INXN InterXion Holding NV

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 September 2012.

Financial Highlights

• Revenue increased by 14% to €70.4 million (Q3 2011: €62.0 million)
• Adjusted EBITDA increased by 15% to €28.7 million (Q3 2011: €25.0 million)
• Adjusted EBITDA margin increased to 40.8% (Q3 2011: 40.3%)
• Net profit increased by 24% to €8.6 million (Q3 2011: €6.9 million)
• Capital expenditure, including intangible assets, was €46.5 million

Operating Highlights

• New data centres opened in Amsterdam and London
• Equipped Space increased by 4,300 square metres in the third quarter to 69,600 square metres
• Revenue Generating Space increased by 2,600 square metres in the third quarter to 51,200 square metres
• Utilisation Rate was 74% at the end of the quarter
• Announced expansion projects remain on schedule

“Interxion again delivered solid financial and operational results and significantly grew both equipped and revenue generating space,” said Interxion Chief Executive Officer, David Ruberg. “Our market strategy that focuses on creating value for our customers by building communities of interest continues to pay off. We saw particular strength from cloud service providers and financial services segments who derive value in their own businesses from the rich, low latency connectivity and robust communities of interest available in our highly reliable data centres.”

Quarterly Review

Revenue for the third quarter of 2012 was €70.4 million, a 14% increase over the third quarter of 2011 and a 4% increase over the second quarter of 2012. Recurring revenue was €65.1 million, a 12% increase over the third quarter of 2011 and a 4% increase over the second quarter of 2012. Recurring revenue was 92% of total revenue.

Cost of sales for the third quarter increased by 13% to €29.4 million, compared with the third quarter of 2011. Gross profit margin increased to 58.3%, compared with 58.1% in the same quarter of 2011. Sales and marketing costs in the third quarter were €5.1 million, up 20% compared with the same quarter in the previous year. General and administrative costs1, were €7.2 million, an increase of 6% compared with the third quarter of 2011. Depreciation, amortisation, and impairments increased by 21%, compared with the previous-year third quarter, to €11.0 million.

Net financing costs for the third quarter of 2012 were €3.8 million, compared with €5.3 million in the third quarter of 2011, primarily as a result of higher interest capitalization because of increased data centre construction.

Net profit was €8.6 million in the third quarter of 2012, up 24% from the third quarter of 2011. Earnings per share in the third quarter of 2012 were €0.12, an increase of 21%, on a weighted average of 68.7 million diluted shares compared to €0.10 on a weighted average of 67.5 million diluted shares in the third quarter of 2011.

Adjusted EBITDA for the third quarter of 2012 was €28.7 million, up 15% year-on-year. Adjusted EBITDA margin expanded to 40.8%, compared with 40.3% in the third quarter of the previous year.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €24.1 million. Capital Expenditure, including intangible assets, was €46.5 million in the third quarter 2012.

Cash and cash equivalents were €55.2 million at 30 September 2012, down from €142.7 million at year-end 2011. The Company’s €60.0 million revolving credit facility remains undrawn.

Equipped space at the end of the third quarter 2012 was 69,600 square metres, compared with 62,200 square metres at the end of the third quarter of 2011 and 65,300 square metres at the end of the second quarter of 2012. Revenue generating space was 51,200 square metres at the end of the third quarter 2012, compared to 46,100 square metres at the end of the third quarter of 2011 and 48,600 square metres at the end of the second quarter of 2012. Utilisation rate, the ratio of revenue-generating space to equipped space, was 74% at the end of the quarter, the same as the third quarter of 2011 and the second quarter of 2012.

1 excluding depreciation, amortisation, impairments, increase in provision for onerous lease contracts, and share-based payments

Business Outlook

The Company today reaffirmed its guidance for 2012:

Revenue     €275 million – €285 million Adjusted EBITDA €112 million – €120 million Capital Expenditure (including intangibles) €170 million – €190 million

Conference Call to Discuss Results

The Company will host a conference call today at 8:30am ET (1:30pm GMT, 2:30pm CET) to discuss the results.

To participate on this call, U.S. callers may dial toll free 1-866-295-3947; callers outside the U.S. may dial direct +44 (0) 1452 561 394. The conference ID for this call is 39820449. 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 November 2012. 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 39820449.

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 Adjusted EBITDA is provided in the Notes to Consolidated Income Statement: Adjusted EBITDA reconciliation later 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, abandoned transaction costs, income from sub-leases on unused data centre sites and net insurance compensation benefit, which it uses to reconcile to Adjusted EBITDA. The Company is, therefore, unable to provide reconciling information for Adjusted EBITDA.

About Interxion

Interxion (NYSE: INXN) is a leading provider of carrier-neutral colocation data centre services in Europe, serving a wide range of customers through 32 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.

        INTERXION HOLDING NV CONSOLIDATED INCOME STATEMENT (in €'000 - except per share data and where stated otherwise) (unaudited)   Three Months Ended Nine Months Ended 30-Sep 30-Sep 30-Sep 30-Sep 2012 2011 2012 2011   Revenue 70,425 62,005 204,241 179,920 Cost of sales (29,400 ) (25,969 ) (84,129 ) (76,271 ) Gross profit 41,025 36,036 120,112 103,649 Other income 111 99 343 341 Sales and marketing costs (5,083 ) (4,234 ) (14,597 ) (13,037 ) General and administrative costs (19,443 ) (16,594 ) (55,457 ) (50,389 ) Operating profit 16,610 15,307 50,401 40,564 Net finance expense (3,778 ) (5,255 ) (12,089 ) (17,829 ) Profit before taxation 12,832 10,052 38,312 22,735 Income tax expense (4,270 ) (3,161 ) (12,330 ) (7,812 ) Net profit 8,562   6,891   25,982   14,923     Basic earnings per share: (€) 0.13 0.10 0.39 0.23 Diluted earnings per share: (€) 0.12 0.10 0.38 0.23     Number of shares outstanding at the end of the period (shares in thousands) 67,950 65,823 67,950 65,823 Weighted average number of shares for Basic EPS (shares in thousands) 67,776 65,742 67,069 63,528 Weighted average number of shares for Diluted EPS (shares in thousands) 68,659 67,488 67,936 65,223      

Capacity Metrics

Equipped space (in square meters) 69,600 62,200 69,600 62,200 Revenue generating space (in square meters) 51,200 46,100 51,200 46,100 Utilisation rate 74 % 74 % 74 % 74 %           INTERXION HOLDING NV NOTES TO CONSOLIDATED INCOME STATEMENT: SEGMENT INFORMATION (in €'000 - except where stated otherwise) (unaudited)   Three Months Ended Nine Months Ended 30-Sep 30-Sep 30-Sep 30-Sep 2012 2011 2012 2011

Consolidated

  Recurring revenue 65,101 58,225 190,247 168,611 Non-recurring Revenue 5,324   3,780   13,994   11,309   Revenue 70,425   62,005   204,241   179,920   Adjusted EBITDA 28,726   25,005   83,828   70,536   Gross Margin 58.3 % 58.1 % 58.8 % 57.6 % Adjusted EBITDA Margin 40.8 % 40.3 % 41.0 % 39.2 %   Total assets 769,644 708,410 769,644 708,410 Total liabilities 400,504 392,391 400,504 392,391 Capital expenditure, including intangible assets (i) (46,468 ) (54,943 ) (150,140 ) (93,413 )  

France, Germany, Netherlands, and UK

  Recurring revenue 39,828 34,470 116,287 100,276 Non-recurring Revenue 3,950   1,950   10,149   6,912   Revenue 43,778   36,420   126,436   107,188   Adjusted EBITDA 22,395   18,473   65,800   53,216   Gross Margin 60.1 % 59.9 % 60.9 % 59.0 % Adjusted EBITDA Margin 51.2 % 50.7 % 52.0 % 49.6 %   Total assets 518,004 335,727 518,004 335,727 Total liabilities 90,654 86,705 90,654 86,705 Capital expenditure, including intangible assets (i) (37,935 ) (41,008 ) (124,990 ) (62,827 )  

Rest of Europe

  Recurring revenue 25,273 23,755 73,960 68,335 Non-recurring Revenue 1,374   1,830   3,845   4,397   Revenue 26,647   25,585   77,805   72,732   Adjusted EBITDA 13,805   13,162   40,689   37,423   Gross Margin 60.8 % 60.7 % 61.2 % 60.9 % Adjusted EBITDA Margin 51.8 % 51.4 % 52.3 % 51.5 %   Total assets 192,261 174,732 192,261 174,732 Total liabilities 41,141 38,812 41,141 38,812 Capital expenditure, including intangible assets (i) (7,047 ) (13,650 ) (21,818 ) (28,453 )  

Corporate and Other

        Adjusted EBITDA (7,474 ) (6,630 ) (22,661 ) (20,103 )   Total assets 59,379 197,951 59,379 197,951 Total liabilities 268,709 266,874 268,709 266,874 Capital expenditure, including intangible assets (i) (1,486 ) (285 ) (3,332 ) (2,133 )     (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 Nine Months Ended 30-Sep 30-Sep 30-Sep 30-Sep 2012 2011 2012 2011    

Reconciliation to adjusted EBITDA

 

Consolidated

  Operating profit 16,610 15,307 50,401 40,564 Depreciation, amortization and impairments 11,031   9,087   30,922   27,181   EBITDA 27,641 24,394 81,323 67,745 Share-based payments 1,196 710 2,848 1,389 Increase/(decrease) in provision for onerous lease contracts - - - 18 IPO transaction costs (ii) - - - 1,725 Income from sub-leases on unused data center sites (111 ) (99 ) (343 ) (341 ) Adjusted EBITDA 28,726   25,005   83,828   70,536    

France, Germany, Netherlands, and UK

  Operating profit 15,798 13,385 48,011 37,300 Depreciation, amortization and impairments 6,526   5,118   17,627   16,017   EBITDA 22,324 18,503 65,638 53,317 Share-based payments 182 69 505 222 Increase/(decrease) in provision for onerous lease contracts - - - 18 Income from sub-leases on unused data center sites (111 ) (99 ) (343 ) (341 ) Adjusted EBITDA 22,395   18,473   65,800   53,216    

Rest of Europe

  Operating profit 9,796

 

9,681

 

28,977

 

27,533 Depreciation, amortization and impairments 3,904  

 

3,411  

 

11,393  

 

9,698   EBITDA 13,700

 

13,092

 

40,370

 

37,231 Share-based payments 105  

 

70  

 

319  

 

192   Adjusted EBITDA 13,805  

 

13,162  

 

40,689  

 

37,423    

Corporate and Other

  Operating Profit/(Loss) (8,984 )

 

(7,759 )

 

(26,587 )

 

(24,269 ) Depreciation, amortization and impairments 601  

 

558  

 

1,902  

 

1,466   EBITDA (8,383 )

 

(7,201 )

 

(24,685 )

 

(22,803 ) Share-based payments 909

 

571

 

2,024

 

975 IPO transaction costs (ii) -  

 

-  

 

-  

 

1,725   Adjusted EBITDA (7,474 )

 

(6,630 )

 

(22,661 )

 

(20,103 )   (ii) The IPO transaction 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-Sep 31-Dec 2012 2011 Non-current Assets Property, plant and equipment 583,809 477,798 Intangible assets 18,162 12,542 Deferred tax assets 32,394 39,557 Financial fixed assets 774 – Other non-current assets 4,525   3,841   639,664 533,738 Current Assets Trade and other current assets 74,828 67,874 Cash and cash equivalents 55,152   142,669   129,980   210,543   Total Assets 769,644   744,281     Shareholders’ Equity Share capital 6,796 6,613 Share premium 475,185 466,166 Foreign currency translation reserve 10,781 7,386 Accumulated deficit (123,622 ) (149,604 ) 369,140 330,561 Non-current Liabilities Trade payables and other liabilities 10,858 10,294 Deferred tax liabilities 2,722 1,742 Provision for onerous lease contracts 8,503 10,618 Borrowings 257,758   257,267   279,841 279,921 Current Liabilities Trade payables and other liabilities 113,799 127,639 Income tax liabilities 3,582 2,249 Provision for onerous lease contracts 3,180 3,108 Borrowings 102   803   120,663   133,799   Total Liabilities 400,504   413,720   Total Liabilities and Shareholders’ Equity 769,644   744,281         INTERXION HOLDING NV NOTES TO THE CONSOLIDATED BALANCE SHEET: BORROWINGS (in €'000 - except where stated otherwise) (unaudited)   As at 30-Sep 31-Dec 2012 2011    

Borrowings Net of Cash and Cash Equivalents

  Cash and Cash Equivalents (iii) 55,152   142,669     9.5% Senior Secured Notes due 2017 (iv) 256,090 255,560 Financial Leases 165 337 Other Borrowings 1,605   2,173   Borrowings Excluding Revolving Credit Facility Deferred Financing Costs 257,860   258,070   Revolving credit facility deferred financing costs (v) (1,452 ) (667 ) Total Borrowings 256,408   257,403       Borrowings Net of Cash and Cash Equivalents 201,256   114,734       (iii) Cash and cash equivalents includes €5.6 million as of September 30, 2012 and €4.8 million as of December 31, 2011, which is restricted and held as collateral to support the issuance of bank guarantees on behalf of a number of subsidiary companies. (iv) €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. (v) Deferred financing costs of €1.5 million incurred in connection with the €60 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 Nine Months Ended 30-Sep 30-Sep 30-Sep 30-Sep 2012 2011 2012 2011     Profit for the period 8,562 6,891 25,982 14,923 Depreciation, amortization and impairments 11,031 9,087 30,922 27,181 IPO transaction costs - - - 1,725 Unwinding provision for onerous lease contracts (793 ) (750 ) (2,372 ) (2,303 ) Share-based payments 1,196 710 2,848 1,389 Net finance expense 3,778 5,255 12,089 17,829 Income tax expense 4,270   3,161   12,330   7,812   28,044 24,354 81,799 68,556 Movements in trade and other current assets (3,291 ) (2,316 ) (7,076 ) (7,995 ) Movements in trade and other liabilities (687 ) 1,723   4,128   6,913   Cash Generated from Operations 24,066 23,761 78,851 67,474 Interest paid (vi) (7,476 ) (11,598 ) (17,607 ) (24,178 ) Interest received 414 704 734 1,241 Income tax paid (1,320 ) (392 ) (3,622 ) (1,544 ) Net Cash Flows from Operating Activities 15,684 12,475 58,356 42,993 Cash Flows from Investing Activities Purchase of property, plant and equipment (43,823 ) (53,763 ) (145,046 ) (89,127 ) Disposals of property, plant and equipment - - - 945 Purchase of intangible assets (2,645 ) (1,180 ) (5,094 ) (4,286 ) Acquisition financial fixed assets - - (774 ) - Movement in short-term investments -   50,000   -   (40,000 ) Net Cash Flows from Investing Activities (46,468 ) (4,943 ) (150,914 ) (132,468 ) Cash Flows from Financing Activities Proceeds from exercised options 1,621 698 6,725 3,022 Proceeds from issuance of new shares - - - 142,952 Repayment of "Liquidation Price" to former preferred shareholders - - - (3,055 ) Senior Secured Notes and RCF (204 ) - (1,159 ) (645 ) Other Borrowings (59 ) (678 ) (740 ) (2,265 ) Net Cash Flows from Financing Activities 1,358 20 4,826 140,009 Effect of exchange rate changes on cash 92   16   215   (110 ) Net Movement in Cash and Cash Equivalents (29,334 ) 7,568 (87,517 ) 50,424 Cash and cash equivalents, beginning of period 84,486   141,971   142,669   99,115   Cash and Cash Equivalents, End of Period 55,152   149,539   55,152   149,539     (vi) Interest paid is reported net of cash interest capitalized which is reported as part of “Purchase of property, plant and equipment".     INTERXION HOLDING NV Status of Announced Expansion Projects as at 31 October 2012 with Target Open Dates in 2012 & 2013     Market Project CAPEX (a, b) Equipped Space (a) Target Opening       (€ million) (Sqm)     Stockholm STO 1: Phase 4 Expansion € 5 500 1Q 2012 (opened) Frankfurt FRA 7: New Build € 21 1,500 1Q 2012 (opened) Paris PAR 7 : Phase 1 New Build € 70 4,500 2Q 2012 (opened) (c) Amsterdam AMS 6: New Build € 60 4,400 3Q 2012 (opened) (d) London LON 2: New Build € 38 1,500 3Q 2012 (opened) (e) Amsterdam AMS 5: Phase 4 Expansion € 12 1,000 4Q 2012 Zurich ZUR 1: Phase 3 Expansion € 4 600 4Q 2012 Madrid MAD 2: Phase 1 New Build € 10 800 1Q 2013 Total € 220 14,800   (a) CAPEX and Equipped Space are approximate and may change. (b) CAPEX reflects the total for the listed project at full power and capacity and may not be all invested in the current year. (c) Opened 500 sqm in 2Q 2012 and 1500 sqm in 3Q 2012; remaining 2500 sqm scheduled to open in 1Q 2013. (d) Opened 1700 sqm in 3Q 2012 for early customer access; remainder of the facility opened on schedule (e) 1100 sqm opened in 3Q 2012; remainder scheduled to open in 4Q 2012.