ― except where stated otherwise) (unaudited)   Three Months Ended Mar-31 Mar-31 2016   2015       Net profit 10,219 4,425 Depreciation, amortisation and impairments 21,478 18,215 Provision for onerous lease contracts (880 ) (925 )

Share-based payments

1,401 2,241 Net finance expense 7,958 6,585 Income tax expense 4,692   2,415   44,868 32,956 Movements in trade receivables and other current assets 5,041 (1,631 ) Movements in trade payables and other liabilities 506   2,874   Cash generated from operations 50,415 34,199 Interest and fees paid (a) (14,362 ) (13,574 ) Interest received 7 49 Income tax paid (1,054 ) (2,320 ) Net cash flows from / (used in) operating activities 35,006 18,354 Cash flows from investing activities Purchase of property, plant and equipment (47,446 ) (65,318 ) Purchase of intangible assets (2,556 ) (2,252 ) Net cash flows from / (used in) investing activities (50,002 ) (67,570 ) Cash flows from financing activities Proceeds from exercised options 1,926 2,178 Repayment of mortgages (320 ) (320 ) Net cash flows from / (used in) financing activities 1,606 1,858 Effect of exchange rate changes on cash (552 ) 1,417   Net increase / (decrease) in cash and cash equivalents (13,942 ) (45,941 ) Cash and cash equivalents, beginning of period 58,554   99,923   Cash and cash equivalents, end of period 44,612   53,982     (a) Interest paid is reported net of cash interest capitalized, which is reported as part of “Purchase of property, plant and equipment".       INTERXION HOLDING NV NOTES TO CONSOLIDATED INCOME STATEMENTS: ADJUSTED NET PROFIT RECONCILIATION (in €'000 ― except per share data and where stated otherwise) (unaudited)     Three Months Ended Mar-31 Mar-31 2016   2015   (€ in '000 - except per share data)   Net profit - as reported 10,219 4,425   Add back + M&A transaction costs 229   6,887   229 6,887 Reverse - Increase / (decrease) in provision for onerous lease contracts - (100 ) - Interest capitalised (465 ) (881 ) (465 ) (981 )   Tax effect of above add backs & reversals 59 (1,400 )         Adjusted net profit 10,042   8,931     Reported basic EPS: (€) 0.15 0.06 Reported diluted EPS: (€) 0.14 0.06   Adjusted basic EPS: (€) 0.14 0.13 Adjusted diluted EPS: (€) 0.14 0.13         INTERXION HOLDING NV Status of Announced Expansion Projects as at 4 May 2016 with Target Open Dates after 1 January 2016         CAPEX (a)(b)

EquippedSpace (a)

Market       Project   (€ million)   (sqm)   Target Opening Dates   Amsterdam AMS 8: Phases 1 - 2 New Build 50 2,600 4Q 2016 Copenhagen CPH2: Phase 1 New Build 4 500 2Q 2016 (c) Dublin DUB3: Phases 1 - 2 New Build 28 1,200 4Q 2016 Dusseldorf DUS 2: Phase 1 - 2 New Build 16 1,200 4Q 2015 - 2Q 2016 (d) Frankfurt FRA 10: Phases 1 - 4 New Build 92 4,800 1Q 2016 - 4Q 2016 (e) Marseille MRS 1: Phase 2 (continued) 10 800 3Q 2016 Paris PAR7: Phase 2 14 1,100 2Q 2017 Vienna VIE 2: New Build 65 4,200 4Q 2014 - 3Q 2017 (f) Total € 279 16,400     (a) CAPEX and Equipped space are approximate and may change. Figures are rounded to nearest 100 sqm unless otherwise noted. (b) CAPEX reflects the total spend for the projects listed at full power and capacity and the amounts shown in the table above may be invested over the duration of more than one fiscal year. (c) Phase 1 (500 square metres) became operational in 2Q 2016. (d) Phase 1 (600 square metres) became operational in 4Q 2015. Phase 2 (600 square metres) is scheduled to become operational in 2Q 2016. (e) Phase 1 (1,200 square metres) became operational in 1Q 2016; phases 2, 3 & 4 (1,200 square metres each) are scheduled to become operational in 2Q 2016, 4Q 2016, and 4Q 2016 respectively. (f) In 4Q 2014, 1,300 square metres became operational; in 1Q 2015, 600 square metres became operational; in 2Q 2015, 600 square metres became operational. In 4Q 2015, 300 square metres became operational. In 4Q 2016, 300 sqm is scheduled to become operational; another 1,100 square metres is scheduled to become operational between 2Q 2017 and 3Q 2017.  

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