Interxion Reports First Quarter 2014 Results

AMSTERDAM--(BUSINESS WIRE)--

Interxion Holding NV INXN, a leading European provider of carrier and cloud neutral colocation data centre services, today announced its results for the three months ended 31 March 2014.

“Interxion posted solid financial and operational results in the first quarter. The strong order momentum experienced towards the end of last year has continued into 2014, as cloud infrastructure providers prepare for European enterprises migrating to the cloud,” said Interxion Chief Executive Officer, David Ruberg. “Our focus on attracting these magnetic customers as catalysts for our communities of interest has resulted in significant customer orders that underlie approximately 70% of Interxion's capital expenditures in 2014. These expansion projects are scheduled to open in late 2014 and in 2015.”

Financial Highlights

• Revenue increased by 8% to €80.6 million (Q1 2013: €74.4 million).
• Adjusted EBITDA increased by 9% to €34.5 million (Q1 2013: €31.7 million).
• Adjusted EBITDA margin increased to 42.9% (Q1 2013: 42.6%).
• Net profit increased to €10.4 million (Q1 2013: €7.0 million).
• Capital expenditure, including intangible assets, was €57.0 million.
• Subsequent to the quarter end, Interxion issued €150 million of 6% Senior Secured Notes due 2020 at 106.75.

Operating Highlights

• New data centres opened in Amsterdam and Frankfurt.
• Expansion projects were completed in Brussels and Stockholm.
• Other expansion projects remain on schedule.
• Equipped Space increased by 2,800 square metres to 82,900 square metres.
• Revenue Generating Space increased by 1,700 square metres to 61,400 square metres.
• Utilisation Rate at the end of the quarter was 74%.

Quarterly Review

Revenue in the first quarter of 2014 was €80.6 million, an 8% increase over the first quarter of 2013 and a 3% increase over the fourth quarter of 2013. Recurring revenue was €75.9 million, a 7% increase over the first quarter of 2013 and a 2% increase over the fourth quarter of 2013.

Cost of sales in the first quarter of 2014 was €32.6 million, a 10% increase over the first quarter of 2013 and a 4% increase over the fourth quarter of 2013.

Gross profit was €48.0 million in the first quarter of 2014, a 7% increase over the first quarter of 2013 and a 3% increase over the fourth quarter of 2013. Gross profit margin in the first quarter of 2014 was 59.6%, compared with 60.2% in the first quarter of 2013 and 59.9% in the fourth quarter of 2013.

Sales and marketing costs in the first quarter of 2014 were €5.9 million, a 7% increase over the first quarter of 2013 and an 8% decrease from the fourth quarter of 2013.

General and administrative costs¹ in the first quarter of 2014 were €7.6 million, a slight increase compared with the first quarter of 2013 and a 14% increase over the fourth quarter of 2013. Depreciation and amortisation in the first quarter of 2014 was €14.0 million, a slight decrease compared with the first quarter of 2013 and a 3% increase over the fourth quarter of 2013.

Net financing costs in the first quarter of 2014 were €5.4 million, a 16% decrease compared with the first quarter of 2013 and a 3% decrease over the fourth quarter of 2013.

Income tax expense was €4.2 million in the first quarter of 2014, a 26% increase over the first quarter of 2013 and a 16% increase from the fourth quarter of 2013. The underlying effective tax rate for the quarter was 29% compared with 32% in the same period last year.

Net profit was €10.4 million in the first quarter of 2014, a 49% increase over the first quarter 2013 and a 6% increase over the fourth quarter of 2013. Earnings per share was €0.15 on a weighted average of 69.6 million diluted shares in the first quarter of 2014. This result compares with earnings per share of €0.10 on a weighted average of 69.1 million diluted shares in the first quarter of 2013, and earnings per share of €0.14 on a weighted average of 69.5 million diluted shares in the fourth quarter of 2013. Adjusted diluted earnings per share² for the first quarter of 2014 was €0.14, compared with €0.09 for the first quarter of 2013.

Adjusted EBITDA in the first quarter of 2014 was €34.5 million, a 9% increase over the first quarter of 2013 and a 2% increase over the fourth quarter of 2013. Adjusted EBITDA margin was 42.9%, compared with 42.6% in the first quarter of 2013 and 43.2% in the fourth quarter of 2013.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €34.3 million in the first quarter of 2014, a 45% increase over the first quarter of 2013 and a 49% increase over the fourth quarter of 2013. Capital expenditure, including intangible assets, was €57.0 million in the first quarter of 2014, compared to €32.8 million in the first quarter of 2013 and €55.3 million in the fourth quarter of 2013.

Cash and cash equivalents were €41.9 million at 31 March 2014, down from €45.7 million at year-end 2013. Total borrowings were €392.9 million at the end of the first quarter of 2014, including a balance of €30.0 million on the company's revolving credit facility, compared with total borrowings of €362.7 million at the end of 2013.

Subsequent to the end of the quarter, Interxion completed a transaction which resulted in the company adding a further €150.0 million aggregate principal amount of its 6.00% Senior Secured Notes due 2020, issued at 106.75 and resulting in estimated net cash proceeds of €158.1 million. In connection with this transaction, the Company terminated its €100 million senior secured credit facility, which it entered into on 14 April 2014.

Equipped Space at the end of the first quarter of 2014 was 82,900 square metres, compared with 78,100 square metres at the end of the first quarter of 2013 and 80,100 square metres at the end of the fourth quarter of 2013. Revenue Generating Space at the end of the first quarter of 2014 was 61,400 square metres, compared with 57,000 square metres at the end of the first quarter of 2013 and 59,700 square metres at the end of the fourth quarter of 2013. Utilisation Rate, the ratio of Revenue Generating Space to Equipped Space, was 74% at the end of the first quarter of 2014, compared with 73% at the end of the first quarter of 2013 and 75% at the end of the fourth quarter of 2013.

Business Outlook

Interxion today reaffirmed its guidance for 2014:

Revenue		€334 million - €344 million
Adjusted EBITDA		€145 million - €152 million
Capital expenditure (including intangibles)		€175 million - €200 million

Conference Call to Discuss Results

The Company will host a conference call today at 8:30am EDT (1:30pm BST and 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 27524174. 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 14 May 2014. 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 27524174.

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, amortisation 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 €100 million revolving credit facility and €475 million 6.00% Senior Secured Notes due 2020. 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.

Adjusted diluted earnings per share amounts are determined on Adjusted Net Profit³. A reconciliation from reported Net Profit to Adjusted Net Profit is 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 INXN is a leading provider of cloud and carrier-neutral colocation data centre services in Europe, serving a wide range of customers through 37 data centres in 11 European countries. Interxion's data centres offer customers extensive security and uptime for their mission-critical applications. With connectivity provided by over 500 connectivity providers and 20 European Internet exchanges across its footprint, 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.

² Diluted earnings per share adjusted for capitalised interest after tax.

³ We define Adjusted Net Profit as net profit/loss excluding the impact of the refinancing charges, deferred tax adjustments, Dutch crisis tax, adjustments to onerous leases, capitalised interest, and the related corporate income tax effect.

INTERXION HOLDING NV CONSOLIDATED INCOME STATEMENT (in €'000 ― except per share data and where stated otherwise) (unaudited)
		Three Months Ended
		31 Mar			31 Mar
		2014			2013
Revenue		80,610			74,379
Cost of sales		(32,578	)		(29,615	)
Gross profit		48,032			44,764
Other income		60			123
Sales and marketing costs		(5,880	)		(5,495	)
General and administrative costs		(22,231	)		(22,616	)
Operating profit		19,981			16,776
Net finance expense		(5,401	)		(6,451	)
Profit before taxation		14,580			10,325
Income tax expense		(4,221	)		(3,355	)
Net profit		10,359			6,970
Basic earnings per share: (€)		0.15			0.10
Diluted earnings per share: (€)		0.15			0.10
Number of shares outstanding at the end of the period (shares in thousands)		68,898			68,411
Weighted average number of shares for Basic EPS (shares in thousands)		68,871			68,225
Weighted average number of shares for Diluted EPS (shares in thousands)		69,619			69,109
		As at
		31 Mar			31 Mar
Capacity metrics		2014			2013
Equipped space (in square meters)		82,900			78,100
Revenue generating space (in square meters)		61,400			57,000
Utilisation rate		74	%		73	%

INTERXION HOLDING NV NOTES TO CONSOLIDATED INCOME STATEMENT: SEGMENT INFORMATION (in €'000 ― except where stated otherwise) (unaudited)
			Three Months Ended
			31 Mar			31 Mar
			2014			2013
Consolidated
Recurring revenue			75,871			70,956
Non-recurring revenue			4,739			3,423
Revenue			80,610			74,379
Adjusted EBITDA			34,545			31,673
Gross margin			59.6	%		60.2	%
Adjusted EBITDA margin			42.9	%		42.6	%
Total assets			941,658			822,527
Total liabilities			542,343			439,639
Capital expenditure, including intangible assets (i)			(57,005	)		(32,789	)
France, Germany, the Netherlands, and the UK
Recurring revenue			47,640			44,448
Non-recurring revenue			3,132			2,138
Revenue			50,772			46,586
Adjusted EBITDA			27,294			25,167
Gross margin			61.8	%		63.2	%
Adjusted EBITDA margin			53.8	%		54.0	%
Total assets			645,929			550,804
Total liabilities			138,082			127,036
Capital expenditure, including intangible assets (i)			(43,592	)		(20,693	)
Rest of Europe
Recurring revenue			28,231			26,508
Non-recurring revenue			1,607			1,285
Revenue			29,838			27,793
Adjusted EBITDA			15,798			14,464
Gross margin			62.2	%		61.3	%
Adjusted EBITDA margin			52.9	%		52.0	%
Total assets			237,874			202,046
Total liabilities			43,981			41,166
Capital expenditure, including intangible assets (i)			(12,683	)		(11,249	)
Corporate and other
Adjusted EBITDA			(8,547	)		(7,958	)
Total assets			57,855			69,677
Total liabilities			360,280			271,437
Capital expenditure, including intangible assets (i)			(730	)		(847	)
(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
		31 Mar			31 Mar
		2014			2013
Reconciliation to Adjusted EBITDA
Consolidated
Net profit		10,359			6,970
Income tax expense		4,221			3,355
Profit before taxation		14,580			10,325
Net finance expense		5,401			6,451
Operating profit		19,981			16,776
Depreciation, amortisation and impairments		13,981			14,011
EBITDA		33,962			30,787
Share-based payments		643			1,009
Income from sub-leases on unused data centre sites		(60	)		(123	)
Adjusted EBITDA		34,545			31,673
France, Germany, the Netherlands, and the UK
Operating profit		18,284			15,912
Depreciation, amortisation and impairments		8,919			9,123
EBITDA		27,203			25,035
Share-based payments		151			255
Income from sub-leases on unused data centre sites		(60	)		(123	)
Adjusted EBITDA		27,294			25,167
Rest of Europe
Operating profit		11,468			10,175
Depreciation, amortisation and impairments		4,280			4,183
EBITDA		15,748			14,358
Share-based payments		50			106
Adjusted EBITDA		15,798			14,464
Corporate and Other
Operating profit/(loss)		(9,771	)		(9,311	)
Depreciation, amortisation and impairments		782			705
EBITDA		(8,989	)		(8,606	)
Share-based payments		442			648
Adjusted EBITDA		(8,547	)		(7,958	)

INTERXION HOLDING NV CONSOLIDATED BALANCE SHEET (in €'000 ― except where stated otherwise) (unaudited)
		As at
		31 Mar			31 Dec
		2014			2013
Non-current assets
Property, plant and equipment		745,554			698,748
Intangible assets		17,877			17,878
Deferred tax assets		33,137			34,446
Financial assets		774			774
Other non-current assets		4,808			16,536
		802,150			768,382
Current assets
Trade and other current assets		97,569			96,703
Cash and cash equivalents		41,939			45,690
		139,508			142,393
Total assets		941,658			910,775
Shareholders' equity
Share capital		6,890			6,887
Share premium		486,130			485,347
Foreign currency translation reserve		7,120			6,757
Hedging reserve, net of tax		(35	)		60
Accumulated deficit		(100,790	)		(111,149	)
		399,315			387,902
Non-current liabilities
Trade payables and other liabilities		11,648			11,537
Deferred tax liabilities		4,926			4,147
Provision for onerous lease contracts		4,042			4,855
Borrowings		362,352			362,209
		382,968			382,748
Current liabilities
Trade payables and other liabilities		119,621			132,093
Income tax liabilities		3,902			2,229
Provision for onerous lease contracts		4,084			4,020
Borrowings		31,768			1,783
		159,375			140,125
Total liabilities		542,343			522,873
Total liabilities and shareholders' equity		941,658			910,775

INTERXION HOLDING NV NOTES TO THE CONSOLIDATED BALANCE SHEET: BORROWINGS (in €'000 ― except where stated otherwise) (unaudited)
		As at
		31 Mar			31 Dec
		2014			2013
Borrowings net of cash and cash equivalents
Cash and cash equivalents (ii)		41,939			45,690
6.0% Senior Secured Notes due 2020 (iii)		317,847			317,610
Mortgages		24,115			24,257
Financial leases		20,553			20,520
Revolving credit facility		30,000			-
Other borrowings		1,605			1,605
Borrowings excluding Revolving Credit Facility deferred financing costs		394,120			363,992
Revolving credit facility deferred financing costs (iv)		(1,189	)		(1,258	)
Total borrowings		392,931			362,734
Borrowings net of cash and cash equivalents		350,992			317,044
(ii) Cash and cash equivalents include €4.1 million as of 31 March 2014 and €4.1 million as of 31 December 2013, which is restricted and held as collateral to support the issuance of bank guarantees on behalf of a number of subsidiary companies.
(iii) €325 million 6.0% Senior Secured Notes due 2020 are shown after deducting underwriting discounts and commissions, offering fees and expenses. On 29 April 2014, the Company completed the issuance of €150.0 million aggregate principal amount of its 6.00% Senior Secured Notes due 2020 (the “Additional Notes”). The estimated net proceeds of the offering amount to €158.1 million.
(iv) Deferred financing costs of €1.2 million as of 31 March 2014 were incurred in connection with the €100 million revolving facility.

INTERXION HOLDING NV CONSOLIDATED STATEMENT OF CASH FLOWS (in €'000 ― except where stated otherwise) (unaudited)
		Three Months Ended
		31 Mar			31 Mar
		2014			2013
Profit for the period		10,359			6,970
Depreciation, amortisation and impairments		13,981			14,011
Provision for onerous lease contracts		(819	)		(826	)
Share-based payments		643			1,009
Net finance expense		5,401			6,451
Income tax expense		4,221			3,355
		33,786			30,970
Movements in trade and other current assets		(800	)		(6,787	)
Movements in trade and other liabilities		1,306			(588	)
Cash generated from operations		34,292			23,595
Interest and fees paid (v)		(10,826	)		(10,031	)
Interest received		67			285
Income tax paid		(358	)		(436	)
Net cash flows from operating activities		23,175			13,413
Cash flows from investing activities
Purchase of property, plant and equipment		(56,391	)		(30,920	)
Purchase of intangible assets		(614	)		(1,869	)
Net cash flows from investing activities		(57,005	)		(32,789	)
Cash flows from financing activities
Proceeds from exercised options		256			1,611
Proceeds from mortgages		-			9,621
Repayment of mortgages		(167	)		-
Proceeds from Revolving Facility		30,000			-
Repayment of other borrowings		(11	)		(13	)
Net cash flows from financing activities		30,078			11,219
Effect of exchange rate changes on cash		1			(9	)
Net movement in cash and cash equivalents		(3,751	)		(8,166	)
Cash and cash equivalents, beginning of period		45,690			68,692
Cash and cash equivalents, end of period		41,939			60,526
(v) Interest paid is reported net of cash interest capitalised, which is reported as part of “Purchase of property, plant and equipment."

INTERXION HOLDING NV NOTES TO CONSOLIDATED INCOME STATEMENT: ADJUSTED NET PROFIT RECONCILIATION (in € millions ― except per share data and where stated otherwise) (unaudited)
		Three Months Ended
		31 Mar			31 Mar
		2014			2013
Net profit - as reported		10.4			7.0
Reverse
- Interest Capitalised		(0.8	)		(0.7	)
		(0.8	)		(0.7	)
Tax effect of above add backs & reversals		0.2			0.2
Adjusted Net profit		9.8			6.5
Reported Basic EPS: (€)		0.15			0.10
Reported Diluted EPS: (€)		0.15			0.10
Adjusted Basic EPS: (€)		0.14			0.10
Adjusted Diluted EPS: (€)		0.14			0.09

INTERXION HOLDING NV
Status of Announced Expansion Projects as at 7 May 2014
with Target Open Dates in 2014 & 2015
						Equipped
				CAPEX (a, b)		Space (a)
Market		Project		(€million)		(sqm)		Target Opening Dates
Amsterdam		AMS 7: Phases 1 - 6 New Build		115		7,300		1Q 2014 - 1H 2015 (c)
Brussels		BRU 1: Phase 5 Expansion		2		300		1Q 2014 (fully opened)
Frankfurt		FRA 8: Phases 1 - 4 New Build		67		3,600		2Q 2014 - 1H 2015 (d)
Frankfurt		FRA 9: Phase 1 New Build		13		800		1Q 2014 (fully opened)
Stockholm		STO 2: Phase 2 Expansion		6		500		1Q 2014 (fully opened)
Stockholm		STO 3: New Build		12		900		4Q 2014
Vienna		VIE 2: Phases 1 - 2 New Build		25		1,200		4Q 2014 - 1H 2015 (e)
Total				€ 240		14,600
(a) CAPEX and Equipped Space are approximate and may change.
(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 (1,100 sqm) became operational in 1Q 2014; phase 2 (1,000 sqm) is scheduled to be operational in 3Q 2014; phase 3 (1,300 sqm) is scheduled for 4Q 2014; phase 4 (1,300 sqm) is scheduled for 1Q 2015; phases 5 and 6 (1,300 sqm each) are scheduled for 1H 2015.
(d) Phase 1 (900 sqm) became operational in the second quarter of 2014; phase 2 (900 sqm) is scheduled to be operational in the fourth quarter of 2014; phases 3 and 4 (900 sqm each) are scheduled for 1H 2015.
(e) Phase 1 (600 sqm) is scheduled to be operational in 4Q 2014; phase 2 (600 sqm) is scheduled to be operational in 1H 2015.