Upgrade to SI Premium - Free Trial

INAP Reports First Quarter 2018 Financial Results

May 3, 2018 7:00 AM

RESTON, Va., May 03, 2018 (GLOBE NEWSWIRE) -- Internap Corporation (NASDAQ: INAP), a leading provider of high-performance data center services, including colocation, cloud and network, today announced financial results for the first quarter of 2018.

“INAP continues to perform by improving operations and focusing on our core strengths in data center services,” stated Peter D. Aquino, President and CEO. “As we layer on value-added products, such as advanced managed services through our SingleHop acquisition, we expect our customers to benefit by the integrated solution sets we offer them in Tier 1 markets, where addressable market demand for our services allows us to capture additional share. Our new sales team now has momentum that we can build on and expand our product set across our entire platform, providing a path toward a combination of organic and acquisition growth.”

Revenue

First quarter 2018 results include SingleHop operations as of March 1, 2018, and are therefore not comparable to prior periods.

In 2018, with the inclusion of SingleHop, INAP moved to a geographic organizational structure to better align global data center assets with management and increase sales efficiency. Beginning with first quarter 2018 reporting, INAP redefined its segment reporting into: INAP US, and INAP INTL.

First Quarter 2018 Financial Summary

($ in thousands) QoQ YoY
1Q 2018 4Q 2017 1Q 2017 Growth Growth
Total Revenue$74,201 $70,035 $72,133 5.9% 2.9%
Operating Costs and Expenses$73,322 $64,432 $71,641 13.8% 2.3%
Depreciation and Amortization$21,077 $17,397 $17,745 21.2% 18.8%
Acquisition Costs$2,558 $176 $— — —
All Other Operating Costs and Expenses$49,687 $46,859 $53,896 6.0% (7.8)%
GAAP Net Loss Attributable to INAP Shareholders$(14,060) $(6,934) $(8,230) (102.8)% (70.8)%
GAAP Net Loss Margin(18.9)% (9.9)% (11.4)%
Minus Goodwill Impairment and Other Items$3,701 $1,393 $3,414 165.7% 8.4%
Normalized Net Loss2$(10,359) $(5,541) $(4,816) (87.0)% (115.1)%
Adjusted EBITDA1$25,665 $24,363 $21,554 5.3% 19.1%
Adjusted EBITDA Margin134.6% 34.8% 29.9%
Capital Expenditures (CapEx)$6,359 $12,616 $5,989 (49.6)% 6.2%
Adjusted EBITDA less CapEx1$19,306 $11,747 $15,565 64.3% 24.0%

Net Loss, Normalized Net Loss, Adjusted EBITDA and Business Unit Contribution

“We are off to a great start to the year, having worked through further operations improvement, the closing of SingleHop acquisition and repricing of our total debt,” says Robert M. Dennerlein, Chief Financial Officer. “The repricing of our debt at favorable rates creates over $5 million in annual interest savings. We also realigned our divisions along geographic reporting segments to correspond with our management reorganization to include SingleHop.”

Balance Sheet and Cash Flow Statement

Business Outlook

INAP reiterated its outlook for 2018 which, as noted above, includes projected results of acquired SingleHop operations as of February 28, 2018. Additionally, INAP’s sales momentum is expected to contribute to organic growth, offset by select planned closures of certain data center facilities.

Full-Year 2018 Expected Range
Revenue$320 million-$330 million
Adjusted EBITDA$105 million-$115 million
Capital Expenditures$40 million-$45 million

  1. Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBITDA less CapEx are non-GAAP financial measures which we define in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP information and non-GAAP information related to Adjusted EBITDA and Adjusted EBITDA margin are contained in the table entitled “Reconciliation of GAAP Net Loss to Adjusted EBITDA.” Adjusted EBITDA margin is Adjusted EBITDA as a percentage of revenue. A reconciliation between GAAP information and non-GAAP information related to Adjusted EBITDA less CapEx is contained in the table entitled “Reconciliation of GAAP Net Cash Flows provided by Operating Activities to Adjusted EBITDA less CapEx.”
  2. Normalized net loss is a non-GAAP financial measure which we define in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP information and non-GAAP information related to normalized net loss are contained in the table entitled “Reconciliation of Net Loss to Normalized Net Loss.”
  3. Business unit contribution and business unit contribution margin are non-GAAP financial measures which we define in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP and non-GAAP information related to business unit contribution and business unit contribution margin are contained in the table entitled “Business Unit Contribution and Business Unit Contribution Margin” in the attachment. Business unit contribution margin is business unit contribution as a percentage of revenue.
  4. Free cash flow and unlevered free cash flow are non-GAAP financial measures which we define in the attachment to the press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP and non-GAAP information related to Free cash flow and unlevered free cash flow are contained in the table entitled “Free Cash Flow and Unlevered Free Cash Flow.”

Conference Call Information:

INAP's first quarter 2018 conference call will be held today at 8:30 a.m. ET. Listeners may connect to a simultaneous webcast of the call, which will include accompanying presentation slides, on the Investor Relations section of INAP’s web site at http://ir.inap.com/events-and-presentations. The call can also be accessed by dialing 877-334-0775. International callers should dial 631-291-4567. An online archive of the webcast will be archived in the Investor Relations section of INAP’s website. An audio-only replay will be accessible from Thursday, May 3, 2018 at 11:30 a.m. ET through Tuesday, May 8, 2018 at 855-859-2056 using replay code 3674167. International callers can listen to the archived event at 404-537-3406 with the same code.

About INAP

Internap Corporation (NASDAQ: INAP) is a leading provider of high-performance data center services, including colocation, cloud and network. INAP partners with its customers, who range from the Fortune 500 to emerging start-ups, to create secure, scalable and reliable IT infrastructure solutions that meet the customer’s unique business requirements. INAP operates in 57 primarily Tier 3 data centers in 21 metropolitan markets and has 98 POPs around the world. INAP has over 1 million gross square feet under lease, with over 500,000 square feet of data center space. For more information, visit www.inap.com.

Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements include statements related to sales, improved profitability, margin expansion, operations improvement, cost reductions, participation in strategic transactions, our expectations for 2018 revenue, Adjusted EBITDA, capital expenditures and Adjusted EBITDA less Capex. Our ability to achieve these forward-looking statements is based on certain assumptions, including our ability to execute on our business strategy, leveraging of multiple routes to market, expanded brand awareness for high-performance IT infrastructure services and customer churn levels. These assumptions may prove inaccurate in the future. Because such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, there are important factors that could cause INAP’s actual results to differ materially from those expressed or implied in the forward-looking statements, due to a variety of important factors. Such important factors include, without limitation: our ability to execute on our business strategy to growth while reducing costs; our ability to maintain current customers and obtain new ones, whether in a cost-effective manner or at all; the robustness of the IT infrastructure services market; our ability to achieve or sustain profitability; our ability to expand margins and drive higher returns on investment; our ability to sell into new and existing data center space; the actual performance of our IT infrastructure services and improving operations; our ability to correctly forecast capital needs, demand planning and space utilization; our ability to respond successfully to technological change and the resulting competition; the geographic concentration of INAP’s data centers in certain markets and any adverse developments in local economic conditions or the demand for data center space in these markets; ability to identify any suitable strategic transactions; INAP's ability to realize anticipated revenue, growth, synergies and cost savings from the acquisition of SingleHop; INAP's ability to successfully integrate SingleHop’s sales, operations, technology, and products generally; the availability of services from Internet network service providers or network service providers providing network access loops and local loops on favorable terms, or at all; failure of third party suppliers to deliver their products and services on favorable terms, or at all; failures in our network operations centers, data centers, network access points or computer systems; our ability to provide or improve IT infrastructure services to our customers; our ability to protect our intellectual property; our substantial amount of indebtedness, our possibility to raise additional capital when needed, on attractive terms, or at all, our ability to service existing debt or maintain compliance with financial and other covenants contained in our credit agreement; our compliance with and changes in complex laws and regulations in the U.S. and internationally; our ability to attract and retain qualified management and other personnel; and volatility in the trading price of INAP common stock.

These risks and other important factors discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release.

Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements attributable to INAP or persons acting on its behalf are expressly qualified in their entirety by the foregoing forward-looking statements. All such statements speak only as of the date made, and INAP undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Contacts:Richard RamlallVP, IR & PR INAP404-302-9982[email protected] Carolyn Capaccio/Jody BurfeningLHA212-838-3777[email protected]

INTERNAP CORPORATION AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE LOSS

(In thousands, except per share amounts) Three Months Ended March 31,
2018 2017
Revenues:
INAP US $57,076 $55,461
INAP INTL 17,125 16,672
Total revenues 74,201 72,133
Operating costs and expenses:
Costs of sales and services, exclusive of depreciation and amortization, shown below:
INAP US 18,435 23,547
INAP INTL 6,602 5,498
Costs of customer support 7,387 7,264
Sales, general and administrative 19,854 16,564
Depreciation and amortization 21,077 17,745
Exit activities, restructuring and impairments (33) 1,023
Total operating costs and expenses 73,322 71,641
Income from operations 879 492
Non-operating expenses:
Interest expense 15,027 8,137
(Gain) loss on foreign currency, net (215) 97
Total non-operating expenses 14,812 8,234
Loss before income taxes, non-controlling interest and equity in earnings of equity-method investment (13,933) (7,742)
Provision for income taxes 100 518
Equity in earnings of equity-method investment, net of taxes — (30)
Net loss (14,033) (8,230)
Less net income attributable to non-controlling interest 27 —
Net loss attributable to INAP stockholders (14,060) (8,230)
Other comprehensive income:
Foreign currency translation adjustment 61 73
Unrealized gain on foreign currency contracts — 85
Total other comprehensive income 61 158
Comprehensive loss $(13,999) $(8,072)
Basic and diluted net loss per share $(0.70) $(0.50)
Weighted average shares outstanding used in computing basic and diluted net loss per share 20,052 16,087

INTERNAP CORPORATION AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except par value amounts)

March 31, 2018 December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents $16,159 $14,603
Accounts receivable, net of allowance for doubtful accounts of $1,700, and $1,487, respectively 17,524 17,794
Contract Assets 7,131
Prepaid expenses and other assets 8,690 8,673
Total current assets 49,504 41,070
Property and equipment, net 461,314 458,565
Intangible assets, net 79,185 25,666
Goodwill 118,077 50,209
Non-current contract assets 12,056
Deposits and other assets $11,784 $11,015
Total assets $731,920 $586,525
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable 21,699 20,388
Accrued liabilities 14,279 15,908
Deferred revenues 5,871 4,861
Capital lease obligations 10,095 11,711
Revolving credit facility 16,000 5,000
Term loan, less discount and prepaid costs of $3,539 and $2,133, respectively 818 867
Exit activities and restructuring liability 3,391 4,152
Other current liabilities 4,197 1,707
Total current liabilities 76,350 64,594
Capital lease obligations 223,549 223,749
Term loan, less discount and prepaid costs of $11,286 and $7,655, respectively 416,766 287,845
Exit activities and restructuring liability 408 664
Deferred rent 1,138 1,310
Deferred tax liability 1,841 1,651
Other long-term liabilities 3,046 7,744
Total liabilities 723,098 587,557
Stockholders’ deficit:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding — —
Common stock, $0.001 par value; 30,000 shares authorized; 21,131 and 20,804 shares outstanding, respectively 21 21
Additional paid-in capital 1,327,985 1,327,084
Treasury stock, at cost, 313 and 293 shares, respectively (7,429) (7,159)
Accumulated deficit (1,313,598) (1,323,723)
Accumulated items of other comprehensive loss (1,263) (1,324)
Total INAP stockholders’ deficit 5,716 (5,101)
Non-controlling interests 3,106 4,069
Total stockholders’ deficit $8,822 $(1,032)
Total liabilities and stockholders’ deficit $731,920 $586,525

INTERNAP CORPORATION AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)

Three Months Ended March 31,
2018 2017
Cash Flows from Operating Activities:
Net loss $(14,033) $(8,230)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 21,077 17,745
Loss on disposal of fixed asset 46 —
Amortization of debt discount and issuance costs 638 715
Stock-based compensation expense, net of capitalized amount 858 598
Equity in earnings of equity-method investment 2 (30)
Provision for doubtful accounts 332 301
Non-cash change in capital lease obligations (213) 71
Non-cash change in exit activities and restructuring liability 372 980
Non-cash change in deferred rent (252) (423)
Deferred taxes (30) 254
Payment of debt lender fees (300) (2,583)
Other, net — (96)
Changes in operating assets and liabilities:
Accounts receivable 864 2,096
Prepaid expenses, deposits and other assets (467) 123
Accounts payable (636) (2,247)
Accrued and other liabilities (2,904) (180)
Deferred revenues (138) (510)
Exit activities and restructuring liability (1,389) (1,386)
Asset retirement obligation (248) 52
Other liabilities (52) 14
Net cash flows provided by operating activities 3,527 7,264
Cash Flows from Investing Activities:
Purchases of property and equipment (6,082) (5,789)
Proceeds from disposal of property and equipment 437 —
Business acquisition, net of cash acquired (132,143) —
Acquisition of minority shares (1,130) —
Additions to acquired and developed technology (277) (200)
Net cash flows used in investing activities (139,195) (5,989)
Cash Flows from Financing Activities:
Proceeds from credit agreements 146,000 —
Proceeds from stock issuance — 40,282
Principal payments on credit agreements (1,089) (39,997)
Debt issuance costs (5,676) —
Payments on capital lease obligations (2,027) (2,491)
Proceeds from exercise of stock options 31 7
Acquisition of common stock for income tax withholdings (270) (149)
Other, net 235 (157)
Net cash flows provided by(used in) in financing activities 137,204 (2,505)
Effect of exchange rates on cash and cash equivalents 20 15
Net increase (decrease) in cash and cash equivalents 1,556 (1,215)
Cash and cash equivalents at beginning of period 14,603 10,389
Cash and cash equivalents at end of period $16,159 $9,174
Supplemental disclosure of cash flow information:
Cash paid for interest $13,000 $7,336
Non-cash acquisition of property and equipment under capital leases — 290
Additions to property and equipment included in accounts payable 2,287 1,247

INTERNAP CORPORATIONNON-GAAP FINANCIAL MEASURES

In addition to providing financial measurements based on accounting principles generally accepted in the United States of America (“GAAP”), this earnings press release includes additional financial measures that are not prepared in accordance with GAAP (“non-GAAP”), including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA less CapEx, normalized net loss, business unit contribution, business unit contribution margin, free cash flow and unlevered free cash flow. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found below.

We define the following non-GAAP measures as follows:

We believe that presentation of these non-GAAP financial measures provides useful information to investors regarding our results of operations.

We believe that excluding depreciation and amortization and loss (gain) on disposals of property and equipment, as well as impairments and restructuring, to calculate Adjusted EBITDA provides supplemental information and an alternative presentation that is useful to investors’ understanding of our current ongoing operating results and trends. Not only are depreciation and amortization expenses based on historical costs of assets that may have little bearing on present or future replacement costs, but also they are based on management estimates of remaining useful lives. Loss on disposals of property and equipment is also based on historical costs of assets that may have little bearing on replacement costs. Impairments and restructuring expenses primarily reflect goodwill impairments and subsequent plan adjustments in sublease income assumptions for certain properties included in our previously disclosed restructuring plans.

We believe that excluding interest expense, provision (benefit) for income taxes and other expense (income) from non-GAAP financial measures provides supplemental information and an alternative presentation useful to investors’ understanding of our core operating results and trends. Investors have indicated that they consider financial measures of our results of operations excluding interest expense, provision (benefit) for income taxes and other expense (income) as important supplemental information useful to their understanding of our historical results and estimating our future results.

We also believe that, in excluding the effects of interest expense, provision (benefit) for income taxes and other expense (income), our non-GAAP financial measures provide investors with transparency into what management uses to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods and to compare our results of operations on a more consistent basis against that of other companies, in making financial and operating decisions and to establish certain management compensation.

We believe that exit activities, restructuring and impairment charges, non-income tax contingency, strategic alternatives and related costs, organizational realignment costs, pre-acquisition costs, claim settlement costs and debt extinguishment and modification expense are unique costs, and consequently, we do not consider these charges as a normal component of expenses related to current and ongoing operations.

Similarly, we believe that excluding the effects of stock-based compensation from non-GAAP financial measures provides supplemental information and an alternative presentation useful to investors’ understanding of our current ongoing operating results and trends. Management believes that investors consider financial measures of our results of operations excluding stock-based compensation as important supplemental information useful to their understanding of our historical results and estimating our future results.

We also believe that, in excluding the effects of stock-based compensation, our non-GAAP financial measures provide investors with transparency into what management uses to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods and to compare our results of operations on a more consistent basis against that of other companies, in making financial and operating decisions and to establish certain management compensation.

Stock-based compensation is an important part of total compensation, especially from the perspective of employees. We believe, however, that supplementing GAAP net loss by providing normalized net loss, excluding the effect of exit activities, restructuring and impairments, stock-based compensation, non-income tax contingency, strategic alternatives and related costs, organizational realignment cost, pre-acquisition costs, claim settlement costs, and debt extinguishment and modification expenses in all periods, is useful to investors because it enables additional and more meaningful period-to-period comparisons.

Adjusted EBITDA is not a measure of financial performance calculated in accordance with GAAP, and should be viewed as a supplement to — not a substitute for — our results of operations presented on the basis of GAAP. Adjusted EBITDA does not purport to represent cash flow provided by operating activities as defined by GAAP. Our statements of cash flows present our cash flow activity in accordance with GAAP. Furthermore, Adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies.

We believe Adjusted EBITDA is used by and is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:

Our management uses Adjusted EBITDA:

Our presentation of business unit contribution and business unit contribution margin excludes depreciation and amortization in order to allow investors to see the business through the eyes of management.

We also have excluded depreciation and amortization from business unit contribution and business unit contribution margin because, as noted above, they are based on estimated useful lives of tangible and intangible assets. Further, depreciation and amortization are based on historical costs incurred to build out our deployed network and the historical costs of these assets may not be indicative of current or future capital expenditures.

Free cash flow and unlevered free cash flow are used in addition to and in conjunction with results presented in accordance with GAAP. Free cash flow and unlevered free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow and unlevered free cash flow reflect an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.

We use free cash flow and unlevered free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a useful measure of cash flows since capital expenditures are a necessary component of ongoing operations. In limited circumstances in which proceeds from sales of fixed assets exceed capital expenditures, free cash flow would exceed cash flow from operations. However, since we do not anticipate being a net seller of fixed assets, we expect free cash flow to be less than operating cash flows.

Free cash flow and unlevered free cash flow have limitations due to the fact that they do not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments made to service our debt or capital lease obligations. Therefore, we believe it is important to view free cash flow as a complement to our entire consolidated statements of cash flows.

Adjusted EBITDA less CapEx is used in addition to and in conjunction with results presented in accordance with GAAP. Adjusted EBITDA less CapEx should not be relied upon to the exclusion of GAAP financial measures. Adjusted EBITDA less CapEx reflects an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.

We use Adjusted EBITDA less CapEx, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a useful measure of cash flows since capital expenditures are a necessary component of ongoing operations.

Adjusted EBITDA less CapEx has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. Adjusted EBITDA less CapEx does not incorporate payments made to service our debt or capital lease obligations. Therefore, we believe it is important to view Adjusted EBITDA less CapEx as a complement to our entire consolidated statements of cash flows.

Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is presented as we understand certain investors use it as one measure of our historical ability to service debt. Also adjusted EBITDA is used in our debt covenants.

Although we believe, for the foregoing reasons, that our presentation of non-GAAP financial measures provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial measures should only be considered in addition to, and not as a substitute for, or superior to, any measure of financial performance prepared in accordance with GAAP.

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA AND FORWARD LOOKING ADJUSTED EBITDA

A reconciliation of GAAP net loss attributable to INAP Shareholders to Adjusted EBITDA for each of the periods indicated is as follows (in thousands, unaudited):

Three Months Ended
March 31, 2018 December 31, 2017 March 31, 2017
Reconciliation of GAAP Net Loss Attributable to INAP Shareholders to Adjusted EBITDA:Amount Percent Amount Percent Amount Percent
Total Revenue$74,201 100.0% $70,035 100.0% $72,133 100.0%
Net Loss (GAAP) attributable to INAP Shareholders(14,060) (18.9)% (6,934) (9.9)% (8,230) (11.4)%
Add:
Non-GAAP revenue40 0.1% — 0.0% — 0.0%
Depreciation and amortization21,077 28.4% 17,397 24.8% 17,745 24.6%
Interest expense15,027 20.3% 12,895 18.4% 8,137 11.3%
Provision (benefit) for income taxes100 0.1% (436) (0.6)% 518 0.7%
Other (income) expense(215) (0.3)% 40 0.1% 67 0.1%
Loss (gain) on disposal of property and equipment, net46 0.1% 8 0.0% (97) (0.1)%
Exit activities, restructuring and impairments(33) 0.0% (148) (0.2)% 1,023 1.4%
Stock-based compensation858 1.2% 979 1.4% 598 0.8%
Non-income tax contingency— 0.0% — 0.0% 1,500 2.1%
Strategic alternatives and related costs27 0.0% 38 0.1% 6 0.0%
Organizational realignment costs240 0.3% 346 0.5% 287 0.4%
Acquisition costs2,558 3.4% 176 0.3% — 0.0%
Adjusted EBITDA (non-GAAP)$25,665 34.6% $24,363 34.8% $21,554 29.9%

A reconciliation of forward-looking Adjusted EBITDA for full-year 2018 is as follows (in millions, unaudited):

2018 Full-Year Guidance
Low High
Amount Percent Amount Percent
Total Revenue $320 100.0% $330 100.0%
Net Loss (GAAP) $(48) (15.0)% $(38) (11.5)%
Add:
Depreciation and amortization 70 21.9% 70 21.2%
Interest expense 59 18.4% 59 17.9%
Provision for income taxes 1 0.3% 1 0.3%
Exit activities, restructuring and impairments 11 3.4% 11 3.3%
Stock-based compensation 12 3.8% 12 3.6%
Non-income tax contingency 1 0.3% 1 0.3%
Adjusted EBITDA (non-GAAP) $105 32.8% $115 34.8%

RECONCILIATION OF GAAP NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED EBITDA LESS CAPEX

A reconciliation of GAAP Net Cash Flows Provided by Operating Activities to Adjusted EBITDA less CapEx for each of the periods indicated is as follows (in thousands, unaudited):

Three Months Ended
Reconciliation of GAAP Net Cash Flows provided by Operating Activities to Adjusted EBITDA less CapEx:March 31, 2018 December 31, 2017 March 31, 2017
Net Cash Flow provided by operating activities:$3,527 $13,808 $7,264
Add:
Cash paid for interest13,000 11,793 7,336
Cash paid for income taxes108 176 —
Cash paid for exit activities and restructuring1,389 1,450 1,086
Cash paid for strategic alternatives and related costs27 373 189
Cash paid for organizational realignment costs240 282 267
Cash paid for acquisition costs2,558 176 —
Other working capital changes4,816 (3,695) 5,412
Adjusted EBITDA (non-GAAP)$25,665 $24,363 $21,554
Less:
Capital Expenditures (CapEx)$6,359 $12,616 $5,989
Adjusted EBITDA less CapEx$19,306 $11,747 $15,565

RECONCILIATION OF NET LOSS ATTRIBUTABLE TO INAP SHAREHOLDERS TO NORMALIZED NET LOSS TO INAP SHAREHOLDERS

Reconciliations of net loss attributable to INAP Shareholders, the most directly comparable GAAP measure, to normalized net loss attributable to INAP Shareholders (in thousands, unaudited):

Three Months Ended
March 31, 2018 December 31, 2017 March 31, 2017
Net loss (GAAP) attributable to INAP Shareholders(14,060) (6,934) (8,230)
Non GAAP revenue40 — —
Exit activities, restructuring and impairments(33) (148) 1,023
Stock-based compensation858 979 598
Strategic alternatives, realignment, and related costs267 385 293
Acquisition costs2,558 176 —
Non-Income Tax Contingency— — 1,500
Normalized net loss (non-GAAP)(10,370) (5,541) (4,816)

BUSINESS UNIT CONTRIBUTION AND BUSINESS UNIT CONTRIBUTION MARGIN

Business unit contribution and business unit contribution margin, which includes direct costs of sales and service, customer support and sales and marketing for each of the periods indicated is as follows (in thousands, unaudited):

Three Months Ended
March 31, 2018 December 31, 2017 March 31, 2017
Revenues:
INAP US$57,076 $53,226 $55,461
INAP INTL 17,125 16,809 16,672
Total 74,201 70,035 72,133
Direct costs of sales and services, customer support and sales and marketing:
INAP US 30,537 30,230 35,457
INAP INTL 11,133 10,490 9,002
Total 41,670 40,720 44,459
Business Unit Contribution:
INAP US 26,539 22,997 20,004
INAP INTL 5,992 6,319 7,670
Total$32,531 $29,316 $27,674
Business Unit Contribution Margin:
INAP US 46.5% 43.2% 36.1%
INAP INTL 35.0% 37.6% 46.0%
Total 43.8% 41.9% 38.4%

Free cash flow and unlevered free cash flow are non-GAAP measures. Free cash flow is net cash flows provided by operating activities minus capital expenditures. Unlevered free cash flow is free cash flow plus cash interest expense (in thousands, unaudited):

Three Months Ended
March 31, 2018 December 31, 2017 March 31, 2017
Net cash flows provided by operating activities$3,527 $13,808 $7,264
Capital expenditures:
Maintenance capital(1,796) (4,057) (790)
Growth capital(4,564) (8,559) (5,199)
Free cash flow (non-GAAP)(2,833) 1,192 1,275
Cash interest expense13,000 11,794 7,336
Unlevered free cash flow (non-GAAP)$10,167 $12,986 $8,611

DATA CENTER PORTFOLIO

The following table presents an overview of the portfolio of data center properties that INAP leases as of March 31, 2018:

MarketGross Square Feet (SF)1SupportingInfrastructure2Office &OtherData CenterFootprint SF3Current RaisedFloor SF4OccupiedSFOccupiedSF %
Atlanta212,89864,24875,34473,30649,46233,07667%
Los Angeles124,65111,32317,47595,85325,05515,65062%
Dallas5112,70023,76321,02367,91430,97217,26256%
New York/New Jersey116,50316,40528,46871,63048,94027,16656%
Boston116,69947,77911,58757,33351,60818,32136%
Seattle100,59731,32621,55247,71938,71923,05560%
Montreal90,06529,57232,93327,56024,09023,89099%
Santa Clara/San Jose88,88223,85223,66741,36341,03821,39352%
Houston43,9137,92515,59920,38920,3899,41646%
Phoenix23,542—1,89221,66817,60117,39199%
Chicago14,0271,551—12,47612,0769,81181%
Other622,993—98121,99420,04515,96280%
Total1,067,470257,744250,521559,206379,996232,39361%
(1) Represents total SF subject to our lease.
(2) Represents total SF for mechanical and utility rooms.
(3) Represents total SF that is currently leased or available for lease but excludes supporting infrastructure, office space, and common area.
(4) Represents data center footprint SF less unbuilt SF.
(5) 10,000 SF of raised floor completed late Q1'18.
(6) Represents Miami, Northern Virginia, Oakland/San Francisco, London, Amsterdam, Frankfurt, Hong Kong, Singapore, Sydney, Tokyo, and Osaka.

Primary Logo

Source: Internap Corporation

Categories

Press Releases