INXN InterXion Holding NV

Interxion Holding NV (NYSE:INXN), a leading European provider of carrier and cloud neutral colocation data centre services, today announced its results for the three months ended 30 September 2013.

Financial Highlights

• Revenue increased by 11% to €78.1 million (Q3 2012: €70.4 million).
• Big 4 reporting segment’s recurring revenue increased by 16% to €46.1 million (Q3 2012: €39.8 million).
• Adjusted EBITDA increased by 17% to €33.7 million (Q3 2012: €28.7 million).
• Adjusted EBITDA margin increased to 43.1% (Q3 2012: 40.8%).
• Debt refinancing closed on 3 July, reducing interest costs and extending maturities. One-time costs of €31.0 million related to the refinancing were recognized in the quarter.
• Net loss was €16.5 million (Q3 2012: €8.6 million profit).
• Capital expenditure, including intangible assets, was €26.5 million.

Operating Highlights

• Expansion project in Vienna completed; announced expansion projects in Frankfurt, Stockholm and Zurich on schedule.
• Equipped Space increased by 400 square metres to 79,300 square metres.
• Revenue Generating Space increased by 900 square metres to 59,100 square metres.
• Utilisation Rate at the end of the quarter increased to 75%.

“Fundamentals for the carrier neutral data centre industry in Europe remain healthy. Interxion’s third quarter results reflect continued steady execution by the Company, supported by solid demand across our target customer segments,” said Interxion Chief Executive Officer, David Ruberg. “Our Communities of Interest strategy is delivering competitive differentiation in the marketplace, steady organic growth, and attractive returns as we focus on creating long term customer and shareholder value from our highly connected data centres.”

Quarterly Review

Revenue in the third quarter of 2013 was €78.1 million, an 11% increase over the third quarter of 2012 and 2% up on the second quarter of 2013. Recurring revenue, which was 94% of total revenue, was €73.7 million, a 13% increase over the third quarter of 2012 and 2% up on the second quarter of 2013. Recurring revenue in the Big 4 reporting segment was €46.1 million, a 16% increase over the third quarter of 2012 and 2% up on the second quarter of 2013.

Cost of sales in the third quarter of 2013 was €31.9 million, an 8% increase over the third quarter of 2012 and 2% up on the second quarter of 2013.

Gross profit was €46.2 million in the third quarter 2013, a 13% increase over the third quarter of 2012 and 2% up on the second quarter of 2013. Gross profit margin in the third quarter of 2013 was 59.2%, compared with 58.3% in the same quarter of 2012 and 59.1% in the second quarter of 2013.

Sales and marketing costs in the third quarter 2013 were €5.5 million, an 8% increase over the third quarter of 2012 but unchanged from the second quarter of 2013.

General and administrative costs1 in the third quarter 2013 were €7.1 million, a decrease of 2% compared with the third quarter of 2012 and 1% higher than the second quarter of 2013. Depreciation and amortisation in the third quarter 2013 was €15.2 million, a 38% increase over the third quarter of 2012 as a result of significant capital expenditures in the second half of 2012 and 2% up on the second quarter of 2013.

Net financing costs in the third quarter of 2013 were €38.1 million. On 3 July, Interxion closed a refinancing transaction that replaced €260 million of 9.50% Senior Secured Notes due 2017 with €325 million of 6.00% Senior Secured Notes due 2020. The Company also replaced its €60.0 million revolving credit facility with a €100.0 million revolving credit facility. Interxion recognised a €31.0 million one-time charge related to the refinancing transaction at the time of closing. Excluding the costs associated with the refinancing transactions, net financing costs in the third quarter were €7.1 million, an increase of 87% compared with the third quarter of 2012 (primarily as a result of lower interest capitalization) and 3% lower than the second quarter of 2013.

Income tax benefit was €4.1 million in the third quarter of 2013, compared with income tax expense of €4.3 million in the third quarter of 2012. Income taxes for the quarter were impacted by the one-time charge related to the refinancing transaction. The underlying effective tax rate for the quarter was 30% compared to 33% in the same period last year.

Net loss was €16.5 million in the third quarter 2013, compared with a net profit of €8.6 million in the third quarter of 2012 and a net profit of €6.6 million in the second quarter 2013. Loss per share was €0.24 on a weighted average of 69.5 million diluted shares, compared with earnings per share of €0.12 on a weighted average of 68.7 million diluted shares in the third quarter of 2012 and earnings per share of €0.10 on a weighted average of 69.4 million diluted shares in the second quarter 2013. Adjusted diluted earnings per share2 for the quarter was €0.10, compared with €0.10 for the third quarter 2012 and €0.09 in the second quarter 2013.

Adjusted EBITDA in the third quarter of 2013 was €33.7 million, a 17% increase over the third quarter 2012 and 3% up on the second quarter of 2013. Adjusted EBITDA margin increased to 43.1%, compared with 40.8% in the third quarter of 2012 and 42.8% in the second quarter 2013.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €32.0 million in the third quarter 2013 compared to €24.1 million in both the third quarter 2012 and the second quarter 2013. Capital expenditure, including intangible assets, was €26.5 million in the third quarter of 2013, compared to €46.5 million in the third quarter 2012 and €28.8 million in the second quarter 2013.

Cash and cash equivalents were €84.0 million at 30 September 2013, up from €68.7 million at year-end 2012. Total borrowings were €364.6 million at the end of the third quarter 2013 compared to €288.1 million at the end of 2012. The Company’s €100.0 million revolving credit facility was undrawn at the end of the third quarter 2013.

Equipped Space at the end of the third quarter 2013 was 79,300 square metres, compared with 69,600 square metres at the end of the third quarter of 2012 and 78,900 square metres at the end of the second quarter of 2013. Revenue Generating Space at the end of the third quarter 2013 was 59,100 square metres, compared with 51,200 square metres at the end of the third quarter of 2012 and 58,200 square metres at the end of the second quarter of 2013. Utilisation rate, the ratio of Revenue Generating Space to Equipped Space, was 75% at the end of the third quarter 2013, compared to 74% at the end of both the third quarter of 2012 and the second quarter of 2013.

Interxion’s previously announced expansion projects remain on schedule:

• ZUR 1.4 (Zurich): 500 square metres is scheduled to open in the fourth quarter of 2013.
• FRA 9 (Frankfurt): 800 square metres is scheduled to open in the first quarter of 2014.
• STO 2.2 (Stockholm): 500 square metres is scheduled to open in the first quarter of 2014.
• FRA 8 (Frankfurt): Phase 1, with approximately 900 square metres, is scheduled to open in the first half of 2014. Phase 2, with another 900 square metres, is scheduled to open in the second half of 2014.

Business Outlook

Interxion today reaffirmed its guidance for 2013:

Revenue     €307 million - €322 million Adjusted EBITDA €130 million - €140 million Capital expenditure (including intangibles) €130 million - €150 million  

Conference Call to Discuss Results

The Company will host a conference call today at 8:30am EST (1:30pm GMT 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 77292235. 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 12 November 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 550 000. The replay access number is 77292235.

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 €325 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 Profit. A reconciliation from reported Net Profit/(Loss) 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 34 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 450 fixed and mobile carriers and ISPs and 19 European Internet exchanges, 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 one-time refinancing costs after tax, capitalised interest after tax and one-time deferred tax asset movements.

        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 2013 2012 2013 2012   Revenue 78,051 70,425 228,957 204,241 Cost of sales (31,860 ) (29,400 ) (92,769 ) (84,129 ) Gross profit 46,191 41,025 136,188 120,112 Other income 106 111 299 343 Sales and marketing costs (5,465 ) (5,083 ) (16,452 ) (14,597 ) General and administrative costs (23,321 ) (19,443 ) (68,688 ) (55,457 ) Operating profit 17,511 16,610 51,347 50,401 Net finance expense (38,082 ) (3,778 ) (51,863 ) (12,089 ) Profit/(loss) before taxation (20,571 ) 12,832 (516 ) 38,312 Income tax benefit/(expense) 4,053   (4,270 ) (2,432 ) (12,330 ) Net profit/(loss) (16,518 ) 8,562   (2,948 ) 25,982     Basic earnings per share: (€) (0.24 ) 0.13 (0.04 ) 0.39 Diluted earnings per share: (€) (0.24 ) 0.12 (0.04 ) 0.38     Number of shares outstanding at the end of the period (shares in thousands) 68,810 67,950 68,810 67,950 Weighted average number of shares for Basic EPS (shares in thousands) 68,737 67,776 68,500 67,069 Weighted average number of shares for Diluted EPS (shares in thousands) 69,487 68,659 69,283 67,936         As at 30 Sep 30 Sep Capacity metrics 2013 2012 Equipped space (in square meters) 79,300 69,600 Revenue generating space (in square meters) 59,100 51,200 Utilisation rate 75 % 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 2013 2012 2013 2012 Consolidated   Recurring revenue 73,708 65,101 216,858 190,247 Non-recurring revenue 4,343   5,324   12,099   13,994   Revenue 78,051   70,425   228,957   204,241   Adjusted EBITDA 33,671   28,726   98,075   83,828   Gross margin 59.2 % 58.3 % 59.5 % 58.8 % Adjusted EBITDA margin 43.1 % 40.8 % 42.8 % 41.0 %   Total assets 885,658 769,644 885,658 769,644 Total liabilities 508,180 400,504 508,180 400,504 Capital expenditure, including intangible assets (i) (26,467 ) (46,468 ) (88,035 ) (150,140 )   France, Germany, the Netherlands, and the UK   Recurring revenue 46,057 39,828 135,692 116,287 Non-recurring revenue 2,713   3,950   7,915   10,149   Revenue 48,770   43,778   143,607   126,436   Adjusted EBITDA 26,587   22,395   77,791   65,800   Gross margin 62.1 % 60.1 % 62.5 % 60.9 % Adjusted EBITDA margin 54.5 % 51.2 % 54.2 % 52.0 %   Total assets 590,500 518,004 590,500 518,004 Total liabilities 135,540 90,654 135,540 90,654 Capital expenditure, including intangible assets (i) (17,595 ) (37,935 ) (59,316 ) (124,990 )   Rest of Europe   Recurring revenue 27,651 25,273 81,166 73,960 Non-recurring revenue 1,630   1,374   4,184   3,845   Revenue 29,281   26,647   85,350   77,805   Adjusted EBITDA 14,931   13,805   44,122   40,689   Gross margin 60.6 % 60.8 % 61.1 % 61.2 % Adjusted EBITDA margin 51.0 % 51.8 % 51.7 % 52.3 %   Total assets 207,318 192,261 207,318 192,261 Total liabilities 41,438 41,141 41,438 41,141 Capital expenditure, including intangible assets (i) (7,998 ) (7,047 ) (26,552 ) (21,818 )   Corporate and other                 Adjusted EBITDA (7,847 ) (7,474 ) (23,838 ) (22,661 )   Total assets 87,840 59,379 87,840 59,379 Total liabilities 331,202 268,709 331,202 268,709 Capital expenditure, including intangible assets (i) (874 ) (1,486 ) (2,167 ) (3,332 )     (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 2013 2012 2013 2012   Reconciliation to Adjusted EBITDA   Consolidated   Net profit/(loss) (16,518 ) 8,562 (2,948 ) 25,982 Income tax expense/(benefit) (4,053 ) 4,270   2,432   12,330   Profit/(loss) before taxation (20,571 ) 12,832 (516 ) 38,312 Net finance expense 38,082   3,778   51,863   12,089   Operating profit 17,511 16,610 51,347 50,401 Depreciation, amortisation and impairments 15,211   11,031   44,138   30,922   EBITDA 32,722 27,641 95,485 81,323 Share-based payments 1,055 1,196 2,889 2,848 Income from sub-leases on unused data centre sites (106 ) (111 ) (299 ) (343 ) Adjusted EBITDA 33,671   28,726   98,075   83,828     France, Germany, the Netherlands, and the UK   Operating profit 16,745 15,798 48,971 48,011 Depreciation, amortisation and impairments 9,761   6,526   28,668   17,627   EBITDA 26,506 22,324 77,639 65,638 Share-based payments 187 182 451 505 Income from sub-leases on unused data centre sites (106 ) (111 ) (299 ) (343 ) Adjusted EBITDA 26,587   22,395   77,791   65,800     Rest of Europe   Operating profit 10,218 9,796 30,635 28,977 Depreciation, amortisation and impairments 4,638   3,904   13,232   11,393   EBITDA 14,856 13,700 43,867 40,370 Share-based payments 75   105   255   319   Adjusted EBITDA 14,931   13,805   44,122   40,689     Corporate and Other   Operating profit/(loss) (9,452 ) (8,984 ) (28,259 ) (26,587 ) Depreciation, amortisation and impairments 812   601   2,238   1,902   EBITDA (8,640 ) (8,383 ) (26,021 ) (24,685 ) Share-based payments 793   909   2,183   2,024   Adjusted EBITDA (7,847 ) (7,474 ) (23,838 ) (22,661 )                     INTERXION HOLDING NV CONSOLIDATED BALANCE SHEET (in €'000 ― except where stated otherwise) (unaudited)     As at 30 Sep 31 Dec 2013 2012 Non-current assets Property, plant and equipment 658,279 620,931 Intangible assets 17,997 18,638 Deferred tax assets 35,548 30,376 Financial assets 774 774 Other non-current assets 4,899   4,959   717,497 675,678 Current assets Trade and other current assets 84,158 74,854 Cash and cash equivalents 84,003   68,692   168,161   143,546   Total assets 885,658   819,224     Shareholders’ equity Share capital 6,881 6,818 Share premium 483,899 477,326 Foreign currency translation reserve 7,564 9,403 Hedging reserve 55 - Accumulated deficit (120,921 ) (117,973 ) 377,478 375,574 Non-current liabilities Trade payables and other liabilities 11,142 11,194 Deferred tax liabilities 3,629 2,414 Provision for onerous lease contracts 5,632 7,848 Borrowings 362,781   288,085   383,184 309,541 Current liabilities Trade payables and other liabilities 115,160 127,778 Income tax liabilities 4,051 2,301 Provision for onerous lease contracts 3,998 3,978 Borrowings 1,787   52   124,996   134,109   Total liabilities 508,180   443,650   Total liabilities and shareholders’ equity 885,658   819,224         INTERXION HOLDING NV NOTES TO THE CONSOLIDATED BALANCE SHEET: BORROWINGS (in €'000 ― except where stated otherwise) (unaudited)     As at 30 Sep 31 Dec 2013 2012     Borrowings net of cash and cash equivalents   Cash and cash equivalents (ii) 84,003   68,692     6.0% Senior Secured Notes due 2020 (iii) 317,384 256,268 Mortgages 25,090 9,903 Financial leases 20,489 20,361 Other borrowings 1,605   1,605   Borrowings excluding Revolving Credit Facility deferred financing costs 364,568   288,137   Revolving credit facility deferred financing costs (iv) (1,290 ) (1,371 ) Total borrowings 363,278   286,766           Borrowings net of cash and cash equivalents 279,275   218,074      

(ii) Cash and cash equivalents include €4.1 million as of 30 September 2013 and €5.0 million as of 31 December 2012, 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. (iv) Deferred financing costs of €1.3 million as of 30 September 2013 were incurred in connection with the €100 million revolving credit facility.             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 2013 2012 2013 2012   Profit/(loss) for the period (16,518 ) 8,562 (2,948 ) 25,982 Depreciation, amortisation and impairments 15,211 11,031 44,138 30,922 Unwinding provision for onerous lease contracts (825 ) (793 ) (2,456 ) (2,372 ) Share-based payments 1,055 1,196 2,889 2,848 Net finance expense 38,082 3,778 51,863 12,089 Income tax expense/(benefit) (4,053 ) 4,270   2,432   12,330   32,952 28,044 95,918 81,799 Movements in trade and other current assets (1,105 ) (3,291 ) (9,909 ) (7,076 ) Movements in trade and other liabilities 156   (687 ) (6,314 ) 4,128   Cash generated from operations 32,003 24,066 79,695 78,851 Interest paid (v) (10,763 ) (7,476 ) (21,934 ) (17,607 ) Interest received 145 414 432 734 Income tax paid (2,020 ) (1,320 ) (4,090 ) (3,622 ) Net cash flows from operating activities 19,365 15,684 54,103 58,356 Cash flows from investing activities Purchase of property, plant and equipment (25,959 ) (43,823 ) (85,432 ) (145,046 ) Purchase of intangible assets (508 ) (2,645 ) (2,603 ) (5,094 ) Acquisition financial asset -   -   -   (774 ) Net cash flows from investing activities (26,467 ) (46,468 ) (88,035 ) (150,914 ) Cash flows from financing activities Proceeds from exercised options 1,289 1,621 4,032 6,725 Proceeds from / (Payments related to) mortgages (167 ) - 15,157 - Proceeds 6.00% Senior Secured Notes due 2020 317,814 - 317,814 - Repayment 9.50% Senior Secured Notes due 2017 (286,478 ) - (286,478 ) - Payments for Revolving Credit Facility (1,159 ) (204 ) (1,159 ) (1,159 ) Other borrowings (28 ) (59 ) (53 ) (740 ) Net cash flows from financing activities 31,271 1,358 49,313 4,826 Effect of exchange rate changes on cash (9 ) 92   (70 ) 215   Net movement in cash and cash equivalents 24,160 (29,334 ) 15,311 (87,517 ) Cash and cash equivalents, beginning of period 59,843   84,486   68,692   142,669   Cash and cash equivalents, end of period 84,003   55,152   84,003   55,152     (v) Interest paid is reported net of cash interest capitalized, 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 30 Sep 30 June 30 Sep 2013 2013 2012   Net Profit/(Loss) - as reported (16.5 ) 6.6 8.6   Add back + Refinancing charges 31.0 - - + Deferred tax asset adjustment 0.6   -   -   31.6 - - Reverse - Interest Capitalised (0.3 ) (0.3 ) (2.7 ) (0.3 ) (0.3 ) (2.7 )   Tax effect of above add backs & reversals (7.7 ) 0.1 0.7             Adjusted Net Profit 7.1   6.4   6.5     Reported Basic EPS: (€) (0.24 ) 0.10 0.13 Reported Diluted EPS: (€) (0.24 ) 0.10 0.12   Adjusted Basic EPS: (€) 0.10 0.09 0.10 Adjusted Diluted EPS: (€) 0.10 0.09 0.10           INTERXION HOLDING NV Status of Announced Expansion Projects as at 6 November 2013 with Target Open Dates in 2013 & 2014     Market Project CAPEX (a, b) Equipped Space (a) Target Opening Dates         (€million)   (Sqm)       Frankfurt FRA 6: Phase 3 Expansion 5 600 1Q 2013 (opened)   Copenhagen CPH 1: Expansion 2 300 2Q 2013 (opened)   Stockholm STO 2: Phase 1 New Build 11 500 2Q 2013 (opened)   Vienna VIE 1: Phase 4 Expansion 1 400 3Q 2013 (opened)   Zurich ZUR 1: Phase 4 Expansion 4 500 4Q 2013   Frankfurt FRA 9: Phase 1 New Build 13 800 1Q 2014   Stockholm STO 2: Phase 2 Expansion 6 500 1Q 2014   Frankfurt FRA 8: Phases 1 & 2 New Build 30 1,800 1H 2014 (c)   Total € 72 5,400   (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 the amounts shown in the table above may be invested over the duration of more than one fiscal year. (c) Phase 1 scheduled to be operational in the first half of 2014; phase 2 is scheduled to be operational in the second half of 2014.

Interxion Holding NVInvestor Relations:Jim Huseby, +1-813-644-9399IR@interxion.com