Receives $50 Million in New Financing from
Lenders to Support Ongoing Business Operations; Enters into
Restructuring Support Agreement
Reports First Quarter Earnings Highlights,
Demonstrating Consistent Revenue Growth and Operating Momentum
Cyxtera (NASDAQ: CYXT), a global leader in data center
colocation and interconnection services, today announced that it
has received $50 million in new financing from certain of its
lenders, holding over two-thirds of its outstanding term loan (the
“Lenders”), to support ongoing business operations. In connection
with the new financing, Cyxtera has entered into a Restructuring
Support Agreement (“RSA”) with the Lenders to strengthen the
Company’s financial position and facilitate the business’s
long-term success.
Cyxtera is continuing to operate its unique global platform of
highly interconnected data centers with an unwavering focus on
providing high-quality services that help its customers around the
world transform and scale their businesses.
“We have strong momentum in our business, and demand for our
global data center platform remains high,” said Nelson Fonseca,
Cyxtera’s Chief Executive Officer. “With the support of our
Lenders, we are taking steps to strengthen our financial position
and ensure that our business is best positioned for the long term.
We are confident in our ability to continue growing our business
and creating value for the customers and communities we serve as we
work to implement the transactions contemplated by the
agreement.”
Mr. Fonseca added, “We thank our customers and partners for
their continued support, and we are grateful to our employees for
their hard work and commitment to Cyxtera. We look forward to
continuing to provide innovative, cloud-like data center services
and enabling our customers to meet their evolving business
needs.”
Additional Information Regarding the RSA
The terms of the RSA contemplate the Company undertaking a
process to pursue a potential sale of the business or a significant
investment from a new investor. In connection with this process,
the Lenders have agreed to offer long-term financing for potential
investors to address existing near-term maturities.
To the extent the process does not result in an acceptable
transaction with a third party, as defined by the RSA, the Company
would implement a comprehensive financial restructuring and
transition majority ownership of the business to the Lenders
through an expedited, voluntary court-supervised process under
Chapter 11 of the U.S. Bankruptcy Code.
In all scenarios being contemplated, Cyxtera will continue
operating and serving customers via its global data center platform
with innovative services and the highest levels of support.
Additionally, regardless of the path forward, employees will
continue receiving their pay and benefits without interruption. The
Company will also continue evaluating its data center footprint,
consistent with its commitment to optimizing operations.
Cyxtera expects to determine a path forward under the RSA in the
coming weeks and will provide an update in due course.
First Quarter 2023 Financial Highlights
Cyxtera today also shared key financial highlights for the
quarter ended March 31, 2023, as follows:
- Total revenue increased by $14.3 million, or 7.8% year over
year, to $196.7 million in the first quarter.
- Recurring revenue increased by $14.7 million, or 8.5% year over
year, to $188.4 million in the first quarter.
- Core revenue increased by $18.1 million, or 10.9% year over
year, to $184.0 million in the first quarter.
- Net Loss of $325.4 million in the quarter, including a non-cash
Goodwill impairment charge of $278.2 million; Transaction Adjusted
EBITDA1 increased by $4.7 million, or 8.0%, to $63.3 million in the
first quarter.
Carlos Sagasta, Cyxtera’s Chief Financial Officer, said, “Our
solid first quarter results underscore the strength of our
operations and Cyxtera’s ability to deliver consistent revenue
growth. We appreciate the continued patience and support of our
suppliers and business partners and look forward to working closely
with them to drive our mutual success.”
Additional Information
Additional details regarding the RSA and Cyxtera’s first quarter
2023 financial results will be provided in the Company’s Form 8-K
and Form 10-Q, respectively, to be filed with the U.S. Securities
and Exchange Commission (the “SEC”). A presentation regarding the
Company’s first quarter 2023 financial results, along with
supplemental financial information, will also be available on the
Cyxtera Investor Relations website at http://ir.cyxtera.com/.
Kirkland & Ellis LLP is serving as legal counsel to Cyxtera,
Guggenheim Securities, LLC is serving as financial advisor and
AlixPartners, LLP is serving as restructuring advisor.
About Cyxtera
Cyxtera is a global leader in colocation and interconnection
services, with a footprint of more than 60 data centers in over 30
markets. With IT infrastructure becoming increasingly hybrid,
complex, and distributed, Cyxtera continues to expand its portfolio
beyond space and power to deliver more cloud-like and flexible
infrastructure solutions across its global data center platform and
robust partner ecosystem. Today, Cyxtera provides more than 2,300
enterprise and government customers with the technology solutions
they need to scale faster, achieve financial goals, and gain a
competitive advantage. For more information, please visit
www.cyxtera.com.
__________
1 A complete reconciliation of Net Loss to
Transaction Adjusted EBITDA is included below.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the federal securities laws. Because forward-looking
statements are predictions, projections and other statements about
future events that are based on current expectations and
assumptions, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of Cyxtera’s control. Actual results and
conditions (financial or otherwise) may differ materially from
those indicated in the forward-looking statements. These
forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results and conditions to
differ materially from those indicated in the forward-looking
statements, including, but not limited to, risks related to
Cyxtera’s material indebtedness with near term maturities;
Cyxtera’s ability to implement the balance sheet restructuring and
other transactions contemplated in the RSA; Cyxtera’s ability to
refinance or renew its existing indebtedness on favorable terms or
at all; Cyxtera’s ability to access external sources of capital on
favorable terms or at all, which could limit Cyxtera’s ability to
execute its business and growth strategies; Cyxtera’s ability to
maintain its credit ratings; increases in interest rates;
fluctuations in energy prices; fluctuations in foreign currency
exchange rates in the markets in which Cyxtera operates
internationally; inflation; prolonged power outages, shortages or
capacity constraints; physical and electronic security breaches and
cyber-attacks, which could disrupt Cyxtera’s operations; any
failure of Cyxtera’s physical infrastructure or negative impact on
its ability to provide its services, or damage to customer
infrastructure within its data centers; inadequate or inaccurate
external and internal information, including budget and planning
data, which could lead to inaccurate financial forecasts and
inappropriate financial decisions; Cyxtera’s fluctuating operating
results; Cyxtera’s government contracts, which are subject to early
termination, audits, investigations, sanctions and penalties;
Cyxtera’s reliance on third parties to provide internet
connectivity to its data centers; the incurrence of goodwill and
other intangible asset impairment charges, such as Cyxtera’s recent
impairment of goodwill, or impairment charges to Cyxtera’s property
and equipment, which could result in a significant reduction to its
earnings; the requirements of being a public company, including
maintaining adequate internal controls over financial and
management systems; Cyxtera’s ability to manage its growth;
volatility of the market price of Cyxtera’s Class A common stock;
future sales, or the perception of future sales, of Cyxtera Class A
common stock by Cyxtera or its existing securityholders in the
public market, which could cause the market price for Cyxtera’s
Class A common stock to decline; Cyxtera’s ability to use its
United States federal and state net operating losses to offset
future United States federal and applicable state taxable income
may be subject to certain limitations that could accelerate or
permanently increase taxes owed; Cyxtera’s ability to address the
significant implementation and operational complexities required to
complete a conversion to a REIT, including, without limitation,
completing internal reorganizations and modifying accounting and
information technology systems, and receiving any necessary
stakeholder and other approvals; and risks related to the effects
of the COVID-19 pandemic on Cyxtera’s business or future results,
including supply chain disruptions. The foregoing list of factors
is not exhaustive. You should carefully consider the foregoing
factors and the “Risk Factors” disclosed in Cyxtera’s filings with
the SEC from time to time. There may be additional risks that
Cyxtera does not presently know or that it currently believes are
immaterial that could also cause actual results to differ from
those contained in the forward-looking statements. In addition,
forward-looking statements reflect Cyxtera’s expectations, plans or
forecasts of future events and views as of the date of this press
release. Accordingly, you should not place undue reliance upon any
such forward-looking statements in this press release. Neither
Cyxtera nor any of its affiliates assume any obligation to update
this press release, except as required by law.
Statement Regarding Non-GAAP Financial Measures
This press release contains Transaction Adjusted EBITDA, which
is a supplemental measure that is not required by, or presented in
accordance with, accounting principles generally accepted in the
United States (“GAAP”). Transaction Adjusted EBITDA represents the
measure of EBITDA disclosed to Starboard Value Acquisition Corp.
(“SVAC”) in connection with its consideration of the business
combination transaction between SVAC and Cyxtera. Cyxtera defines
Transaction Adjusted EBITDA as net income (loss) before the
following items: depreciation and amortization, interest and other
expenses, net, income tax expense (benefit), equity-based
compensation, stand-up separation & other, goodwill impairment,
restructuring costs & other, straight-line rent adjustment,
amortization of favorable / unfavorable leasehold interest &
asset retirement obligation accretion, and change in fair value of
warrant liabilities. As a Non-GAAP financial measure, Transaction
Adjusted EBITDA excludes items that are significant in
understanding and assessing Cyxtera’s financial results or
position. Therefore, this measure should not be considered in
isolation or as an alternative to net income, cash flows from
operations or other measures of profitability, liquidity or
performance under GAAP. You should be aware that Cyxtera’s
presentation of this measure may not be comparable to
similarly-titled measures used by other companies. You should
review the reconciliation of the non-GAAP financial measures
included in this press release to the most directly comparable GAAP
financial measures as well as Cyxtera’s unaudited financial
statements included in its Quarterly Report on Form 10-Q filed with
the SEC and not rely on any single financial measure to evaluate
Cyxtera’s business.
CYXTERA TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(unaudited, in millions)
Three Months Ended March 31,
2023
2022
Net Loss to
EBITDA Reconciliation:
Net loss
$
(325.4
)
(40.9
)
Depreciation and amortization
60.0
62.3
Interest and other expenses, net
46.6
38.1
Income tax expense (benefit)
(13.1
)
4.1
EBITDA
$
(231.9
)
$
63.6
Adjustments
Equity-based compensation
3.1
3.4
Stand-up separation & other
8.2
0.6
Goodwill impairment
278.2
—
Restructuring costs & other
4.5
1.3
Total Adjustments
294.0
5.3
Adjusted EBITDA
$
62.1
$
68.9
Transaction Adjustments
Straight-line rent adjustment
0.3
0.6
Amortization of Favorable / Unfavorable
Leasehold Interest & ARO accretion
0.9
0.9
Change in fair value of warrant
liabilities
—
(11.8
)
Total Adjustments
1.2
(10.3
)
Transaction Adjusted EBITDA
$
63.3
58.6
Note: Numbers may not foot or cross-foot due to rounding
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version on businesswire.com: https://www.businesswire.com/news/home/20230504006083/en/
Media Inquiries Janice Clayton press@cyxtera.com
Aaron Palash / Meaghan Repko Joele Frank, Wilkinson Brimmer
Katcher (212) 355-4449
Investor Inquiries Kwang Edeker IR@cyxtera.com
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