Equinix, Inc. (Nasdaq:EQIX), a provider of global data center services, today reported quarterly and year-end results for the period ended December 31, 2011.
“2011 was a pivotal year for Equinix,” said Steve Smith, president and CEO of Equinix. “We continue to extend our competitive advantage through our global platform and the strength of our ecosystems, evidenced by growth in customers expanding their geographic footprint and deploying new infrastructure applications.”Revenues were $431.3 million for the fourth quarter, a 3% increase over the previous quarter and a 25% increase over the same quarter last year. Revenues for the year ended December 31, 2011, were $1,606.8 million, a 32% increase over 2010 revenues. This result included $17.3 million in revenues from ALOG for the quarter and $46.9 million in revenues from ALOG for the year ended December 31, 2011. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $410.7 million for the fourth quarter, a 3% increase over the previous quarter and $1,528.5 million for the year ended December 31, 2011, a 32% increase over 2010. Non-recurring revenues were $20.6 million in the quarter and $78.3 million for the year ended December 31, 2011.
Cost of revenues were $229.3 million for the fourth quarter, a 1% increase from the previous quarter, and $867.6 million for the year ended December 31, 2011, a 29% increase over 2010. Cost of revenues, excluding depreciation, amortization, accretion and stock-based compensation of $85.8 million for the fourth quarter and $319.3 million for the year, were $143.5 million for the fourth quarter, a 1% decrease over the previous quarter, and $548.3 million for the year ended December 31, 2011, a 27% increase over 2010. Cash gross margins, defined as gross profit before depreciation, amortization, accretion and stock-based compensation, divided by revenues, for the quarter, were 67%, up from 65% for the previous quarter and up from 64% for the same quarter last year. Cash gross margins were 66% for the full year of 2011, up from 65% for the prior year.
Selling, general and administrative expenses were $117.0 million for the fourth quarter, a 7% increase over the previous quarter and $425.0 million for the year ended December 31, 2011, a 28% increase over 2010. Selling, general and administrative expenses, excluding depreciation, amortization and stock-based compensation of $27.3 million for the fourth quarter and $104.8 million for the year, were $89.7 million for the fourth quarter, a 10% increase over the previous quarter, and $320.2 million for 2011, a 31% increase over 2010.
Restructuring charges were $1.3 million for the fourth quarter and $3.5 million for the year ended December 31, 2011, which were primarily related to an excess space lease in the New York metro area. Acquisition costs were $0.8 million for the fourth quarter and $3.5 million for the year ended December 31, 2011, which were primarily related to the ALOG acquisition.
Interest expense was $55.2 million for the fourth quarter, an 8% increase over the last quarter, and $181.3 million for the year ended December 31, 2011, a 29% increase over 2010. The Company recorded a loss on debt extinguishment of $5.4 million for the fourth quarter of 2010 and a loss on debt extinguishment and interest rate swaps, net, of $10.2 million for the year ended December 31, 2010. The Company had no debt extinguishment activity for the year ended December 31, 2011. The Company recorded an income tax expense of $13.8 million for the fourth quarter as compared to income tax expense of $5.3 million in the prior quarter and income tax expense of $38.4 million for the year ended December 31, 2011 as compared to income tax expense of $13.0 million in the prior year.
Net income attributable to Equinix for the fourth quarter was $17.8 million. This represents a basic net income per share attributable to Equinix of $0.36 and diluted net income per share attributable to Equinix of $0.35 based on a weighted average share count of 47.2 million and 48.1 million, respectively, for the fourth quarter of 2011. Net income attributable to Equinix for the year ended December 31, 2011 was $94.0 million. This represents a basic net income per share attributable to Equinix of $1.76 and diluted net income per share attributable to Equinix of $1.72 based on a weighted share count of 47.0 million and 47.9 million, respectively, for the year ended December 31, 2011.
Adjusted EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation, restructuring charges and acquisition costs, for the fourth quarter was $198.1 million, an increase of 3% over the previous quarter and $738.4 million for the year ended December 31, 2011, a 36% increase over 2010.
“Demand for data center services is strong, supply and demand dynamics are favorable and pricing remains firm. This gives us confidence to continue investing in our business to capitalize on our long term growth opportunity and drive strong future returns for shareholders,” concluded Smith.
Capital expenditures, defined as gross capital expenditures less the net change in accrued property, plant and equipment in the fourth quarter were $189.8 million, of which $145.5 million was attributed to expansion capital expenditures and $44.3 million was attributed to ongoing capital expenditures. Capital expenditures for the year ended December 31, 2011 were $685.3 million, of which $557.6 million was attributed to expansion capital expenditures and $127.7 million was attributed to ongoing capital expenditures. In addition, the Company purchased real estate in Paris and Frankfurt for cash in the year ended December 31, 2011 totaling $28.1 million.
The Company repurchased 0.9 million shares of its common stock under the share repurchase program in the fourth quarter for an average price of $99.57 per share for total consideration of $86.7 million.
The Company generated cash from operating activities of $187.3 million for the fourth quarter as compared to $141.9 million in the previous quarter. Cash generated from operating activities for the year ended December 31, 2011 was $587.3 million as compared to $392.9 million in the previous year. Cash used in investing activities was $194.3 million in the fourth quarter as compared to cash used in investing activities of $808.7 million in the previous quarter. Cash used in investing activities for the year ended December 31, 2011 was $1,499.1 million as compared to $601.0 million in the previous year. Cash used in financing activities was $83.4 million for the fourth quarter, which was primarily related to share repurchases that were settled during the quarter, and cash provided by financing activities was $748.7 million for the year ended December 31, 2011.
As of December 31, 2011, the Company’s cash, cash equivalents and investments were $1,076.3 million, as compared to $592.8 million as of December 31, 2010.
Business Outlook
For the first quarter of 2012, the Company expects revenues to be in the range of $443.0 to $446.0 million. Cash gross margins are expected to range between 66% and 67%. Cash selling, general and administrative expenses are expected to range between $90.0 and $95.0 million. Adjusted EBITDA is expected to be between $200.0 and $205.0 million. Capital expenditures are expected to be approximately $180.0 to $200.0 million, comprised of approximately $30.0 million of ongoing capital expenditures and $150.0 to $170.0 million of expansion capital expenditures.
For the full year of 2012, total revenues are expected to be greater than $1,870.0 million. Total year cash gross margins are expected to approximate 66%. Cash selling, general and administrative expenses are expected to range between $370.0 and $400.0 million. Adjusted EBITDA for the year is expected to be greater than $850.0 million. Capital expenditures for 2012 are expected to be in the range of $700.0 and $800.0 million, comprised of approximately $135.0 million of ongoing capital expenditures and $565.0 to $665.0 million for expansion capital expenditures.
