Document



 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-K
_______________

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 1, 2019
_______________
CYRUSONE INC.
(Exact Name of Registrant as Specified in its Charter)
_______________
Maryland
 
001-35789
 
46-0691837
(State of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
2101 Cedar Springs Road, Suite 900
Dallas, TX 75201
(Address of Principal Executive Office)
Registrant’s telephone number, including area code: (972) 350-0060
_______________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨








Item 2.02 Results of Operations and Financial Condition
On May 1, 2019, CyrusOne Inc. issued a press release announcing financial results and supplemental information for the first quarter ended March 31, 2019. A copy of the press release and supplemental information is furnished herewith as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure

CyrusOne will host a conference call on May 2, 2019, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the first quarter of 2019. A live webcast of the conference call and the presentation to be made during the call will be available in the “Investors / Events & Presentations” section of the Company's website at http://investor.cyrusone.com/events.cfm. The U.S. conference call dial-in number is 1-844-492-3731, and the international dial-in number is 1-412-542-4121. A replay will be available one hour after the conclusion of the earnings call on May 2, 2019, through May 16, 2019. The U.S. toll-free replay dial-in number is 1-877-344-7529 and the international replay dial-in number is 1-412-317-0088. The replay access code is 10129894.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K and the exhibit furnished therewith shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, and shall not be or be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.
Item 9.01 — Financial Statements and Exhibits
(d) Exhibits.
 
 
 
Exhibit No.
 
Description
 












SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
Date: May 1, 2019
 
CYRUSONE INC.
 
 
 
 
 
By:
 
/s/ Robert M. Jackson
 
 
 
 
Robert M. Jackson


 
 
 
 
Executive Vice President, General Counsel
 
 
 
 
and Secretary




Exhibit
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=4



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=3


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

Exhibit 99.1

CyrusOne Reports First Quarter 2019 Earnings
1Q’19 Year-over-Year Revenue Growth of 14%
Signed $27 Million in Annualized GAAP Revenue and 16 Megawatts

DALLAS (May 1, 2019) - CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT, today announced first quarter 2019 earnings.

Highlights
 
 
% Change vs. 1Q’18
Category
1Q’19
1Q’18
1Q’18 Adjusted
for ASC 8421
Revenue
$225.0 million
14%
14%
Net income / (loss)
$89.4 million
n/m
n/m
Adjusted EBITDA
$119.2 million
9%
13%
Normalized FFO
$89.3 million
9%
12%
Net income / (loss) per diluted share
$0.82
82%
86%
Normalized FFO per diluted share
$0.82
(4)%
(1)%

Leased 16 megawatts (“MW”) and 93,000 colocation square feet (“CSF”) in the first quarter, totaling $27 million in annualized GAAP revenue

Backlog of $39 million in annualized GAAP revenue as of the end of the first quarter

As previously announced, acquired 22 acres of land in San Antonio and 8 acres of land in Santa Clara to support growth in those markets

Estimated 120 MW of power capacity in San Antonio and nearly 200 MW of power capacity in Santa Clara (inclusive of previously acquired land)

Strategically hedged EUR exposure, synthetically converting $270 million outstanding on the Company’s revolving credit facility into more attractively priced EUR-denominated debt (equivalent to €238 million), resulting in a nearly 300 basis point decrease in the interest rate

Raised approximately $252 million in net proceeds through the sale of approximately 4.9 million shares of common stock under at-the-market (“ATM”) equity program

As previously announced, subsequent to the end of the first quarter raised approximately $200 million through the sale of approximately 5.7 million American depository shares (“ADSs”) of GDS Holdings Limited (“GDS”)
 
Increasing 2019 Normalized FFO per diluted share guidance2 by $0.20 at the midpoint of the range, from $3.10 - 3.20 to $3.30 - 3.40

“We are off to a great start to the year, with strong operational and financial performance, and leasing contributions across the portfolio as our international expansion creates an increasingly balanced and diversified business with a presence in the most important markets in the world,” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “We continue to maintain a very strong balance sheet to support our growth, and recent initiatives have allowed us to significantly increase our Normalized FFO per share guidance while meeting our equity funding requirements for the year based on our current outlook.”

First Quarter 2019 Financial Results
    
Revenue was $225.0 million for the first quarter, compared to $196.6 million for the same period in 2018, an increase of 14%. The increase in revenue was driven primarily by a 22% increase in occupied CSF from organic growth and the Zenium acquisition, as well as additional interconnection services.

3

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

Net income was $89.4 million for the first quarter, compared to net income of $43.5 million in the same period in 2018. Net income for the first quarter included a $101.2 million unrealized gain on the Company’s equity investment in GDS, a leading data center provider in China, due to an increase in GDS’s share price during the quarter. Net income per diluted common share3 was $0.82 in the first quarter of 2019, compared to net income per diluted common share of $0.45 in the same period in 2018.

Net operating income (“NOI”)4 was $141.7 million for the first quarter, compared to $128.8 million in the same period in 2018, an increase of 10%. Adjusted EBITDA5 was $119.2 million for the first quarter, compared to $109.5 million in the same period in 2018, an increase of 9%.

Normalized Funds From Operations (“Normalized FFO”)6 was $89.3 million for the first quarter, compared to $82.2 million in the same period in 2018, an increase of 9%. Normalized FFO per diluted common share was $0.82 in the first quarter of 2019.

Leasing Activity

CyrusOne leased approximately 16 MW of power and 93,000 CSF in the first quarter, representing $2.3 million in monthly recurring rent, inclusive of the monthly impact of installation charges, or approximately $27.2 million in annualized GAAP revenue7, excluding estimates for pass-through power. The weighted average lease term of the new leases, based on square footage, is 56 months (4.7 years), and the weighted average remaining lease term of CyrusOne’s portfolio is 56 months (taking into account the impact of the backlog). Recurring rent churn8 for the first quarter was 2.1%, compared to 0.5% for the same period in 2018.

Portfolio Development and CSF Leased

In the first quarter, the Company completed construction on 249,000 CSF and 48 MW of power capacity across five projects in Northern Virginia, the New York Metro area, and Raleigh-Durham. CSF leased9 as of the end of the first quarter was 90% for stabilized properties10 and 86% overall. In addition, the Company has development projects underway in Northern Virginia, Dallas, the New York Metro area, Raleigh-Durham, Phoenix, Austin, Frankfurt, London, and Amsterdam that are expected to add approximately 190,000 CSF and 82 MW of power capacity.

Sale of GDS Shares

As previously announced, subsequent to the end of the first quarter the Company raised approximately $200 million through the sale of approximately 5.7 million ADSs of GDS. CyrusOne continues to hold approximately 2.3 million ADSs, valued at approximately $90 million based on the GDS closing price on April 30, 2019, with the remaining ADSs being subject to a six-month lock up period. The commercial agreement between CyrusOne and GDS remains in place, and Gary Wojtaszek remains a member of the GDS Board of Directors.

Balance Sheet and Liquidity

As of March 31, 2019, the Company had gross asset value11 totaling approximately $7.1 billion, an increase of approximately 32% over gross asset value as of March 31, 2018. CyrusOne had $2.92 billion of long-term debt12, $126.0 million of cash and cash equivalents, and $1.28 billion available under its unsecured revolving credit facility as of March 31, 2019. Net debt12 was $2.82 billion as of March 31, 2019, representing approximately 33% of the Company's total enterprise value as of March 31, 2019 of $8.6 billion.

In the first quarter, CyrusOne sold approximately 4.9 million shares of its common stock through its ATM equity program, raising approximately $252 million in net proceeds. The settlement of a portion of the shares and receipt of the associated proceeds occurred in April 2019. As of March 31, 2019, there was approximately $495 million in remaining availability under the current ATM program. Also in the first quarter, CyrusOne strategically hedged its EUR exposure, synthetically converting $270 million outstanding on the Company’s revolving credit facility into more attractively priced EUR-denominated debt (equivalent to €238 million), resulting in a nearly 300 basis point decrease in the interest rate.

Subsequent to the end of the first quarter, CyrusOne paid down $200 million of its $1.0 billion term loan maturing in March 2023, decreasing the remaining balance to $800 million.

Net debt to Adjusted EBITDA for the last quarter annualized was 5.2x, after adjusting net debt to include the impact of proceeds from the April 2019 settlement of shares of common stock sold through the ATM equity program in March 2019, proceeds from the sale of GDS ADSs in April 2019, and the repayment of $200 million of the $1.0 billion term loan in April 2019. After further adjusting Adjusted EBITDA to exclude the impact of the adoption of ASC 842 as of January 1, 2019, in order to present the leverage metric on a basis comparable to that of prior periods, net debt to Adjusted EBITDA for the last quarter annualized was 5.0x13. Available liquidity14 was $1.55 billion as of March 31, 2019.    



4

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

Dividend

On February 20, 2019, the Company announced a dividend of $0.46 per share of common stock for the first quarter of 2019. The dividend was paid on April 12, 2019, to stockholders of record at the close of business on March 29, 2019.

Additionally, today the Company is announcing a dividend of $0.46 per share of common stock for the second quarter of 2019. The dividend will be paid on July 12, 2019, to stockholders of record at the close of business on June 28, 2019.
Guidance

CyrusOne is updating guidance for full year 2019, increasing the guidance range for Normalized FFO per diluted common share, decreasing and tightening the guidance ranges for Capital Expenditures and Capital Expenditures - Development, and reaffirming the ranges for all other metrics. The annual guidance provided below represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base, and the supply and demand dynamics of the markets in which CyrusOne operates.

CyrusOne does not provide forward-looking guidance for GAAP financial measures (other than Revenue and Capital Expenditures) or reconciliations for the non-GAAP financial measures included in the annual guidance provided below due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for transaction, acquisition, integration and other related expenses, legal claim costs, asset impairments and loss on disposals and other charges in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
Category
Previous
 2019 Guidance
Revised
2019 Guidance
Total Revenue
$960 - 1,000 million
$960 - 1,000 million
   Lease and Other Revenues from Customers
$835 - 865 million
$835 - 865 million
   Metered Power Reimbursements
$125 - 135 million
$125 - 135 million
Adjusted EBITDA
$500 - 525 million
$500 - 525 million
Normalized FFO per diluted common share
$3.10 - 3.20
$3.30 - 3.40
Capital Expenditures
$950 - 1,100 million
$900 - 1,000 million
   Development(1)
$940 - 1,085 million
$890 - 985 million
   Recurring
$10 - 15 million
$10 - 15 million
 
 
 
(1)Development capital expenditures include the acquisition of land for future development.

Upcoming Conferences and Events

MoffettNathanson Media & Communications Summit on May 14-15 in New York City
J.P. Morgan Global Technology, Media and Communications Conference on May 13-16 in Boston, Massachusetts
RBC C-Level 2019 Global Datacenter and Connectivity Conference on May 29 in the San Francisco Bay Area
Cowen Technology, Media & Telecom Conference on May 29-30 in New York City
Credit Suisse Communications Conference on June 4-5 in New York City
NAREIT’s REITweek Conference on June 4-6 in New York City
William Blair Growth Stock Conference on June 5-6 in Chicago
NASDAQ Investor Conference on June 13 in London

Conference Call Details

CyrusOne will host a conference call on May 2, 2019, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the first quarter of 2019. A live webcast of the conference call and the presentation to be made during the call will be available in the “Investors / Events & Presentations” section of the Company's website at http://investor.cyrusone.com/events.cfm. The U.S. conference call dial-in number is 1-844-492-3731, and the international dial-in number is 1-412-542-4121. A replay will be available one hour after the conclusion of the earnings call on May 2, 2019, through May 16, 2019. The U.S. toll-free replay dial-in number is 1-877-344-7529 and the international replay dial-in number is 1-412-317-0088. The replay access code is 10129894.





5

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

Safe Harbor

This release and the documents incorporated by reference herein contain forward-looking statements regarding future events and our future results that are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "predicts," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "endeavors," "strives," "may," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents we file with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including CyrusOne's Form 10-K report, Form 10-Q reports, and Form 8-K reports. We undertake no obligation to revise or update any forward-looking statements for any reason other than as required by law.

Adoption of New Accounting Standard and Use of Non-GAAP Financial Measures and Other Metrics

In February 2016, the Financial Accounting Standards Board issued ASU 2016-02 (codified in ASC 842, Leases (“ASC 842”)) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The ASU requires that a liability be recorded on the balance sheet for all leases where the reporting entity is a lessee, based on the present value of future lease obligations. A corresponding right-of-use asset will also be recorded. Amortization of the lease obligation and the right-of-use asset for leases classified as operating leases are on a straight-line basis. Leases classified as financing leases are required to be accounted for as financing arrangements similar to the accounting treatment for capital leases under ASC 840, Leases (the former accounting standard for all leases).

We adopted ASU 2016-02 on January 1, 2019, applied the package of practical expedients included therein and utilized the modified retrospective transition method, with the cumulative effect of transition, including initial recognition of lease assets and liabilities for existing operating leases, recognized as of the effective date, included in ASU 2018-11. By applying ASU 2018-11 at the adoption date, the presentation of financial information for periods prior to January 1, 2019 will remain unchanged.

This press release contains certain non-GAAP financial measures that management believes are helpful in understanding the Company's business, as further discussed within this press release. These financial measures, which include Funds From Operations, Normalized Funds From Operations, Normalized Funds From Operations per Diluted Common Share, Adjusted EBITDA, Net Operating Income, and Net Debt should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables that accompany this release and are available in the Investor Relations section of www.cyrusone.com.
Management uses FFO, Normalized FFO, Normalized FFO per Diluted Common Share, Adjusted EBITDA, and NOI as supplemental performance measures because they provide performance measures that, when compared year over year, capture trends in occupancy rates, rental rates and operating costs. The Company also believes that, as widely recognized measures of the performance of real estate investment trusts (REITs) and other companies, these measures will be used by investors as a basis to compare its operating performance with that of other companies. Other companies may not calculate these measures in the same manner, and, as presented, they may not be comparable to others. Therefore, FFO, Normalized FFO, NOI, and Adjusted EBITDA should be considered only as supplements to net income as measures of our performance. FFO, Normalized FFO, NOI, and Adjusted EBITDA should not be used as measures of liquidity or as indicative of funds available to fund the Company's cash needs, including the ability to make distributions. These measures also should not be used as substitutes for cash flow from operating activities computed in accordance with U.S. GAAP. The Company believes that Net Debt provides a useful measure of liquidity and financial health.
1 The Company adopted ASC 842 effective January 1, 2019. The adjusted 1Q’18 results have not been prepared in accordance with GAAP and represent the Company’s estimates as if the standard had been adopted as of January 1, 2018. The percentage changes versus adjusted 1Q’18 results are being shown solely for comparative and investor usefulness purposes with respect to the Company’s 1Q’19 results. There is no impact on 1Q’18 Revenue. The estimated impacts on 1Q’18 Net income, Adjusted EBITDA, Normalized FFO, Net income per share, and Normalized FFO per share are $1.2 million, $4.1 million, $2.2 million, $0.01, and $0.02, respectively.
2CyrusOne is not providing forward-looking GAAP guidance for GAAP net income (loss) per share or reconciliations of its non-GAAP guidance, see “Guidance” for more information.

6

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

3Net income (loss) per diluted common share is defined as net income (loss) divided by the weighted average diluted common shares outstanding for the period, which were 108.8 million for the first quarter of 2019.
4We use Net Operating Income ("NOI"), which is a non-GAAP financial measure commonly used in the REIT industry, as a supplemental performance measure. We use NOI as a supplemental performance measure because, when compared period over period, it captures trends in occupancy rates, rental rates and operating expenses. We also believe that, as a widely recognized measure of the performance of REITs, NOI is used by investors as a basis to evaluate REITs.

We calculate NOI as revenue less property operating expenses, each of which are presented in the accompanying consolidated statements of operations and/or net income (loss), which is presented in the accompanying consolidated statements of operations, adjusted for sales and marketing expenses, general and administrative expenses, depreciation and amortization expenses, transaction, acquisition, integration and other related expenses, interest expense, unrealized (gain) loss on marketable equity investment, loss on early extinguishment of debt, other expense, income tax expense and other special items as appropriate. Amortization of deferred leasing costs is presented in depreciation and amortization expenses, which is excluded from NOI. Sales and marketing expenses are not property-specific, rather these expenses support our entire portfolio. As a result, we have excluded these sales and marketing expenses from our NOI calculation, consistent with the treatment of general and administrative expenses, which also support our entire portfolio. Because the calculation of NOI excludes various expenses, the utility of NOI as a measure of our performance is limited. Other REITs may not calculate NOI in the same manner. Accordingly, our NOI may not be comparable to others. Therefore, NOI should be considered only as a supplement to revenue and to net income (loss) presented in accordance with GAAP as a measure of our performance. NOI should not be used as a measure of our liquidity or as indicative of funds available to fund our cash needs, including our ability to make distributions. NOI also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

5Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) as defined by GAAP adjusted for interest expense, income tax benefit (expense), depreciation and amortization, impairment losses and loss on disposals, transaction, acquisition, integration and other related expenses, legal claim costs, stock-based compensation expense, severance and management transition costs, loss on early extinguishment of debt, new accounting standards and regulatory compliance and the related system implementation costs, unrealized (gain) loss on marketable equity investment, other expenses and other special items as appropriate. Other companies may not calculate Adjusted EBITDA in the same manner. Accordingly, the Company's Adjusted EBITDA as presented may not be comparable to others.
6We use funds from operations ("FFO") and normalized funds from operations ("Normalized FFO"), which are non-GAAP financial measures commonly used in the REIT industry, as supplemental performance measures. We use FFO and Normalized FFO as supplemental performance measures because, when compared period over period, they capture trends in occupancy rates, rental rates and operating costs. We also believe that, as widely recognized measures of the performance of REITs, FFO and Normalized FFO are used by investors as a basis to evaluate REITs.

We calculate FFO as net income (loss) computed in accordance with GAAP before real estate depreciation and amortization and impairment losses. While it is consistent with the definition of FFO promulgated by the National Association of Real Estate Investment Trusts ("NAREIT"), our computation of FFO may differ from the methodology for calculating FFO used by other REITs. Accordingly, our FFO may not be comparable to others.

We calculate Normalized FFO as FFO plus loss on early extinguishment of debt; unrealized (gain) loss on marketable equity investment; new accounting standards and regulatory compliance and the related system implementation costs; amortization of tradenames; transaction, acquisition, integration and other related expenses; severance and management transition costs; legal claim costs; lease exit costs; and other special items as appropriate. The Company believes its Normalized FFO calculation provides a comparable measure between different periods. Other REITs may not calculate Normalized FFO in the same manner. Accordingly, our Normalized FFO may not be comparable to others.

In addition, because FFO and Normalized FFO exclude real estate depreciation and amortization and impairment losses, and capture neither the changes in the value of our properties that result from use or from market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO and Normalized FFO as measures of our performance is limited. Therefore, FFO and Normalized FFO should be considered only as supplements to net income (loss) presented in accordance with GAAP as measures of our performance. FFO and Normalized FFO should not be used as measures of our liquidity or as indicative of funds available to fund our cash needs, including our ability to make distributions. FFO and Normalized FFO also should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP.
7Annualized GAAP revenue is equal to monthly recurring rent, defined as average monthly contractual rent during the term of the lease plus the monthly impact of installation charges, multiplied by 12. It can be shown both inclusive and exclusive of the Company’s estimate of customer reimbursements for metered power.

7

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

8Recurring rent churn is calculated as any reduction in recurring rent due to customer terminations, service reductions or net pricing decreases as a percentage of rent at the beginning of the period, excluding any impact from metered power reimbursements or other usage-based billing.
9CSF leased is calculated by dividing CSF under signed leases for colocation space (whether or not the contract has commenced billing) by total CSF. CSF leased differs from CSF occupied presented in the Data Center Portfolio table because the leased rate includes CSF for signed leases that have not commenced billing.
10Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased.
11Gross asset value is defined as total assets plus accumulated depreciation.
12Long-term debt and net debt exclude adjustments for deferred financing costs and bond premiums. Net debt, which is a non-GAAP financial measure, provides a useful measure of liquidity and financial health. The Company defines net debt as long-term debt and capital lease obligations, offset by cash and cash equivalents.
13The estimated impact of the adoption of ASC 842 on Adjusted EBITDA for the last quarter annualized is $16.2 million.

14Liquidity is calculated as cash, cash equivalents, and temporary cash investments on hand, plus the undrawn capacity on CyrusOne's revolving credit facility. Liquidity has been adjusted to include the impact of proceeds from the April 2019 settlement of shares of common stock sold through the ATM equity program in March 2019 and proceeds from the sale of GDS ADSs in April 2019, net of the repayment of $200 million of the $1.0 billion term loan in April 2019.

About CyrusOne

CyrusOne (NASDAQ: CONE) is a high-growth real estate investment trust (REIT) specializing in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including 212 Fortune 1000 companies.
With a track record of meeting and surpassing the aggressive speed-to-market demands of hyperscale cloud providers, as well as the expanding IT infrastructure requirements of the enterprise, CyrusOne provides the flexibility, reliability, security, and connectivity that foster business growth. CyrusOne offers a tailored, customer service-focused platform and is committed to full transparency in communication, management, and service delivery throughout its 48 data centers worldwide. Additional information about CyrusOne can be found at www.CyrusOne.com.

# # #

Investor Relations
Michael Schafer
Vice President, Capital Markets & Investor Relations
972-350-0060
investorrelations@cyrusone.com











                                                                                                                                                                                

8

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

Company Profile

CyrusOne (NASDAQ: CONE) specializes in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for approximately 1,000 customers, including 212 Fortune 1000 companies. CyrusOne's data center offerings provide the flexibility, reliability, and security that enterprise customers require and are delivered through a tailored, customer service-focused platform designed to foster long-term relationships. CyrusOne is committed to full transparency in communication, management, and service delivery throughout its 48 data centers worldwide.

Best-in-Class Sales Force
Flexible Solutions that Scale as Customers Grow
Massively Modular® Engineering with Data Hall Builds in 10-14 Weeks
Focus on Operational Excellence and Superior Customer Service
Proven Leading-Edge Technology Delivering Power Densities up to 900 Watts per Square Foot
National IX Replicates Enterprise Data Center Architecture

Corporate Headquarters
Senior Management
2101 Cedar Springs Road, Ste. 900
Gary Wojtaszek, President and CEO
Jonathan Schildkraut, EVP & Chief Strategy Officer
Dallas, Texas 75201
Tesh Durvasula, EVP & President, Europe
John Gould, EVP & Chief Commercial Officer
Phone: (972) 350-0060
Diane Morefield, EVP & Chief Financial Officer
Kellie Teal-Guess, EVP & Chief People Officer
Website: www.cyrusone.com
Kevin Timmons, EVP & Chief Technology Officer
Robert Jackson, EVP General Counsel & Secretary
Analyst Coverage

Firm
Analyst
Phone Number
Bank of America Merrill Lynch
Michael J. Funk
(646) 855-5664
Berenberg Capital Markets
Nate Crossett
(646) 949-9030
BMO Capital Markets
Ari Klein
(212) 885-4103
Citi
Mike Rollins
(212) 816-1116
Cowen and Company
Colby Synesael
(646) 562-1355
Credit Suisse
Sami Badri
(212) 538-1727
Deutsche Bank
Matthew Niknam
(212) 250-4711
Guggenheim Securities, LLC
Robert Gutman
(212) 518-9148
Jefferies
Jonathan Petersen
(212) 284-1705
J.P. Morgan
Richard Choe
(212) 622-6708
KeyBanc Capital Markets
Jordan Sadler
(917) 368-2280
MoffettNathanson
Nick Del Deo, CFA
(212) 519-0025
Morgan Stanley
Simon Flannery
(212) 761-6432
MUFG Securities
Stephen Bersey
(212) 405-7032
RBC Capital Markets
Jonathan Atkin
(415) 633-8589
Raymond James
Frank G. Louthan IV
(404) 442-5867
Stifel
Erik Rasmussen
(212) 271-3461
SunTrust Robinson Humphrey
Greg Miller
(212) 303-4169
UBS
John C. Hodulik, CFA
(212) 713-4226
Wells Fargo
Eric Luebchow
(312) 630-2386
William Blair
Jim Breen, CFA
(617) 235-7513



9

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Summary of Financial Data
(Dollars in millions, except per share amounts)

 
Three Months
 
 
March 31,
December 31,
March 31,
Growth %
 
2019
2018
2018
Yr/Yr
Revenue
$
225.0

$
221.3

$
196.6

14
 %
Net operating income
141.7

143.3

128.8

10
 %
Net income (loss)
89.4

(105.8
)
43.5

n/m

Funds from Operations ("FFO") - Nareit defined
189.5

(10.3
)
116.0

63
 %
Normalized Funds from Operations ("Normalized FFO")
89.3

90.9

82.2

9
 %
Weighted average number of common shares outstanding - diluted for Normalized FFO
108.8

106.1

96.6

13
 %
Income (loss) per share - basic
$
0.82

$
(1.00
)
$
0.45

82
 %
Income (loss) per share - diluted
$
0.82

$
(1.00
)
$
0.45

82
 %
Normalized FFO per diluted common share
$
0.82

$
0.86

$
0.85

(4
)%
Adjusted EBITDA
$
119.2

$
121.2

$
109.5

9
 %
Adjusted EBITDA as a % of Revenue
53.0
%
54.8
%
55.7
%
(2.7
) pts


 
As of
 
 
March 31,
December 31,
March 31,
Growth %
 
2019
2018
2018
Yr/Yr
Balance Sheet Data
 
 
 
 
Gross investment in real estate
$
5,508.8

$
5,347.5

$
3,954.6

39
 %
Accumulated depreciation
(1,122.5
)
(1,054.5
)
(836.4
)
34
 %
Total investment in real estate, net
4,386.3

4,293.0

3,118.2

41
 %
Cash and cash equivalents
126.0

64.4

228.7

(45
)%
Market value of common equity
5,785.0

5,728.5

5,066.4

14
 %
Long-term debt
2,915.8

2,643.0

2,200.0

33
 %
Net debt
2,823.2

2,612.0

1,987.2

42
 %
Total enterprise value
8,608.2

8,340.5

7,053.6

22
 %
Net debt to LQA Adjusted EBITDA(a)
5.2x

5.4x

4.5x

0.7x

 
 
 
 
 
Dividend Activity
 
 
 
 
Dividends per share
$
0.46

$
0.46

$
0.46

-

 
 
 
 
 
Portfolio Statistics
 
 
 
 
Data centers
48

48

45

7
 %
Stabilized CSF (000)
3,721

3,540

3,024

23
 %
Stabilized CSF % leased
90
%
92
%
92
%
(2) pts

Total CSF (000)
4,061

3,819

3,348

21
 %
Total CSF % leased
86
%
88
%
86
%
0 pts

Total NRSF (000)
7,004

6,726

5,824

20
 %


(a) March 31, 2019 period adjusted to reflect the impact of proceeds from the April 2019 settlement of shares of common stock sold through the Company's ATM equity program in March 2019, proceeds from the sale of GDS ADSs in April 2019, and the repayment of $200 million of the $1.0 billion term loan in April 2019.

10

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share amounts)
(Unaudited)
 

 
Three Months
 
 
 
Ended March 31,
Change
 
2019
2018
$
%
Revenue(a)
$
225.0

$
196.6

$
28.4

14
 %
Operating expenses:
 
 
 
 
Property operating expenses
83.3

67.8

15.5

23
 %
Sales and marketing
5.3

5.3


n/m

General and administrative
22.2

19.3

2.9

15
 %
Depreciation and amortization
102.1

74.6

27.5

37
 %
Transaction, acquisition, integration and other related expenses
0.3

1.9

(1.6
)
(84
)%
Total operating expenses
213.2

168.9

44.3

26
 %
Operating income
11.8

27.7

(15.9
)
(57
)%
Interest expense
(23.7
)
(20.8
)
(2.9
)
14
 %
Unrealized gain on marketable equity investment
101.2

40.5

60.7

n/m

Loss on early extinguishment of debt

(3.1
)
3.1

n/m

Other expense
(0.1
)

(0.1
)
n/m

Net income before income taxes
89.2

44.3

44.9

n/m

Income tax benefit (expense)
0.2

(0.8
)
1.0

n/m

Net income
$
89.4

$
43.5

$
45.9

n/m

Income per share - basic
$
0.82

$
0.45

$
0.37

82
 %
Income per share - diluted
$
0.82

$
0.45

$
0.37

82
 %
            
(a) The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $28.5 million and $21.6 million for the three months ended March 31, 2019 and 2018, respectively.















11

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)
(Unaudited)
 

 
March 31,
December 31,
Change
 
2019
2018
$
%
Assets
 
 
 
 
Investment in real estate:
 
 
 
 
Land
$
124.9

$
118.5

$
6.4

5
 %
Buildings and improvements
1,649.2

1,677.5

(28.3
)
(2
)%
Equipment
2,799.6

2,630.2

169.4

6
 %
Gross operating real estate
4,573.7

4,426.2

147.5

3
 %
Less accumulated depreciation
(1,122.5
)
(1,054.5
)
(68.0
)
6
 %
Net operating real estate
3,451.2

3,371.7

79.5

2
 %
Construction in progress, including land under development
734.7

744.9

(10.2
)
(1
)%
Land held for future development
200.4

176.4

24.0

14
 %
Total investment in real estate, net
4,386.3

4,293.0

93.3

2
 %
Cash and cash equivalents
126.0

64.4

61.6

96
 %
Rent and other receivables
248.7

234.9

13.8

6
 %
Restricted cash
1.3


1.3

 %
Operating lease right-of-use assets
83.8


83.8

 %
Equity investments
299.3

198.1

101.2

51
 %
Goodwill
455.1

455.1


 %
Intangible assets, net
226.1

235.7

(9.6
)
(4
)%
Other assets
114.8

111.3

3.5

3
 %
Total assets
$
5,941.4

$
5,592.5

$
348.9

6
 %
Liabilities and equity
 
 


Debt
$
2,898.6

$
2,624.7

$
273.9

10
 %
Capital lease obligations
33.4

33.4


 %
Operating lease liabilities
119.6


119.6

 %
Lease financing arrangements

123.3

(123.3
)
 %
Construction costs payable
155.5

195.3

(39.8
)
(20
)%
Accounts payable and accrued expenses
81.6

121.3

(39.7
)
(33
)%
Dividends payable
51.5

51.0

0.5

1
 %
Deferred revenue and prepaid rents
155.9

148.6

7.3

5
 %
Deferred tax liability
67.2

68.9

(1.7
)
(2
)%
Total liabilities
3,563.3

3,366.5

196.8

6
 %
Stockholders' equity
 
 


Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding



 %
Common stock, $.01 par value, 500,000,000 shares authorized and 110,316,652 and 108,329,314 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
1.1

1.1


 %
Additional paid in capital
2,938.2

2,837.4

100.8

4
 %
Accumulated deficit
(552.2
)
(600.2
)
48.0

(8
)%
Accumulated other comprehensive loss
(9.0
)
(12.3
)
3.3

(27
)%
Total stockholders’ equity
2,378.1

2,226.0

152.1

7
 %
Total liabilities and equity
$
5,941.4

$
5,592.5

$
348.9

6
 %



12

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share amounts)
(Unaudited)

 
For the three months ended:
March 31,
December 31,
September 30,
June 30,
March 31,
 
2019
2018
2018
2018
2018
Revenue(a)
$
225.0

$
221.3

$
206.6

$
196.9

$
196.6

Operating expenses:
 
 
 
 
 
Property operating expenses
83.3

78.0

77.7

68.9

67.8

Sales and marketing
5.3

5.6

4.3

4.4

5.3

General and administrative
22.2

23.4

19.3

18.6

19.3

Depreciation and amortization
102.1

97.9

84.0

77.6

74.6

Transaction, acquisition, integration and other related expenses
0.3

1.6

1.1

0.4

1.9

Total operating expenses
213.2

206.5

186.4

169.9

168.9

Operating income
11.8

14.8

20.2

27.0

27.7

Interest expense
(23.7
)
(25.3
)
(25.8
)
(22.8
)
(20.8
)
Unrealized gain (loss) on marketable equity investment
101.2

(96.7
)
(36.6
)
102.7

40.5

Loss on early extinguishment of debt




(3.1
)
Other expense
(0.1
)




Net income (loss) before income taxes
89.2

(107.2
)
(42.2
)
106.9

44.3

Income tax benefit (expense)
0.2

1.4

(0.2
)
(1.0
)
(0.8
)
Net income (loss)
$
89.4

$
(105.8
)
$
(42.4
)
$
105.9

$
43.5

Income (loss) per share - basic
$
0.82

$
(1.00
)
$
(0.43
)
$
1.07

$
0.45

Income (loss) per share - diluted
$
0.82

$
(1.00
)
$
(0.43
)
$
1.06

$
0.45


(a) The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $28.5 million, $28.4 million, $29.3 million, $24.8 million and $21.6 million for the three months ended March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.

















13

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)
(Unaudited) 
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2019
2018
2018
2018
2018
Assets
 
 
 
 
 
Investment in real estate:
 
 
 
 
 
Land
$
124.9

$
118.5

$
125.2

$
107.4

$
104.6

Buildings and improvements
1,649.2

1,677.5

1,587.3

1,461.1

1,400.8

Equipment
2,799.6

2,630.2

2,452.5

2,050.3

1,959.5

Gross operating real estate
4,573.7

4,426.2

4,165.0

3,618.8

3,464.9

Less accumulated depreciation
(1,122.5
)
(1,054.5
)
(973.4
)
(900.3
)
(836.4
)
Net operating real estate
3,451.2

3,371.7

3,191.6

2,718.5

2,628.5

Construction in progress, including land under development
734.7

744.9

738.6

452.6

435.3

Land held for future development
200.4

176.4

189.6

74.2

54.4

Total investment in real estate, net
4,386.3

4,293.0

4,119.8

3,245.3

3,118.2

Cash and cash equivalents
126.0

64.4

61.0

116.2

228.7

Rent and other receivables
248.7

234.9

224.6

201.4

200.5

Restricted cash
1.3





Operating lease right-of-use assets
83.8





Equity investments
299.3

198.1

282.2

318.8

216.1

Goodwill
455.1

455.1

455.1

455.1

455.1

Intangible assets, net
226.1

235.7

248.4

190.5

196.8

Other assets
114.8

111.3

102.0

101.4

82.9

Total assets
$
5,941.4

$
5,592.5

$
5,493.1

$
4,628.7

$
4,498.3

Liabilities and equity
 
 
 
 
 
Debt
$
2,898.6

$
2,624.7

$
2,576.2

$
2,179.5

$
2,178.3

Capital lease obligations
33.4

33.4

36.9

14.9

15.9

Operating lease liabilities
119.6





Lease financing arrangements

123.3

125.8

127.8

131.3

Construction costs payable
155.5

195.3

160.5

113.3

89.0

Accounts payable and accrued expenses
81.6

121.3

96.8

91.4

66.7

Dividends payable
51.5

51.0

49.7

46.5

46.4

Deferred revenue and prepaid rents
155.9

148.6

139.5

127.1

116.1

Deferred tax liability
67.2

68.9

68.7



Total liabilities
3,563.3

3,366.5

3,254.1

2,700.5

2,643.7

Stockholders' equity
 
 
 
 
 
Preferred stock, $.01 par value, 100,000,000 authorized; no shares issued or outstanding





Common stock, $.01 par value, 500,000,000 shares authorized and 110,316,652 and 108,329,314 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
1.1

1.1

1.1

1.0

1.0

Additional paid in capital
2,938.2

2,837.4

2,685.3

2,281.5

2,268.0

Accumulated deficit
(552.2
)
(600.2
)
(444.3
)
(353.0
)
(413.1
)
Accumulated other comprehensive loss
(9.0
)
(12.3
)
(3.1
)
(1.3
)
(1.3
)
Total stockholders' equity
2,378.1

2,226.0

2,239.0

1,928.2

1,854.6

Total liabilities and equity
$
5,941.4

$
5,592.5

$
5,493.1

$
4,628.7

$
4,498.3





14

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Condensed Consolidated Statements of Cash Flow
(Dollars in millions)
(Unaudited) 
 
Three Months Ended March 31, 2019
Three Months Ended March 31, 2018
Cash flows from operating activities:
 
 
Net income
$
89.4

$
43.5

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
102.1

74.6

Provision for bad debt expense

0.5

Unrealized gain on marketable equity investment
(101.2
)
(40.5
)
Loss on early extinguishment of debt

3.1

Interest expense amortization, net
1.2

0.7

Stock-based compensation expense
4.5

3.9

Provision for taxes
(0.8
)

Operating lease ROU amortization and liability accretion
5.0


Other
(0.5
)

 
 
 
Change in operating assets and liabilities:
 
 
Rent and other receivables, net and other assets
(18.0
)
(18.0
)
Accounts payable and accrued expenses
(39.8
)
(28.9
)
Deferred revenue and prepaid rents
7.1

5.3

Operating leases
(5.1
)

Net cash provided by operating activities
43.9

44.2

Cash flows from investing activities:
 
 
Investment in real estate
(301.9
)
(145.2
)
Net cash used in investing activities
(301.9
)
(145.2
)
Cash flows from financing activities:
 
 
Issuance of common stock, net
105.0

142.9

Dividends paid
(50.4
)
(41.0
)
Proceeds from revolving credit facility
275.7


Proceeds from unsecured term loan

985.6

Repayments of unsecured term loan

(902.7
)
Payments on capital lease obligations
(0.6
)
(2.6
)
Tax payment upon exercise of equity awards
(8.7
)
(4.4
)
Net cash provided by financing activities
321.0

177.8

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(0.1
)

Net increase in cash, cash equivalents and restricted cash
62.9

76.8

Cash, cash equivalents and restricted cash at beginning of period
64.4

151.9

Cash, cash equivalents and restricted cash at end of period
$
127.3

$
228.7

 
 
 
Supplemental disclosure of cash flow information:
 
 
Cash paid for interest, including amounts capitalized of $9.3 million and $5.1 million in 2019 and 2018, respectively
$
46.7

$
42.2

Cash paid for income taxes

0.3

Non-cash investing and financing activities:
 
 
Construction costs and other payables
155.5

89.0

Dividends payable
51.5

46.4


15

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Net Operating Income and Reconciliation of Net Income (Loss) to Adjusted EBITDA
(Dollars in millions)
(Unaudited)
 
Three Months Ended
 
 
Three Months Ended
 
March 31,
Change
March 31,
December 31,
September 30,
June 30,
March 31,
 
2019
2018
$
%
2019
2018
2018
2018
2018
Net Operating Income
 
 
 
 
 
 
 
 
 
Revenue
$
225.0

$
196.6

$
28.4

14%
$
225.0

$
221.3

$
206.6

$
196.9

$
196.6

Property operating expenses
83.3

67.8

15.5

23%
83.3

78.0

77.7

68.9

67.8

Net Operating Income (NOI)
$
141.7

$
128.8

$
12.9

10%
$
141.7

$
143.3

$
128.9

$
128.0

$
128.8

NOI as a % of Revenue
63.0
%
65.5
%
 
 
63.0
%
64.8
%
62.4
%
65.0
%
65.5
%
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
89.4

$
43.5

$
45.9

n/m
$
89.4

$
(105.8
)
$
(42.4
)
$
105.9

$
43.5

Interest expense
23.7

20.8

2.9

14%
23.7

25.3

25.8

22.8

20.8

Income tax benefit (expense)
(0.2
)
0.8

(1.0
)
n/m
(0.2
)
(1.4
)
0.2

1.0

0.8

Depreciation and amortization
102.1

74.6

27.5

37%
102.1

97.9

84.0

77.6

74.6

EBITDA (Nareit definition)(a)
$
215.0

$
139.7

$
75.3

54%
$
215.0

$
16.0

$
67.6

$
207.3

$
139.7

 
 
 
 
 
 
 
 
 
 
Transaction, acquisition, integration and other related expenses
0.3

1.9

(1.6
)
(84)%
0.3

1.4

1.1

0.4

1.9

Legal claim costs
0.1

0.2

(0.1
)
(50)%
0.1

0.2

0.1

0.1

0.2

Stock-based compensation expense
4.5

3.9

0.6

15%
4.5

4.5

4.6

4.5

3.9

Severance and management transition costs
0.1

0.7

(0.6
)
(86)%
0.1

1.6



0.7

Loss on early extinguishment of debt

3.1

(3.1
)
n/m




3.1

New accounting standards and regulatory compliance and the related system implementation costs
0.3

0.5

(0.2
)
(40)%
0.3

0.7

0.8

1.0

0.5

Unrealized (gain) loss on marketable equity investment
(101.2
)
(40.5
)
(60.7
)
n/m
(101.2
)
96.7

36.6

(102.7
)
(40.5
)
Other expenses
0.1


0.1

n/m
0.1

0.1




Adjusted EBITDA
$
119.2

$
109.5

$
9.7

9%
$
119.2

$
121.2

$
110.8

$
110.6

$
109.5

Adjusted EBITDA as a % of Revenue
53.0
%
55.7
%
 
 
53.0
%
54.8
%
53.6
%
56.2
%
55.7
%
(a)
We calculate Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) as GAAP net income (loss) plus interest expense, income tax benefit (expense), depreciation and amortization plus impairment losses and loss on disposals. While it is consistent with the definition of EBITDAre promulgated by the National Association of Real Estate Investment Trusts ("Nareit"), our computation of EBITDAre may differ from the methodology for calculating EBITDAre used by other REITs. Accordingly, our EBITDAre may not be comparable to others.
CyrusOne Inc.
Reconciliation of Net Income (Loss) to Net Operating Income
(Dollars in millions)
(Unaudited)
 
Three Months Ended
 
 
 
March 31,
Change
2019
2018
$
%
Net Income (Loss)
$
89.4

$
43.5

$
45.9

n/m

Sales and marketing expenses
5.3

5.3


n/m

General and administrative expenses
22.2

19.3

2.9

15
 %
Depreciation and amortization expenses
102.1

74.6

27.5

37
 %
Transaction, acquisition, integration and other related expenses
0.3

1.9

(1.6
)
(84
)%
Interest expense
23.7

20.8

2.9

14
 %
Unrealized gain on marketable equity investment
(101.2
)
(40.5
)
(60.7
)
n/m

Loss on early extinguishment of debt

3.1

(3.1
)
n/m

Other expense
0.1


0.1

n/m

Income tax benefit (expense)
(0.2
)
0.8

(1.0
)
n/m

Net Operating Income
$
141.7

$
128.8

$
12.9

10
 %

16

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Reconciliation of Net Income (Loss) to FFO and Normalized FFO
(Dollars in millions)
(Unaudited)
 
 
Three Months Ended
 
 
Three Months Ended
 
March 31,
Change
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
$
%
2019
2018
2018
2018
2018
Reconciliation of Net Income (Loss) to FFO and Normalized FFO:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
89.4

$
43.5

$
45.9

n/m

$
89.4

$
(105.8
)
$
(42.4
)
$
105.9

$
43.5

Real estate depreciation and amortization
100.1

72.5

27.6

38
 %
100.1

95.5

81.9

75.6

72.5

Funds from Operations ("FFO") - Nareit defined
$
189.5

$
116.0

$
73.5

63
 %
$
189.5

$
(10.3
)
$
39.5

$
181.5

$
116.0

 
 
 
 


 
 
 
 
 
Loss on early extinguishment of debt

3.1

(3.1
)
n/m





3.1

Unrealized (gain) loss on marketable equity investment
(101.2
)
(40.5
)
(60.7
)
n/m

(101.2
)
96.7

36.6

(102.7
)
(40.5
)
New accounting standards and regulatory compliance and the related system implementation costs
0.3

0.5

(0.2
)
(40
)%
0.3

0.7

0.8

1.0

0.5

Amortization of tradenames
0.2

0.3

(0.1
)
(33
)%
0.2

0.6

0.4

0.4

0.3

Transaction, acquisition, integration and other related expenses
0.3

1.9

(1.6
)
(84
)%
0.3

1.4

1.1

0.4

1.9

Severance and management transition costs
0.1

0.7

(0.6
)
(86
)%
0.1

1.6



0.7

Legal claim costs
0.1

0.2

(0.1
)
(50
)%
0.1

0.2

0.1

0.1

0.2

Normalized Funds from Operations (Normalized FFO)
$
89.3

$
82.2

$
7.1

9
 %
$
89.3

$
90.9

$
78.5

$
80.7

$
82.2

Normalized FFO per diluted common share
$
0.82

$
0.85

$
(0.03
)
(4
)%
$
0.82

$
0.86

$
0.79

$
0.81

$
0.85

Weighted average diluted common shares outstanding
108.8
96.6

12.2

13
 %
108.8
106.1

99.5

99.4

96.6

 
 
 
 
 
 
 
 
 
 
Additional Information:
 
 
 
 
 
 
 
 
 
Amortization of deferred financing costs and bond premium
1.2

0.7

0.5

71
 %
1.2

1.1

1.1

1.1

0.7

Stock-based compensation expense
4.5

3.9

0.6

15
 %
4.5

4.5

4.6

4.5

3.9

Non-real estate depreciation and amortization
1.9

1.8

0.1

6
 %
1.9

1.8

1.7

1.6

1.8

Straight line rent adjustments(a) 
(10.1
)
(7.2
)
(2.9
)
40
 %
(10.1
)
(8.9
)
(5.8
)
(5.8
)
(7.2
)
Deferred revenue, primarily installation revenue(b)
5.9

3.2

2.7

84
 %
5.9

16.1

7.6

2.4

3.2

Leasing commissions
(3.7
)
(3.2
)
(0.5
)
16
 %
(3.7
)
(6.5
)
(3.3
)
(3.7
)
(3.2
)
Recurring capital expenditures
(2.7
)
(2.4
)
(0.3
)
13
 %
(2.7
)
(2.1
)
(3.7
)
(2.3
)
(2.4
)

(a)
Straight line rent adjustments:
Represents the difference between revenue recognized on a straight line basis under GAAP over the term of the lease compared to the contractual rental payments. Lease agreements typically include payments that escalate over the term of the contract or, to a lesser extent, a ramp period.

(b)
Deferred revenue, primarily installation revenue:
Represents payments received from customers in excess of revenue recognized under GAAP. This primarily relates to specific customer-requested buildouts that CyrusOne does not include in its basic data center design. The company charges customers up front for these buildouts rather than incorporating into rent and billing them over time. The cash payments for these buildouts are non-recurring, and may vary significantly from quarter to quarter, but revenue is amortized over the life of the lease.






17

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Market Capitalization Summary, Reconciliation of Net Debt, Debt Schedule and Interest Summary
(Unaudited)
Market Capitalization (as of March 31, 2019)
(dollars in millions)
Shares or
Equivalents
Outstanding
Market Price
as of
March 31, 2019
Market Value
Equivalents
(in millions)
Common shares
110,316,652

$
52.44

$
5,785.0

Net Debt
 
 
2,823.2

Total Enterprise Value (TEV)
 
 
$
8,608.2

Reconciliation of Net Debt
 
March 31,
December 31,
(dollars in millions)
2019
2018
Long-term debt(a)
$
2,915.8

$
2,643.0

Capital lease obligations
33.4

33.4

Less:
 
 
Cash and cash equivalents
(126.0
)
(64.4
)
Net Debt
$
2,823.2

$
2,612.0

(a)Excludes adjustment for deferred financing costs and bond premiums.
Debt Schedule (as of March 31, 2019)
(dollars in millions)
 
 
 
Long-term debt:
Amount
Interest Rate
Maturity Date
Revolving credit facility - EUR(a)
$
145.8

E + 145bps(b)
March 2023(c)
Revolving credit facility - USD(d)
270.0

L + 145bps(e)
March 2023(c)
Term loan(f)
1,000.0

L + 140bps(g)
March 2023
Term loan
300.0

L + 170bps(h)
March 2025
5.000% senior notes due 2024, excluding bond premium
700.0

5.000%
March 2024
5.375% senior notes due 2027, excluding bond premium
500.0

5.375%
March 2027
Total long-term debt(i)
$
2,915.8

4.06%(j)
 
 
 
 
 
Weighted average term of debt:
5.1

years
 
(a)
Amount outstanding is USD equivalent of €130 million.
(b)
Interest rate as of March 31, 2019: 1.45%.
(c)
Assuming exercise of one-year extension option.
(d)
Amount converted into €238 million pursuant to USD-EUR cross currency swap.
(e)
Interest rate as of March 31, 2019: 3.94%, adjusted interest rate pursuant to USD-EUR cross currency swap: 1.00%.
(f)
In April 2019, paid down $200 million of term loan, decreasing remaining balance to $800 million.
(g)
Interest rate as of March 31, 2019: 3.90%.
(h)
Interest rate as of March 31, 2019: 4.20%.
(i)
Excludes adjustment for deferred financing costs.
(j)
Weighted average interest rate calculated using lower interest rate on swapped amount.
Interest Summary
Three Months Ended
 
 
March 31,
December 31,
March 31,
Growth %
(dollars in millions)
2019
2018
2018
Yr/Yr
Interest expense and fees
$
31.8

$
32.7

$
25.2

26
%
Amortization of deferred financing costs and bond premium
1.2

1.1

0.7

71
%
Capitalized interest
(9.3
)
(8.5
)
(5.1
)
82
%
Total interest expense
$
23.7

$
25.3

$
20.8

14
%

18

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Colocation Square Footage (CSF) and CSF Leased
(Unaudited)
 

 
As of March 31, 2019
As of December 31, 2018
As of March 31, 2018
Market
Colocation
Space (CSF)
(a) (000)
CSF
Leased
(b)
Colocation
Space (CSF)
(a) (000)
CSF
Leased
(b)
Colocation
Space (CSF)
(a) (000)
CSF
Leased
(b)
Northern Virginia
1,113

91
%
881

96
%
673

94
%
Dallas
621

70
%
621

70
%
555

81
%
Phoenix
509

100
%
509

100
%
509

91
%
Cincinnati
402

85
%
402

92
%
404

92
%
Houston
308

70
%
308

73
%
308

74
%
San Antonio
300

100
%
300

100
%
273

100
%
New York Metro
228

77
%
218

86
%
218

83
%
Chicago
207

71
%
213

69
%
213

67
%
Austin
106

80
%
106

80
%
106

73
%
Raleigh-Durham
83

99
%
76

97
%
76

88
%
Total - Domestic
3,876

85
%
3,633

87
%
3,335

87
%
Frankfurt
98

99
%
98

99
%

%
London
84

100
%
84

99
%
10

94
%
Singapore
3

22
%
3

22
%
3

22
%
Total - International
185

98
%
185

98
%
13

76
%
Total - Portfolio
4,061

86
%
3,819

88
%
3,348

86
%
Stabilized Properties(c)
3,721

90
%
3,540

92
%
3,024

92
%

(a)
CSF represents the NRSF at an operating facility that is currently leased or readily available for lease as colocation space, where customers locate their servers and other IT equipment.
(b)
CSF Leased is calculated by dividing CSF under signed leases for colocation space (whether or not the lease has commenced billing) by total CSF.
(c)
Stabilized properties include data halls that have been in service for at least 24 months or are at least 85% leased.
























19

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
2019 Guidance

 
Previous
Revised
Category
2019 Guidance
2019 Guidance
Total Revenue
$960 - 1,000 million
$960 - 1,000 million
   Lease and Other Revenues from Customers
$835 - 865 million
$835 - 865 million
   Metered Power Reimbursements
$125 - 135 million
$125 - 135 million
Adjusted EBITDA
$500 - 525 million
$500 - 525 million
Normalized FFO per diluted common share
$3.10 - 3.20
$3.30 - 3.40
Capital Expenditures
$950 - 1,100 million
$900 - 1,000 million
   Development(1)
$940 - 1,085 million
$890 - 985 million
   Recurring
$10 - 15 million
$10 - 15 million
 
 
 
(1)Development capital expenditures include the acquisition of land for future development.
 
CyrusOne is updating guidance for full year 2019, increasing the guidance range for Normalized FFO per diluted common share, decreasing and tightening the guidance ranges for Capital Expenditures and Capital Expenditures - Development, and reaffirming the ranges for all other metrics. The annual guidance provided above represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base and the supply and demand dynamics of the markets in which CyrusOne operates.

CyrusOne does not provide forward-looking guidance for GAAP financial measures (other than Revenue and Capital Expenditures)
or reconciliations for the non-GAAP financial measures included in the annual guidance provided above due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for transaction, acquisition, integration and other related expenses, legal claim costs, asset impairments and loss on disposals and other charges in its reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

20

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12873966&doc=5

CyrusOne Inc.
Data Center Portfolio
As of March 31, 2019
(Unaudited)
 
 
 
Operating Net Rentable Square Feet (NRSF)(a)
Powered
Shell 
Available
for Future 
Development
(NRSF)
(k)  (000)
Available Critical Load Capacity
 (MW)
(l)
Stabilized Properties(b)
Metro
Area
Annualized Rent(c) ($000)
Colocation Space (CSF)(d) (000)
CSF Occupied(e)
CSF
Leased
(f)
Office & Other(g) (000)
Office & Other Occupied(h)
Supporting
Infrastructure
(i) (000)
Total(j)  (000)
Dallas - Carrollton
Dallas
$
72,569

305

85
%
85
%
82

44
%
111

498


44

Northern Virginia - Sterling V
Northern Virginia
47,126

383

83
%
92
%
11

100
%
145

539

64

63

Northern Virginia - Sterling VI
Northern Virginia
43,513

272

88
%
88
%
35

%

307


57

Northern Virginia - Sterling II
Northern Virginia
34,163

159

100
%
100
%
9

100
%
55

223


30

Houston - Houston West I
Houston
31,118

112

89
%
89
%
11

100
%
37

161

3

28

San Antonio III
San Antonio
30,940

132

100
%
100
%
9

100
%
43

184


24

Somerset I
New York Metro
30,764

106

79
%
80
%
27

89
%
89

222

203

13

Cincinnati - 7th Street***
Cincinnati
30,716

197

77
%
77
%
6

61
%
175

378

46

16

Chicago - Aurora I
Chicago
28,531

113

98
%
98
%
34

100
%
223

371

27

71

Dallas - Lewisville*
Dallas
26,451

114

76
%
83
%
11

84
%
54

180


21

Totowa - Madison**
New York Metro
26,192

51

92
%
92
%
22

100
%
59

133


6

Cincinnati - North Cincinnati
Cincinnati
25,150

65

99
%
99
%
45

79
%
53

163

65

14

Phoenix - Chandler VI
Phoenix
22,265

148

100
%
100
%
6

100
%
32

187

10

24

Frankfurt I
Frankfurt
21,803

53

97
%
97
%
8

91
%
57

118


18

San Antonio I
San Antonio
21,286

44

100
%
100
%
6

83
%
46

96

11

12

Wappingers Falls I**
New York Metro
20,690

37

69
%
69
%
20

99
%
15

72


3

Phoenix - Chandler II
Phoenix
20,529

74

100
%
100
%
6

53
%
26

105


12

Houston - Houston West II
Houston
20,300

80

77
%
77
%
4

79
%
55

139

11

12

Northern Virginia - Sterling I
Northern Virginia
19,780

78

100
%
100
%
6

81
%
49

132


12

Phoenix - Chandler I
Phoenix
19,633

74

100
%
100
%
35

13
%
39

147

31

16

Raleigh-Durham I
Raleigh-Durham
18,809

83

93
%
99
%
13

100
%
82

178

246

12

Phoenix - Chandler III
Phoenix
18,780

68

100
%
100
%
2

%
30

101


14

Northern Virginia - Sterling III
Northern Virginia
17,921

79

100
%
100
%
7

100
%
34

120


15

Austin III
Austin
16,950

62

69
%
69
%
15

98
%
21

98

67

6

Houston - Galleria
Houston
15,842

63

54
%
54
%
23

50
%
25

112


14

Austin II
Austin
14,409

44

95
%
95
%
2

100
%
22

68


5

San Antonio II
San Antonio
14,188

64

100
%
100
%
11

100
%
41

117


12

Florence
Cincinnati
13,574

53

99
%
99
%
47

87
%
40

140


9

Phoenix - Chandler V
Phoenix
12,216

72

100
%
100
%
1

95
%
16

89

94

12

Phoenix - Chandler IV
Phoenix
11,272

73

100
%
100
%
3

100
%
27

103


12

Cincinnati - Hamilton*
Cincinnati
10,800

47

74
%
74
%
1

100
%
35

83


10

Northern Virginia - Sterling IV
Northern Virginia
10,728

81

100
%
100
%
7

100
%
34

122


15

San Antonio IV
San Antonio
10,657

60

100
%
100
%
12

100
%
27

99


12

London I*
London
9,143

25

100
%
100
%
12

56
%
58

95

9

10

London II*
London
8,745

49

100
%
100
%
10

100
%
93

151

4

15

London - Great Bridgewater**
London
6,485

10

94
%
96
%

%
1

11


1

Houston - Houston West III
Houston
6,089

53

35
%
36
%
10

100
%
32

95

209

6

Stamford - Riverbend**
New York Metro
5,392

20

23
%
23
%

%
8

28


2

Cincinnati - Mason
Cincinnati
5,227

34

100
%
100
%
26

98
%
17

78


4

Norwalk I**