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TMCNet: Interxion Reports Q2 2011 Results

[August 17, 2011]

Interxion Reports Q2 2011 Results

AMSTERDAM --(Business Wire)--

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 2011.

Highlights

  • Revenue increased by 19% to €60.0 million (Q2 2010: €50.4 million)
  • Adjusted EBITDA increased by 19% to €23.3 million (Q2 2010: €19.6 million)
  • Adjusted EBITDA margin increased to 38.9% (Q2 2010: 38.8%)
  • Net profit of €5.2 million (Q2 2010: €4.0 million)
  • Capital Expenditures of €16.2 million during the quarter
  • Reaffirmed full year 2011 guidance

"The second quarter of 2011 was Interxion's 19th consecutive quarter of sequential quarterly growth in revenue and Adjusted EBITDA," said Chief Executive Officer David Ruberg. "We saw 19% organic revenue growth and continued growth in Adjusted EBITDA margins. We remain confident in the market opportunity for our services and continue to invest for future growth with expansion projects already underway or completed this year in seven of our 11 countries."

A listing of the company's expansion projects is provided as a table at the end of this release.

Quarterly Review

Revenue for the second quarter of 2011 was €60.0 million, a 19% increase over the second quarter of 2010 and a 4% increase from the first quarter of 2011. Recurring revenue was 94% of total revenue.

Cost of sales for the second quarter increased by 15% to €25.5 million, producing an increased gross profit margin of 57.5% compared to 56.0% in the same quarter of 2010. Sales and marketing costs in the second quarter were €4.6 million, up 29% as a result of the company's continued investment in its market segmentation strategy. General and administrative costs, excluding depreciation, amortisation, impairments, exceptional general and administrative costs, and share-based payments were €6.6 million, an increase of 29% and were impacted by the onset of public company costs. Depreciation, amortisation, and impairments increased by 28% to €9.6 million.

Net financing costs for the second quarter of 2011 were €6.0 million, compared to €4.8 million in the second quarter of 2010 as a result of the €60 million bond tap in November 2010.

Net profit was €5.2 million in the second quarter of 2011, up 32% from the second quarter of 2010.

Adjusted EBITDA for the second quarter of 2011 was €23.3 million, up 19% year over year. Adjusted EBITDA margin expanded to 38.9% as the company's increased scale provided greater operating leverage.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €23.0 million. Net cash used in investing activities was €108.0 million, reflecting €16.2 million of capital expenditures and €90.0 million in short term investments. As announced on August 3, the company has begun building its seventh data centre (PAR7) in the Paris metropolitan area. The new facility is being built to meet the demands of customers who will benefit from Interxion's existing connectivity options of more than 70 carriers and the leading Internet exchange in France, France-IX.

Cash and equivalents and short term investments were €232.0 million, up from €99.1 million at year end.

Equipped space at the end of the second quarter 2011 was 61,500 square metres. Utilisation rate, the ratio of revenue-generating space to equipped space, was 74%, up from 73% both sequentially and year over year.

Business Outlook

The company today also reaffirmed its outlook for 2011:




         
Revenue €239 million - €245 million
Adjusted EBITDA €91 million - €95 million
Capital Expenditures €140 million - €160 million
 

Conference Call to Discuss Results

The company will host a conference call at 8:30 a.m. ET (1:30 p.m. BST) today to discuss results for the second quarter 2011.

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 88641994. 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 24 August 2011. 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 88641994#

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.

Adjusted EBITDA

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 and exceptional and non-recurring items, and to include share of profits (losses) of non-group companies. We present EBITDA and Adjusted EBITDA 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 €50 million revolving credit facility and €260 million 9.50% Senior Secured Notes due 2017. However, other companies may present EBITDA and Adjusted EBITDA differently than we do. EBITDA and Adjusted EBITDA 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 of Adjusted EBITDA to operating profit is provided in the Notes to Consolidated Income Statement: Group Metrics.

About Interxion

Interxion is a leading provider of carrier-neutral colocation data centre services in Europe, serving over 1,200 customers through 28 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 350 carriers and ISPs and 20 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 STATEMENTS
(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
2011 2010 2011 2010
 
Revenue 60,023 50,363 117,915 98,178
Cost of sales (25,522 ) (22,149 ) (50,302 ) (43,922 )
Gross profit 34,501 28,214 67,613 54,256
Other income 115 118 242 226
Sales and marketing costs (4,591 ) (3,557 ) (8,803 ) (6,882 )
General and administrative costs (16,496 ) (13,103 ) (33,795 ) (25,936 )
Operating profit 13,529 11,672 25,257 21,664
Finance income 902 186 1,415 265
Finance expense (6,888 ) (4,962 ) (13,989 ) (18,520 )
Profit before taxation 7,543 6,896 12,683 3,409
Income tax expense (2,319 ) (2,929 ) (4,651 ) (4,176 )
Net profit/(loss) 5,224   3,967   8,032   (767 )
 
Basic earnings per share: (€) (i) 0.08 0.09 0.13 (0.02 )
Diluted earnings per share: (€) (i) 0.08 0.08 0.12 (0.02 )
 
 
 
Number of shares outstanding at the end of the period (shares in thousands) 65,619 44,351 65,619 44,351
Weighted average number of shares for Basic EPS (shares in thousands) 65,579 43,999 62,398 44,351
Weighted average number of shares for Diluted EPS (shares in thousands) 67,536 46,792 64,534 47,567
 
 
(i) Number of shares have been adjusted to take account of the 1 for 5 reverse stock split which took place on 2 February 2011.
 
       
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
2011 2010 2011 2010
Consolidated
 
Recurring revenue 56,244 47,189 110,386 91,918
Non-recurring Revenue 3,779   3,174   7,529   6,260  
Revenue 60,023   50,363   117,915   98,178  
Adjusted EBITDA 23,321   19,561   45,531   37,005  
Gross Margin 57.5 % 56.0 % 57.3 % 55.3 %
Adjusted EBITDA Margin 38.9 % 38.8 % 38.6 % 37.7 %
 
Total assets 702,513 460,103 702,513 460,103
Total liabilities 395,984 321,766 395,984 321,766
Capital expenditures (iv) (16,240 ) (24,947 ) (35,364 ) (53,597 )
Depreciation, amortisation and impairments (9,568 ) (7,494 ) (18,094 ) (14,681 )
 
France, Germany, Netherlands, and UK
 
Recurring revenue 33,561 28,277 65,806 54,759
Non-recurring Revenue 2,535   2,183   4,962   4,221  
Revenue 36,096   30,460   70,768   58,980  
Adjusted EBITDA 17,964   14,714   34,743   27,401  
Gross Margin 58.5 % 57.8 % 58.5 % 56.2 %
Adjusted EBITDA Margin 49.8 % 48.3 % 49.1 % 46.5 %
 
Total assets 296,740 255,692 296,740 255,692
Total liabilities 86,519 80,840 86,519 80,840
Capital expenditures (iv) (7,090 ) (16,444 ) (19,430 ) (32,083 )
Depreciation, amortisation and impairments (5,753 ) (4,470 ) (10,899 ) (8,981 )
 
Rest of Europe
 
Recurring revenue 22,683 18,912 44,580 37,159
Non-recurring Revenue 1,244   991   2,567   2,039  
Revenue 23,927   19,903   47,147   39,198  
Adjusted EBITDA 12,165   9,608   24,267   19,376  
Gross Margin 61.0 % 58.5 % 61.0 % 59.3 %
Adjusted EBITDA Margin 50.8 % 48.3 % 51.5 % 49.4 %
 
Total assets 160,436 141,318 160,436 141,318
Total liabilities 37,139 36,020 37,139 36,020
Capital expenditures (iv) (8,428 ) (8,474 ) (14,692 ) (20,687 )
Depreciation, amortisation and impairments (3,289 ) (2,620 ) (6,287 ) (4,988 )
 
Corporate and Other
               
Adjusted EBITDA (6,808 ) (4,761 ) (13,479 ) (9,772 )
 
Total assets 245,337 63,093 245,337 63,093
Total liabilities 272,326 204,906 272,326 204,906
Capital expenditures (iv) (722 ) (29 ) (1,242 ) (827 )
Depreciation, amortisation and impairments (526 ) (404 ) (908 ) (712 )
 
 

(iv) Capital expenditures represent payments to acquire tangible fixed assets as recorded in the consolidated statement of cash flows as "Purchase of property, plant and equipment".

 
       
INTERXION HOLDING NV
NOTES TO CONSOLIDATED INCOME STATEMENT: GROUP METRICS
(in €'000 - except where stated otherwise)
(unaudited)
 
 
Three Months Ended Six Months Ended
30-Jun 30-Jun 30-Jun 30-Jun
2011 2010 2011 2010
 
1. Reconciliation of adjusted EBITDA
 
Adjusted EBITDA 23,321   19,561   45,531   37,005  
Income from subleases on unused data centre sites 115   118   242   226  
Exceptional income 115   118   242   226  
 
(Increase)/decrease in provision for onerous lease contracts - (118 ) (18 ) (226 )
IPO transaction costs (v) - - (1,725 ) -
Share-based payments (339 ) (395 ) (679 ) (660 )
Exceptional general and administrative costs (339 ) (513 ) (2,422 ) (886 )
EBITDA 23,097   19,166   43,351   36,345  
Depreciation, amortisation and impairments (9,568 ) (7,494 ) (18,094 ) (14,681 )
Operating profit 13,529   11,672   25,257   21,664  
 
 
 
2. Capacity Metrics
Equipped space (in sqm) 61,500 55,800 61,500 55,800
Revenue generating space (in sqm) 45,300 40,500 45,300 40,500
Utilisation rate 74 % 73 % 74 % 73 %
 
(v) The IPO 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
2011 2010
Non-current assets
Property, plant and equipment 359,543 342,420
Intangible assets 8,654 6,005
Deferred tax assets 40,997 39,841
Other non-current assets 3,765   3,709  
412,959 391,975
Current assets
Trade and other current assets 57,583 55,672
Short-term investments 90,000 -
Cash and cash equivalents 141,971   99,115  
289,554   154,787  
Total assets 702,513   546,762  
 
Shareholders' equity
Share capital 6,562 4,434
Share premium 463,070 321,078
Foreign currency translation reserve 4,041 4,933
Accumulated deficit (167,144 ) (175,176 )
306,529 155,269
Non-current liabilities
Trade payables and other liabilities 10,011 7,795
Deferred tax liabilities 1,484 660
Provision for onerous lease contracts 11,947 13,260
Borrowings 257,169   257,403  
280,611 279,118
Current liabilities
Trade payables and other liabilities 109,349 106,038
Current tax liabilities 1,544 868
Provision for onerous lease contracts 3,104 3,073
Borrowings 1,376   2,396  
115,373   112,375  
Total liabilities 395,984   391,493  
Total liabilities and shareholders' equity 702,513   546,762  
 
   
INTERXION HOLDING NV
NOTES TO THE CONSOLIDATED BALANCE SHEET: BORROWINGS
(in €'000 - except where stated otherwise)
(unaudited)
 
 
As at
30-Jun 31-Dec
2011 2010
 
3. Borrowings net of cash and cash equivalents and short-term investments
 
Cash and cash equivalents (vi) and Short-term investments (vii) 231,971   99,115  
 

9.5% Senior Secured Notes due 2017 (viii)

255,257 254,924
Financial Leases 541 765
Other Borrowings 2,747   4,110  
Borrowings excluding revolving credit facility deferred financing costs 258,545   259,799  
Revolving credit facility deferred financing costs (ix) (975 ) (1,283 )
Total Borrowings 257,570   258,516  
       
Borrowings net of cash and cash equivalents and short-term investments 25,599   159,401  
 

(vi) Cash and cash equivalents includes €3.5 million as of June 30, 2011 and €4.2 million as of December 31, 2010, which is restricted and held as collateral to support the issuance of bank guarantees on behalf of a number of subsidiary companies.

(vii) Short-term investments relate to six and nine months deposits.

(viii) €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.

(ix) We reported deferred financing costs of €1.0 million in connection with entering into our €50 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
2011 2010 2011 2010
 
Profit/(loss) for the period 5,224 3,967 8,032 (767 )
Depreciation, amortisation and impairments 9,568 7,494 18,094 14,681
IPO transaction costs - - 1,725 -
Provision for onerous lease contracts (779 ) (957 ) (1,553 ) (1,540 )
Share-based payments 339 395 679 660
Net finance expense 5,986 4,776 12,574 18,255
Income tax expense 2,319   2,929   4,651   4,176  
22,657 18,604 44,202 35,465
Movements in trade and other current assets 1,603 (2,289 ) (5,680 ) 2,646
Movements in trade and other liabilities (1,225 ) (1,508 ) 5,190   823  
Cash generated from operations 23,035 14,807 43,712 38,934
Interest paid (421 ) (257 ) (12,580 ) (978 )
Interest received 266 102 537 187
Income tax paid (465 ) (150 ) (1,152 ) (226 )
Net cash flows from operating activities 22,415 14,502 30,517 37,917
Cash flow from investing activities
Purchase of property, plant and equipment (16,240 ) (24,947 ) (35,364 ) (53,597 )
Disposals of property, plant and equipment 945 - 945 -
Purchase of intangible assets (2,712 ) (133 ) (3,106 ) (490 )
Acquisition of short-term investments (90,000 ) -   (90,000 ) -  
Net cash flows from investing activities (108,007 ) (25,080 ) (127,525 ) (54,087 )
Cash flow from financing activities
Proceeds from exercised options - - 2,324 -
Proceeds from issuance new shares (400 ) - 142,952 -
Repayment of 'Liquidation Price' to former preferred shareholders - - (3,055 ) -
Proceeds/(repayment) bank facilities - - - (159,046 )
Proceeds from Senior Secured Notes and RCF (206 ) (771 ) (645 ) 191,244
Other Borrowings (849 ) (124 ) (1,588 ) (1,170 )
Net cash flows from financing activities (1,455 ) (895 ) 139,988 31,028
Effect of exchange rate changes on cash (241 ) 115   (124 ) 260  
Net movement in cash and cash equivalents (87,288 ) (11,358 ) 42,856 15,118
Cash and cash equivalents, beginning of period 229,259   58,479   99,115   32,003  
Cash and cash equivalents, end of period 141,971   47,121   141,971   47,121  
 
       
INTERXION HOLDING NV
Announced Expansion Projects
 

 

 

 

 

 

Market

 

Project

 

CAPEX (x, xi)
(€ million)

 

Equipped
Space (x)
(Sqm)

 

Target Completion

 
Düsseldorf DUS 1 : Phase 2 Power Upgrade € 7 500 (xii) 2Q 2011 (completed)
London LON 1 : Phase 9 Expansion € 7 525 2Q 2011 (completed)
Vienna VIE 1 : Phase 3 Expansion € 12 1300 (xiii) 3Q 2011
Dublin DUB 2 : Phase 3 Expansion

and Power Upgrade

€ 8 640 4Q 2011
Paris PAR 7 : Phase 1 New Build € 70 4,500 2Q 2012
Various Upgrades (xiv) € 12
 
(x) CAPEX and Equipped Space are approximate and may change after project completion.
(xi) CAPEX reflects the total for the listed project and may not be all invested in the current year.
(xii) Previously included in equipped space
(xiii) 500 square metres scheduled for completion in 3Q 2011 with the remainder in 2012
(xiv) Upgrades include projects in Frankfurt, Paris, Stockholm and Zurich, each of which is below €5 million.


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