Interxion Reports Q4 and Full Year 2012 Results

Interxion Reports Q4 and Full Year 2012 Results

AMSTERDAM--(BUSINESS WIRE)-- Interxion Holding NV (NYS: INXN) , a leading European provider of carrier-neutral colocation data centre services, announced its results today for the three months and year ended 31 December 2012.

Financial Highlights

  • Revenue for the fourth quarter and full year increased by 13% to €72.9 million and €277.1 million, respectively (4Q 2011: €64.4 million; FY 2011: €244.3 million)

  • Adjusted EBITDA for the fourth quarter and full year increased by 15% and 18% to €31.2 million and €115.0 million, respectively (4Q 2011: €27.1 million; FY 2011: €97.6 million)

  • Adjusted EBITDA margin for the fourth quarter and full year increased to 42.8% and 41.5%, respectively (4Q 2011: 42.1%; FY 2011: 40.0%)

  • Net profit for the fourth quarter and full year was €5.6 million and €31.6 million, respectively (4Q 2011: €10.6 million; FY 2011: €25.6 million)

  • Capital Expenditures, including intangible assets1, were €178.3 million


Operating Highlights

  • Equipped Space increased by 4,400 square metres in the fourth quarter and 11,200 square metres for the year to 74,000 square metres

  • Revenue Generating Space increased by 5,000 square metres in the fourth quarter and 9,100 square metres for the full year to 56,200 square metres

  • Utilisation Rate increased to 76% at the end of the year (FY 2011: 75%)

  • Announced expansion projects remain on schedule

Interxion Chief Executive Officer, David Ruberg, stated: "Interxion continued to execute in 2012, delivering strong financial results, despite a difficult macro environment. We added record amounts of equipped space and revenue generating square metres, while increasing our utilisation rate. Both revenue and adjusted EBITDA exhibited double digit growth, while positioning ourselves for continued growth into the future."

"In the fourth quarter, we continued our momentum by adding a record quarterly amount of revenue generating square metres. Compared to our third quarter, recurring revenue increased by 6% and adjusted EBITDA margins grew by 200 basis points," continued Ruberg.

Quarterly Review

Revenue for the fourth quarter of 2012 was €72.9 million, a 13% increase over the fourth quarter of 2011 and a 3% increase over the third quarter of 2012. Recurring revenue was €69.0 million, a 16% increase over the fourth quarter of 2011 and a 6% increase over the third quarter of 2012. Recurring revenue in the quarter was 95% of total revenue.

Cost of sales in the fourth quarter 2012 was €29.0 million, a 14% increase over the fourth quarter of 2011 and a 2% decrease over the third quarter of 2012.

Gross profit was €43.9 million in the fourth quarter 2012, a 13% increase over the fourth quarter 2011 and a 7% increase over the third quarter of 2012.

Sales and marketing costs in the fourth quarter were €5.5 million, up 19% compared to the prior year quarter. Other general and administrative costs2 were €7.2 million, an increase of 1% compared to the prior year quarter.

Adjusted EBITDA for the fourth quarter of 2012 was €31.2 million, up 15% year over year and 9% over the prior quarter. Adjusted EBITDA margin expanded to 42.8% compared to 42.1% in the fourth quarter 2011 and 40.8% in the third quarter 2012.

Depreciation, amortisation, and impairments in the fourth quarter 2012 was €13.1 million, an increase of 56% compared to the prior year quarter and consistent with the company's data centre investment program.

Quarterly operating profit was adversely impacted by two one-time cost items. During the fourth quarter, the company reassessed its onerous contract provision and recognised an additional onerous lease expense of €0.8 million. Share based payments were €2.6 million in the quarter and were impacted by a €1.9 million provision relating to a one-time employment tax implemented as emergency legislation by the Dutch authorities.

Operating profit during the fourth quarter of 2012 was €14.8 million, a decrease of 16% over the fourth quarter 2011 and a decrease of 11% compared to the third quarter 2012. The operating profit comparisons to prior periods are impacted by the two one-time costs mentioned above.

Net financing costs for the fourth quarter of 2012 were €5.7 million, a 14% increase compared to the fourth quarter 2011, and a 50% increase compared to the third quarter 2012, due to lower capitalised interest as construction projects were completed.

Income tax expense for the fourth quarter of 2012 was €3.5 million, an increase of 79% compared to the fourth quarter 2011. The comparison was negatively impacted by the recognition of a €2.7 million deferred tax asset in the prior year quarter.

Net profit was €5.6 million in the fourth quarter of 2012, down 47% from the fourth quarter of 2011, and down 34% sequentially.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €32.9 million, a 46% increase from the fourth quarter of 2011, and a 36% increase from the third quarter of 2012.

Capital Expenditures, including intangible assets, were €28.2 million in the fourth quarter 2012.

Cash and equivalents and short term investments were €68.7 million at 31 December 2012, compared to €142.7 million at year end 2011, as the company invested in additional data centre capacity.

Equipped space at the end of the fourth quarter 2012 was 74,000 square metres compared to 62,800 square metres at the end of fourth quarter 2011 and 69,600 square metres at the end of the third quarter 2012. Utilisation rate, the ratio of revenue-generating space to equipped space, was 76%, up from 75% in the fourth quarter 2011, and up from 74% in the third quarter 2012.

Annual Review

Revenue for the full year 2012 was €277.1 million, a 13% increase over full year 2011. Recurring revenue for 2012 was €259.2 million, a 14% increase over 2011, and 94% of total revenue in 2012, up from 93% in 2011.

Gross profit was €164.0 million, a 15% increase over full year 2011.

Adjusted EBITDA for 2012 was €115.0 million, up 18% year over year. Adjusted EBITDA margin for full year 2012 expanded to 41.5% from 40.0% in 2011.

Net profit was €31.6 million in 2012, up 24% from 2011.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €111.7 million compared to €90.0 million in 2011.

Capital Expenditures, including intangible assets, were €178.3 million in 2012 compared to €162.0 million in 2011.

During 2012, Interxion opened new capacity in Frankfurt, Stockholm, Paris, London, Amsterdam, Madrid and Zurich representing approximately 11,200 square metres of equipped space. The company installed 9,100 revenue generating square metres in 2012. Utilisation was 76% at 31 December 2012 compared to 75% at 31 December 2011.

Business Outlook

The company today is providing guidance for full year 2013:

Revenue

€307 million - €322 million

Adjusted EBITDA

€130 million - €140 million

Capital Expenditures (including intangibles)

€130 million - €150 million

The company will host a conference call at 8:30 a.m. ET (1:30 pm GMT, 2:30 pm CET) today 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 95254723. 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 5 March 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 55 00 00. The replay access number is 95254723.

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 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 Operating Profit, Depreciation, amortisation, and impairments, Share-based Payments, or Increase/decrease in provision for onerous lease contracts, IPO transaction costs, 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 (NYS: INXN) is a leading provider of carrier-neutral collocation data centre services in Europe, serving a wide range of customers through 33 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.

1 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.

2 Other general administrative costs represents General and administrative costs excluding depreciation, amortisation, impairments, share-based payments and increase/(decrease) in provision for onerous lease contracts.

INTERXION HOLDING NV

CONSOLIDATED INCOME STATEMENT

(in €'000 - except per share data and where stated otherwise)

(unaudited)

Three Months Ended

Year Ended

31-Dec
2012

31-Dec
2011

31-Dec
2012

31-Dec
2011

Revenue

72,880

64,390

277,121

244,310

Cost of sales

(28,953

)

(25,495

)

(113,082

)

(101,766

)

Gross profit

43,927

38,895

164,039

142,544

Other income

120

146

463

487

Sales and marketing costs

(5,503

)

(4,643

)

(20,100

)

(17,680

)

General and administrative costs

(23,786

)

(16,869

)

(79,243

)

(67,258

)

Operating profit

14,758

17,529

65,159

58,093

Net finance expense

(5,657

)

(4,955

)

(17,746

)

(22,784

)

Profit before taxation

9,101

12,574

47,413

35,309

Income tax expense

(3,452

)

(1,925

)

(15,782

)

(9,737

)

Net profit

5,649

10,649

31,631

25,572

Basic earnings per share: (€)

0.08

0.16

0.47

0.40

Diluted earnings per share: (€)

0.08

0.16

0.46

0.39

Number of shares outstanding at the end of the period (shares in thousands)

68,176

66,129

68,176

66,129

Weighted average number of shares for Basic EPS (shares in thousands)

68,021

66,052

67,309

64,176

Weighted average number of shares for Diluted EPS (shares in thousands)

69,052

67,449

68,262

65,896

Capacity Metrics

Equipped space (in square meters)

74,000

62,800

74,000

62,800

Revenue generating space (in square meters)

56,200

47,100

56,200

47,100

Utilisation rate

76

%

75

%

76

%

75

%

INTERXION HOLDING NV

NOTES TO CONSOLIDATED INCOME STATEMENT: SEGMENT INFORMATION

(in €'000 - except where stated otherwise)

(unaudited)

Three Months Ended

Year Ended

31-Dec
2012

31-Dec
2011

31-Dec
2012

31-Dec
2011

Consolidated

Recurring revenue

69,002

59,717

259,249

228,328

Non-recurring Revenue

3,878

4,673

17,872

15,982

Revenue

72,880

64,390

277,121

244,310

Adjusted EBITDA

31,187

27,101

115,015

97,637

Gross Margin

60.3

%

60.4

%

59.2

%

58.3

%

Adjusted EBITDA Margin

42.8

%

42.1

%

41.5

%

40.0

%

Total assets

819,224

744,281

819,224

744,281

Total liabilities

443,650

413,720

443,650

413,720

Capital expenditure, including intangible assets (i)

(28,191

)

(68,543

)

(178,331

)

(161,956

)

France, Germany, Netherlands, and UK

Recurring revenue

42,849

36,184

159,136

136,460

Non-recurring Revenue

2,491

3,440

12,640

10,352

Revenue

45,340

39,624

171,776

146,812

Adjusted EBITDA

24,321

21,558

90,121

74,774

Gross Margin

62.7

%

62.2

%

61.4

%

59.8

%

Adjusted EBITDA Margin

53.6

%

54.4

%

52.5

%

50.9

%

Total assets

546,842

412,160

546,842

412,160

Total liabilities

139,576

97,779

139,576

97,779

Capital expenditure, including intangible assets (i)

(20,090

)

(60,230

)

(145,080

)

(122,880

)

Rest of Europe

Recurring revenue

26,153

23,533

100,113

91,868

Non-recurring Revenue

1,387

1,233

5,232

5,630

Revenue

27,540

24,766

105,345

97,498

Adjusted EBITDA

14,379

13,253

55,068

50,676

Gross Margin

62.4

%

62.7

%

61.5

%

61.4

%

Adjusted EBITDA Margin

52.2

%

53.5

%

52.3

%

52.0

%

Total assets

197,802

181,186

197,802

181,186

Total liabilities

48,183

40,774

48,183

40,774

Capital expenditure, including intangible assets (i)

(7,196

)

(6,913

)

(29,014

)

(35,366

)