AMSTERDAM 7 May 2014 – Interxion Holding NV (NYSE:INXN, news), 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 (NYSE: 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.
Contact:
Jim Huseby
Investor Relations
Interxion
Tel: +1-813-644-9399
IR@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.
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