LAS VEGAS, Feb. 24, 2022 /PRNewswire/ -- Switch, Inc.
(NYSE: SWCH) ("Switch") today announced financial results for the
quarter and full year ended December 31,
2021.
"Switch's strong fourth quarter results capped off a
transformational year for the company, highlighted by record
financial and bookings performance, the launch of our fifth PRIME
Campus, the successful acquisition and integration of Data Foundry,
and our announcement to pursue a REIT conversion effective
January 1, 2023," said Rob Roy, Founder and CEO of Switch. "During Q4,
we signed a two-megawatt commitment for LAS VEGAS 15, and expect the first sector to
be substantially committed to clients upon its scheduled opening in
Q2 2022. Looking ahead to 2022, we see one of the strongest sales
pipelines in the company's history driven by robust client demand
for our world-class exascale data center infrastructure."
Fourth Quarter 2021 Financial Results
Financial
Summary
($ in millions,
except per share amounts)
|
Q4
2020
|
Q3
2021
|
Q4
2021
|
|
Y/Y%
Change
|
Q/Q%
Change
|
|
|
|
|
|
|
|
Consolidated
revenue
|
$
127.7
|
$
158.1
|
$
161.4
|
|
26%
|
2%
|
Switch revenue
(excluding Data Foundry)
|
$
127.7
|
$
146.1
|
$
149.3
|
|
17%
|
2%
|
Data Foundry
revenue
|
—
|
$
12.0
|
$
12.1
|
|
n.m.
|
1%
|
Income (loss) from
operations1
|
$
26.3
|
$
17.8
|
$
(10.8)
|
|
n.m.
|
n.m.
|
Net income
(loss)1
|
$
15.3
|
$
(0.9)
|
$
(18.5)
|
|
n.m.
|
n.m.
|
Net income (loss) per
diluted share
|
$
0.05
|
$
(0.00)
|
$
(0.07)
|
|
n.m.
|
n.m.
|
Adjusted net income
per diluted share
|
$
0.06
|
$
0.01
|
$
0.03
|
|
-50%
|
188%
|
Adjusted
EBITDA
|
$
70.6
|
$
76.9
|
$
85.8
|
|
22%
|
12%
|
Adjusted EBITDA
Margin %
|
55.2%
|
48.6%
|
53.2%
|
|
-210
bp
|
450
bp
|
Adjusted Funds From
Operations
|
$
55.6
|
$
51.1
|
$
68.0
|
|
22%
|
33%
|
|
|
|
|
|
|
|
Key Performance
Indicators
|
Q4
2020
|
Q3
2021
|
Q4
2021
|
|
LTM
Average
|
Total Contract
Value
|
$
239.9
|
$
94.1
|
$
163.3
|
|
$133.0
|
Annualized Monthly
Recurring Revenue
|
$
54.9
|
$
26.9
|
$
47.6
|
|
$35.7
|
Incremental
Annualized Revenue
|
$
36.6
|
$
16.2
|
$
29.5
|
|
$21.6
|
Weighted Average Term
(yrs)
|
6.3
|
4.3
|
4.9
|
|
4.6
|
1Fourth
quarter 2021 income (loss) from operations and net income (loss)
includes a noncash litigation settlement of $35 million.
|
"Switch's strategic growth initiatives continue to gain
traction, producing strong double-digit organic revenue growth for
2021," said Thomas Morton, President
of Switch. "We are pleased with our strong fourth quarter sales
activity and ongoing high level of engagement with top enterprise
clients that continue to grow within our PRIME Campus
ecosystems."
"Our fourth quarter and full year 2021 results demonstrate the
inherent strengths of Switch's business model, generating strong
revenue growth, EBITDA margin expansion, and robust sales
execution," said Gabe Nacht, CFO of
Switch. "Our booked-not-billed backlog and highly active sales
pipeline provide good visibility to another year of solid growth in
2022."
Fourth Quarter 2021 Operating Results
Switch reported consolidated fourth quarter 2021 revenue of
$161.4 million, increasing 26%
compared to the fourth quarter of 2020. Excluding Data Foundry
revenue of $12.1 million, Switch
fourth quarter revenue totaled $149.3
million, representing 17% organic growth compared to the
fourth quarter of 2020. Adjusted EBITDA totaled $85.8 million for Q4 2021, compared to
$70.6 million in Q4 2020, reflecting
an Adjusted EBITDA margin of 53.2% and year-over-year growth of
22%. Fourth quarter operating results include a $35 million noncash litigation charge which
affected both income (loss) from operations and consolidated net
income (loss) for the period. As a result of this charge, Switch
reported a fourth quarter net loss of $18.5
million, compared to net income of $15.3 million in Q4 2020. Excluding charges
related to the settlement and a $4.2
million gain on interest rate swaps, net of tax provision
and non-controlling interest, adjusted net income was $4.1 million in the fourth quarter, or
$0.03 per diluted share.
Balance Sheet and Liquidity
As of December 31, 2021, Switch's
net debt was $1.6
billion(1), resulting in a net debt to Q4 2021
annualized Adjusted EBITDA(2) ratio of 4.7x. As of
December 31, 2021, Switch had
liquidity of $411.4 million,
including cash and cash equivalents and availability under its
revolver.
________________________________________
(1)
|
Net debt is
calculated as total debt outstanding, including finance lease
liabilities, of $1.69 billion, net of cash and cash equivalents of
$48.3 million, as of December 31, 2021.
|
(2)
|
Annualized Adjusted
EBITDA is calculated as fourth quarter 2021 Adjusted EBITDA
multiplied by four.
|
Capital Expenditures and Development
Capital expenditures for the fourth quarter totaled $124.0 million, including maintenance capital
expenditures of $2.8 million, or 1.8%
of total revenue. Growth capital expenditures, excluding land
purchases, were $110.7 million for
the fourth quarter of 2021, compared to $94.5 million in the same period last year.
Capital expenditures for the full year 2021 were $455.7 million, which includes $11.2 million for land purchases and $12.2 million of maintenance capital
expenditures.
During the quarter ended December 31,
2021, Switch capital expenditures were primarily incurred as
follows: (i) $49.5 million in The
Core Campus primarily for continued construction of the first
sector at LAS VEGAS 15 and site
preparation for LAS VEGAS 14 and
16; (ii) $37.8 million in The Citadel
Campus, primarily related to ongoing construction of the TAHOE
RENO 2 facility scheduled to open
in early 2023; (iii) $18.8 million in
The Rock Campus primarily for incremental power and cooling
capacity at the AUSTIN 3 facility,
and site preparation for the AUSTIN 4 and AUSTIN 5 data centers in Round Rock; and (iv) $17.5 million in The Keep Campus primarily for
additional power, cooling, and tenant improvements for the second
sector at ATLANTA 1 and
construction of the ATLANTA 3 data
center, scheduled to open in the second half of 2023.
Dividend
Switch today announced that its Board of Directors has declared
a cash dividend of $0.0525 per share
of Switch's Class A common stock. The dividend will be payable on
March 22, 2022 to all stockholders of
record as of the close of business on March
11, 2022. Prior to the payment of this dividend, Switch,
Ltd. will make a cash distribution to all holders of record of
common units of Switch, Ltd., including Switch, of $0.0525 per common unit.
Future declarations of dividends are subject to the
determination and discretion of Switch's Board of Directors based
on its consideration of many factors, including Switch's results of
operations, financial condition, capital requirements, restrictions
in Switch, Ltd.'s debt agreements, and other factors that Switch's
Board of Directors deems relevant.
Recent Business Highlights
- Signed a three-megawatt expansion order with an existing
e-commerce customer at The Citadel Campus representing $6 million in incremental annualized
revenue.
- Completed a two-megawatt transaction with an existing cloud
software customer at The Core Campus, representing Switch's initial
signing at the LAS VEGAS 15
facility. The contract includes expansion options of up to one
additional megawatt of capacity.
- Executed a colocation and network services agreement with an
existing Fortune 50 global technology customer, totaling more than
$6.5 million of incremental
annualized revenue. The agreement will expand the customer's
presence at The Core Campus and also migrate significant portions
of its telecommunications network to the CORE Cooperative.
- Completed an expansion order with an existing global logistics
customer for additional colocation and network services at The Core
Campus and The Keep Campus totaling $5
million of incremental annualized revenue.
- Signed a five-year renewal and expansion order with a leading
semiconductor customer at The Core Campus. Inclusive of incremental
colocation and network services, the contract represents
approximately $5 million of
annualized revenue and $25 million of
total contract value.
- Completed a three-year renewal of existing services with a
Fortune 100 SaaS customer at The Core Campus totaling more than
$11 million of total contract
value.
2022 Guidance
Switch is introducing full year 2022 guidance as follows:
- Revenue in the range of $660
million to $674 million,
reflecting 13% growth at the midpoint.
- Adjusted EBITDA in the range of $345
million to $357 million,
reflecting a margin of 52.6% at the midpoint.
- Capital expenditures, excluding land purchases, in the range of
$510 million to $560 million.
Switch's 2022 guidance reflects management's best assessment of
currently available information and forecasts of sales performance,
customer installations, and renewal activity for the remainder of
2022. Revenue guidance incorporates the company's signed revenue
backlog as of the date of this release, including a $23 million incremental revenue contribution from
the backlog as of December 31, 2021.
Guidance for Adjusted EBITDA and Adjusted EBITDA margin reflects
the company's current operating budget for 2022, including amounts
for variable costs that are dependent on the level of customer
power usage, sales activity, and operating revenue throughout the
year. Guidance for capital expenditures is based upon the
construction projects currently disclosed by management including
data centers that are expected to open in 2023-2024 and thus not
expected to generate revenue in the current year. Actual capital
expenditures are subject to modulation based on customer demand and
deployment timelines.
Switch does not provide reconciliations for the non-GAAP
financial measures included in the 2022 guidance above because we
are unable to provide a meaningful or accurate calculation or
estimation of reconciling items. This is due to the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliations, including net income or loss,
depreciation and amortization expense, impairment charges, gains or
losses on retirement of debt, gains or losses on swaps, and
variations in effective tax rate, which are difficult to predict
and estimate and are primarily dependent on future events, but
which are excluded from Switch's calculation of Adjusted
EBITDA.
Conference Call Information
Switch will host a conference call and live webcast for analysts
and investors at 5:00 p.m. Eastern time on February 24, 2022. Parties in the United
States can access the call by dialing 844-200-6205, parties in
Canada can dial 833-950-0062, and
all international parties can dial 929-526-1599. Please use
participant access code 557944.
The webcast will be accessible on Switch's investor relations
website at investors.switch.com for one year. A telephonic replay
of the conference call will be available through Thursday, March 3, 2022. To access the replay,
U.S. parties can dial 866-813-9403, parties in Canada can dial 226-828-7578, and
international parties can dial +44 204 525 0658. The replay access
code is 09954.
Upcoming Conferences and Events
Switch management will participate in the following upcoming
investor conference:
- Raymond James 43rd
Annual Institutional Investor Conference – March 7-8, 2022
Use of Non-GAAP Financial Measures
To supplement Switch's consolidated financial statements, which
are prepared and presented in accordance with accounting principles
generally accepted in the United States
of America ("GAAP"), Switch uses Adjusted EBITDA, Adjusted
EBITDA margin, Adjusted Funds From Operations, adjusted net income
attributable to Switch, Inc., adjusted net income per diluted
share, net debt, and net debt to annualized Adjusted EBITDA, which
are non-GAAP measures, in this press release. In addition, Switch
presents revenue and Adjusted EBITDA, excluding Data Foundry, which
are also non-GAAP measures. Switch defines Adjusted EBITDA as net
income (loss) adjusted for interest expense, interest income,
income taxes, depreciation and amortization of property and
equipment, amortization of customer relationships, and for specific
and defined supplemental adjustments to exclude (i) non-cash
equity-based compensation expense; (ii) equity in net losses of
investments; and (iii) certain other items that Switch believes are
not indicative of its core operating performance. Switch defines
Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.
Switch defines Adjusted Funds from Operations as net income (loss)
adjusted for depreciation and amortization of property and
equipment, amortization of customer relationships, noncash
equity-based compensation, deferred income tax expense, unrealized
loss (gain) on swaps, loss on debt extinguishment, maintenance
capital expenditures, and certain other items that Switch believes
are not indicative of its core operating performance. Switch
defines adjusted net income attributable to Switch, Inc. as net
income (loss) adjusted for gain (loss) on swaps and noncash
litigation settlement expense, net of noncontrolling interest and
income taxes calculated using the specific tax treatment applicable
to the adjustments. Switch defines net debt as total debt
outstanding, including finance lease liabilities, net of cash and
cash equivalents. Switch defines net debt to last quarter
annualized Adjusted EBITDA as net debt divided by quarterly
Adjusted EBITDA multiplied by four. Switch uses net debt and net
debt to last quarter annualized Adjusted EBITDA as measures to
evaluate its net debt and leverage position. Switch believes that
investors also may find such measures to be helpful in assessing
its ability to pursue business opportunities and investments.
The presentation of these financial measures is not intended to
be considered in isolation or as a substitute for, or superior to,
financial information prepared and presented in accordance with
GAAP. Investors are cautioned that there are material limitations
associated with the use of non-GAAP financial measures as an
analytical tool. These measures may be different from non-GAAP
financial measures used by other companies, limiting their
usefulness for comparison purposes. In addition, the non-GAAP
financial measures exclude certain recurring expenses that have
been and will continue to be significant expenses of Switch's
business.
Switch believes these non-GAAP financial measures provide useful
information to investors and others in understanding and evaluating
its operating results, enhancing the overall understanding of its
past performance and future prospects, and allowing for greater
transparency with respect to key financial metrics used by its
management in financial and operational-decision making. For more
information on Switch's non-GAAP financial measures and a
reconciliation of GAAP to non-GAAP measures, please see the
"Reconciliation of Net (Loss) Income to Adjusted EBITDA",
"Reconciliation of Net (Loss) Income to Adjusted Funds From
Operations," and the "Reconciliation of Net (Loss) Income
Attributable to Switch, Inc. to Adjusted Net Income Attributable to
Switch, Inc." tables in this press release.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of federal securities laws. Forward-looking statements
generally relate to future events or Switch's future financial or
operating performance. In some cases, you can identify
forward-looking statements because they contain words such as
"may," "will," "should," "expects," "plans," "anticipates,"
"could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential" or "continue" or
the negative of these words or other similar terms or expressions
that concern the company's expectations, strategy, plans or
intentions. Forward-looking statements in this press release
include, but are not limited to Switch's guidance relating to
revenue, Adjusted EBITDA and capital expenditures for the year
ending December 31, 2022; Switch's
expectations regarding operating results, including the timing of
revenue growth in 2022; Switch's expectations regarding its plans
to pursue a conversion to a REIT structure, including the timing or
completion of such conversion; Switch's estimated data center
construction and opening timelines; Switch's expectations regarding
customer demand and retention, market position, growth and
financial results; and Switch's expectations regarding future
declarations of dividends and cash distributions. Switch's
expectations and beliefs regarding these matters may not
materialize, and actual results in future periods are subject to
inherent risks, uncertainties and changes in circumstance that are
difficult or impossible to predict. The risks and uncertainties
that could affect Switch's financial and operating results and
cause actual results to differ materially from those indicated by
the forward-looking statements made in this press release include,
without limitation (i) the impact of COVID-19 and its variants on
its business operations, including the duration, spread, severity,
and reoccurrences of such pandemic, the duration and scope of
related government orders and restrictions, the impact on its
employees, and the impact on the global economy including demand
for its customers, partners and vendors' products and services;
(ii) the impact of COVID-19 and its variants on its vendors and
suppliers, including disruptions and inefficiencies in the supply
chain; (iii) its ability to successfully implement its business
strategies and effectively manage its growth and expansion plans;
(iv) delays or unexpected costs in development and opening of data
center facilities; (v) any slowdown in demand for its existing data
center resources; (vi) its ability to attract new customers,
realize the anticipated benefits of its new contracts and achieve
sufficient customer demand to realize future expected returns on
its investments; (vii) its ability to effectively compete in the
data center market; (viii) its ability to license space in its
existing data centers; (ix) the geographic concentration of its
data centers in certain markets; (x) local economic, credit and
market conditions that impact its customers in these markets; (xi)
the impact of delays or disruptions in third-party network
connectivity; (xii) developments in the technology and data center
industries in general that negatively impact Switch, including
development of new technologies, adoption of new industry
standards, declines in the technology industry or slowdown in the
growth of the Internet; (xiii) its ability to adapt to evolving
technologies and customer demands in a timely and cost-effective
manner; (xiv) its ability to obtain necessary capital to fund its
capital requirements and its ability to continue to comply with
covenants and terms in its credit instruments; (xv) fluctuations in
interest rates and increased operating costs, including power
costs; (xvi) significant disruptions, security breaches, including
cyber security breaches, or system failures at any of its data
center facilities; (xvii) loss of significant customers or key
personnel; (xiii) the impact of future changes in legislation and
regulations, including changes in real estate and zoning laws, the
Americans with Disabilities Act of 1990, environmental and other
laws that impact its business and industry, in addition to those
under the captions "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
elsewhere in Switch's most recent Annual Report on Form 10-K and in
Switch's other reports filed with the Securities and Exchange
Commission ("SEC"). Switch's SEC filings are available on the
Investors section of Switch's website at investors.switch.com and
on the SEC's website at www.sec.gov. The forward-looking statements
in this press release are based on information available to Switch
as of the date hereof, and Switch disclaims any obligation to
update any forward-looking statements to reflect any change in its
expectations or any change in events, conditions, or circumstances
on which any such statement is based, except as required by law.
These forward-looking statements should not be relied upon as
representing Switch's views as of any date subsequent to the date
of this press release.
ABOUT Switch
Switch (NYSE: SWCH), is the independent leader in exascale data
center ecosystems, edge data center designs, industry-leading
telecommunications solutions and next-generation technology
innovation. Switch Founder and CEO Rob
Roy has developed more than 700 issued and pending patent
claims covering data center designs that have manifested into the
company's world-renowned data centers and technology solutions.
We innovate to sustainably progress the digital foundation of
the connected world with a focus on enterprise-class and emerging
hybrid cloud solutions. The Switch PRIMEs, located in Las Vegas and Tahoe Reno, Nevada; Grand
Rapids, Michigan; Atlanta,
Georgia; and Austin, Texas
are the world's most powerful exascale data center campus
ecosystems with low latency to major U.S. markets. Visit switch.com
for more information or follow us on LinkedIn and Twitter.
Switch,
Inc.
|
Consolidated
Balance Sheets
|
(in thousands,
except per share data)
|
(unaudited)
|
|
|
December
31,
|
|
2021
|
|
2020
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
48,325
|
|
$
90,719
|
Restricted
cash
|
1,890
|
|
—
|
Accounts receivable,
net of allowance for credit losses of $361 and $792,
respectively
|
18,368
|
|
21,723
|
Prepaid
expenses
|
10,265
|
|
8,171
|
Other current assets,
net of allowance for credit losses of $3 and $0,
respectively
|
4,624
|
|
2,235
|
Total current
assets
|
83,472
|
|
122,848
|
Property and
equipment, net
|
2,237,059
|
|
1,737,415
|
Long-term
deposit
|
13,504
|
|
2,626
|
Deferred income
taxes
|
295,699
|
|
203,201
|
Intangible assets,
net
|
125,758
|
|
2,423
|
Goodwill
|
106,350
|
|
—
|
Other assets, net of
allowance for credit losses of $91 and $87, respectively
|
56,776
|
|
45,943
|
TOTAL
ASSETS
|
$
2,918,618
|
|
$
2,114,456
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Long-term debt,
current portion
|
$
4,000
|
|
$
—
|
Accounts
payable
|
55,262
|
|
14,588
|
Accrued salaries and
benefits
|
6,786
|
|
4,884
|
Accrued
interest
|
8,577
|
|
7,132
|
Accrued expenses and
other
|
18,285
|
|
9,686
|
Accrued construction
payables
|
31,093
|
|
27,162
|
Deferred revenue,
current portion
|
16,905
|
|
14,870
|
Customer
deposits
|
16,335
|
|
12,348
|
Swap liability,
current portion
|
8,062
|
|
9,418
|
Operating lease
liability, current portion
|
3,281
|
|
3,512
|
Total current
liabilities
|
168,586
|
|
103,600
|
Long-term debt,
net
|
1,611,962
|
|
991,213
|
Operating lease
liability
|
32,157
|
|
25,536
|
Finance lease
liability
|
57,376
|
|
57,516
|
Deferred
revenue
|
25,921
|
|
23,862
|
Liabilities under tax
receivable agreement
|
395,615
|
|
278,865
|
Other long-term
liabilities
|
8,360
|
|
22,897
|
TOTAL
LIABILITIES
|
2,299,977
|
|
1,503,489
|
Commitments and
contingencies
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
Preferred stock,
$0.001 par value per share, 10,000 shares authorized, none issued
and outstanding
|
—
|
|
—
|
Class A common stock,
$0.001 par value per share, 750,000 shares authorized, 145,187 and
119,009 shares issued and outstanding, respectively
|
145
|
|
119
|
Class B common stock,
$0.001 par value per share, 300,000 shares authorized, 98,331 and
121,640 shares issued and outstanding, respectively
|
98
|
|
122
|
Class C common stock,
$0.001 par value per share, 75,000 shares authorized, none issued
and outstanding
|
—
|
|
—
|
Additional paid in
capital
|
352,984
|
|
266,129
|
(Accumulated deficit)
retained earnings
|
(23,022)
|
|
9
|
Accumulated other
comprehensive (loss) income
|
(568)
|
|
79
|
Total Switch, Inc.
stockholders' equity
|
329,637
|
|
266,458
|
Noncontrolling
interest
|
289,004
|
|
344,509
|
TOTAL STOCKHOLDERS'
EQUITY
|
618,641
|
|
610,967
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
2,918,618
|
|
$
2,114,456
|
Switch,
Inc.
|
Consolidated
Statements of Comprehensive (Loss) Income
|
(in thousands,
except per share data)
|
(unaudited)
|
|
|
Three Months
Ended
December
31,
|
|
Years
Ended
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue
|
$
161,385
|
|
$
127,749
|
|
$
592,045
|
|
$
511,547
|
Cost of
revenue
|
93,537
|
|
69,900
|
|
339,637
|
|
279,475
|
Gross
profit
|
67,848
|
|
57,849
|
|
252,408
|
|
232,072
|
Selling, general and
administrative expense
|
43,662
|
|
31,589
|
|
161,380
|
|
136,659
|
Litigation settlement
expense
|
35,000
|
|
—
|
|
35,000
|
|
—
|
(Loss) income from
operations
|
(10,814)
|
|
26,260
|
|
56,028
|
|
95,413
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
including $661, $583, $2,553, and $1,840 respectively, in
amortization of debt issuance costs and original issue
discount
|
(13,521)
|
|
(9,092)
|
|
(47,642)
|
|
(29,774)
|
Gain (loss) on
swaps
|
4,203
|
|
(232)
|
|
585
|
|
(23,489)
|
Loss on extinguishment
of debt
|
—
|
|
—
|
|
(146)
|
|
(245)
|
Equity in net losses
of investments
|
(281)
|
|
—
|
|
(1,206)
|
|
—
|
Gain on sale of equity
method investment
|
—
|
|
—
|
|
5,374
|
|
—
|
Other
|
324
|
|
267
|
|
4,416
|
|
1,000
|
Total other
expense
|
(9,275)
|
|
(9,057)
|
|
(38,619)
|
|
(52,508)
|
(Loss) income before
income taxes
|
(20,089)
|
|
17,203
|
|
17,409
|
|
42,905
|
Income tax benefit
(expense)
|
1,629
|
|
(1,908)
|
|
(2,658)
|
|
(4,530)
|
Net (loss)
income
|
(18,460)
|
|
15,295
|
|
14,751
|
|
38,375
|
Less: net (loss)
income attributable to noncontrolling interest
|
(8,239)
|
|
8,843
|
|
9,339
|
|
22,836
|
Net (loss) income
attributable to Switch, Inc.
|
$
(10,221)
|
|
$
6,452
|
|
$
5,412
|
|
$
15,539
|
|
|
|
|
|
|
|
|
Net (loss) income per
share:
|
|
|
|
|
|
|
|
Basic
|
$
(0.07)
|
|
$
0.06
|
|
$
0.04
|
|
$
0.15
|
Diluted
|
$
(0.07)
|
|
$
0.05
|
|
$
0.04
|
|
$
0.14
|
|
|
|
|
|
|
|
|
Weighted average
shares used in computing net (loss) income per share:
|
|
|
|
|
|
|
|
Basic
|
143,063
|
|
115,111
|
|
134,091
|
|
105,822
|
Diluted
|
143,063
|
|
243,346
|
|
138,699
|
|
243,501
|
|
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of reclassification adjustment and tax
of $0
|
(994)
|
|
—
|
|
(1,468)
|
|
—
|
Comprehensive (loss)
income
|
(19,454)
|
|
15,295
|
|
13,283
|
|
38,375
|
Less: comprehensive
(loss) income attributable to noncontrolling interest
|
(8,647)
|
|
8,843
|
|
8,518
|
|
22,836
|
Comprehensive (loss)
income attributable to Switch, Inc.
|
$
(10,807)
|
|
$
18,598
|
|
$
4,765
|
|
$
15,539
|
Switch,
Inc.
|
Reconciliation of
Net (Loss) Income to Adjusted EBITDA
|
(in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Years
Ended
December
31,
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
|
2021
|
|
2020
|
Net (loss)
income
|
$
(18,460)
|
|
$
(867)
|
|
$
15,295
|
|
$
14,751
|
|
$
38,375
|
Interest
expense
|
13,521
|
|
15,166
|
|
9,092
|
|
47,642
|
|
29,774
|
Interest
income
|
(36)
|
|
(36)
|
|
(40)
|
|
(149)
|
|
(156)
|
Income tax (benefit)
expense
|
(1,629)
|
|
(278)
|
|
1,908
|
|
2,658
|
|
4,530
|
Depreciation and
amortization of property and equipment
|
47,336
|
|
45,138
|
|
37,416
|
|
172,550
|
|
142,738
|
Amortization of
customer relationships
|
1,563
|
|
1,562
|
|
—
|
|
3,542
|
|
—
|
Loss on disposal of
property and equipment
|
193
|
|
32
|
|
79
|
|
404
|
|
362
|
Equity-based
compensation
|
8,005
|
|
7,053
|
|
6,583
|
|
29,883
|
|
28,733
|
(Gain) loss on
swaps
|
(4,203)
|
|
3,853
|
|
232
|
|
(585)
|
|
23,489
|
Litigation
expense
|
4,253
|
|
4,717
|
|
—
|
|
8,970
|
|
239
|
Noncash litigation
settlement expense
|
35,000
|
|
—
|
|
—
|
|
35,000
|
|
—
|
Equity in net losses
of investments
|
281
|
|
326
|
|
—
|
|
1,206
|
|
—
|
Loss on
extinguishment of debt
|
—
|
|
146
|
|
—
|
|
146
|
|
245
|
Acquisition-related
costs
|
—
|
|
82
|
|
—
|
|
4,485
|
|
—
|
Gain on sale of
equity method investment
|
—
|
|
—
|
|
—
|
|
(5,374)
|
|
—
|
Adjusted
EBITDA
|
$
85,824
|
|
$
76,894
|
|
$
70,565
|
|
$
315,129
|
|
$
268,329
|
Switch,
Inc.
|
Reconciliation of
Net (Loss) Income to Adjusted Funds From Operations
|
(in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
Net (loss)
income
|
$
(18,460)
|
|
$
(867)
|
|
$
15,295
|
Income tax (benefit)
expense
|
(1,629)
|
|
(278)
|
|
1,908
|
Depreciation and
amortization of property and equipment
|
47,336
|
|
45,138
|
|
37,416
|
Amortization of
customer relationships
|
1,563
|
|
1,562
|
|
—
|
Loss on disposal of
property and equipment
|
193
|
|
32
|
|
79
|
Maintenance capital
expenditures
|
(2,839)
|
|
(3,700)
|
|
(3,405)
|
Equity-based
compensation
|
8,005
|
|
7,053
|
|
6,583
|
Unrealized gain on
swaps
|
(5,881)
|
|
(4,293)
|
|
(2,158)
|
Amortization of
deferred financing costs
|
661
|
|
689
|
|
583
|
Installation
adjustment, net
|
1,171
|
|
36
|
|
112
|
Other adjustments,
net
|
(1,630)
|
|
407
|
|
(853)
|
Equity in net losses
of investments
|
281
|
|
326
|
|
—
|
Litigation
expense
|
4,253
|
|
4,717
|
|
—
|
Noncash litigation
settlement expense
|
35,000
|
|
—
|
|
—
|
Loss on
extinguishment of debt
|
—
|
|
146
|
|
—
|
Acquisition-related
costs
|
—
|
|
82
|
|
—
|
Adjusted Funds From
Operations
|
$
68,024
|
|
$
51,050
|
|
$
55,560
|
Switch,
Inc.
|
Reconciliation of
Net (Loss) Income Attributable to Switch, Inc. to
|
Adjusted Net
Income Attributable to Switch, Inc.
|
(in thousands,
except per share data)
|
(unaudited)
|
|
|
Three Months
Ended
December
31,
|
|
Years
Ended
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net (loss) income
attributable to Switch, Inc.
|
$
(10,221)
|
|
$
6,452
|
|
$
5,412
|
|
$
15,539
|
(Gain) loss on
swaps
|
(4,203)
|
|
232
|
|
(585)
|
|
23,489
|
Noncash litigation
settlement expense
|
35,000
|
|
—
|
|
35,000
|
|
—
|
Income tax impact on
adjustments(1)
|
(3,815)
|
|
(23)
|
|
(4,259)
|
|
(2,015)
|
Noncontrolling
interest impact on adjustments
|
(12,632)
|
|
(120)
|
|
(14,133)
|
|
(13,896)
|
Adjusted net income
attributable to Switch, Inc.
|
$
4,129
|
|
$
6,541
|
|
$
21,435
|
|
$
23,117
|
|
|
|
|
|
|
|
|
Adjusted net income
per share—diluted
|
$
0.03
|
|
$
0.06
|
|
$
0.15
|
|
$
0.21
|
Weighted average
shares used in computing adjusted net income per
share—diluted
|
149,427
|
|
117,887
|
|
138,699
|
|
108,489
|
________________________________________
(1)
|
The income tax impact
is derived by applying the U.S. statutory tax rate to Switch,
Inc.'s portion of the adjustment.
|
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SOURCE Switch, Inc.