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): July 31, 2019
 
CYRUSONE INC.
(Exact name of registrant as specified in its charter)
 
Maryland
 
001-35789
 
46-0691837
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
2101 Cedar Springs Road, Suite 900
Dallas, TX 75201
(Address of principal executive offices, including zip code)
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.01 par value
 
CONE
 
The NASDAQ Global Select Market
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 July 31, 2019, CyrusOne Inc. issued a press release announcing financial results and supplemental information for the second quarter ended June 30, 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 August 1, 2019, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the second quarter of 2019. A live webcast of the conference call will be available in the “Investors / Events & Presentations” section of the Company's website at http://investor.cyrusone.com/events.cfm. The presentation to be made during the call is now available in this location. 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 August 1, 2019, through August 15, 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 10132375.

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: July 31, 2019
 
CYRUSONE INC.
 
 
 
 
 
By:
 
/s/ Robert M. Jackson
 
 
 
 
Robert M. Jackson


 
 
 
 
Executive Vice President, General Counsel
 
 
 
 
and Secretary




Exhibit
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Exhibit 99.1
CyrusOne Reports Second Quarter 2019 Earnings
2Q’19 Year-over-Year Revenue Growth of 28%
Announcing a 9% Increase in 3Q’19 Dividend per Share to $0.50

DALLAS (July 31, 2019) - CyrusOne Inc. (NASDAQ: CONE), a premier global data center REIT, today announced second quarter 2019 earnings.

Highlights
 
 
% Change vs. 2Q’18
Category
2Q’19
2Q’18
2Q’18 Adjusted
for ASC 8421
Revenue
$251.5 million
28%
28%
Net income / (loss)
$(8.5) million
n/m
n/m
Adjusted EBITDA
$127.3 million
15%
20%
Normalized FFO
$102.1 million
27%
30%
Net income / (loss) per diluted share
$(0.08)
n/m
n/m
Normalized FFO per diluted share
$0.90
11%
14%

Signed leases totaling 13 megawatts (“MW”) and $26 million in annualized GAAP revenue

Signed leases totaling 6 MW and 46,000 colocation square feet (“CSF”) in the second quarter, representing $13 million in annualized GAAP revenue

Signed leases totaling 7 MW subsequent to the end of the quarter representing an additional $13 million in annualized GAAP revenue

Backlog of $24 million in annualized GAAP revenue as of the end of the second quarter

Subsequent to the end of the quarter, signed 999-year lease on approximately 24 acres of land in Dublin with 72 MW of power capacity to support continued European expansion in key hyperscale market

Increasing 2019 Normalized FFO per diluted share guidance2 by $0.20 at the midpoint of range, from $3.30 - $3.40 to $3.50 - $3.60

Midpoint of new guidance range represents 10% increase vs. 2018 Normalized FFO per diluted share adjusted for ASC 842

Announcing a 9% increase in the quarterly dividend for the third quarter of 2019 to $0.50 per share, up from $0.46 per share in the second quarter of 2019

As previously announced, raised approximately $200 million through the sale of approximately 5.7 million American depository shares (“ADSs”) of GDS Holdings Limited (“GDS”)

“Our results this quarter reflect very strong financial performance, and the midpoints of our current 2019 guidance ranges imply revenue growth of 19%, Adjusted EBITDA growth of 18%, and Normalized FFO per share growth of 10% compared to 2018,” said Gary Wojtaszek, president and chief executive officer of CyrusOne. “We continue to be one of the fastest-growing REITs, and the investments we have made over the past two years building out our international platform should enable us to continue to grow at industry-leading rates through 2020 and beyond.” 




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Second Quarter 2019 Financial Results
    
Revenue was $251.5 million for the second quarter, compared to $196.9 million for the same period in 2018, an increase of 28%. The increase in revenue was driven primarily by a 20% increase in occupied CSF from organic growth and the Zenium acquisition, a $14.7 million increase in equipment sales, and additional interconnection services.

Net loss was $(8.5) million for the second quarter, compared to net income of $105.9 million in the same period in 2018. Net loss for the second quarter included an $8.5 million loss on the Company’s equity investment in GDS, a leading data center provider in China. Net loss per diluted common share3 was $(0.08) in the second quarter of 2019, compared to net income per diluted common share of $1.06 in the same period in 2018.

Net operating income (“NOI”)4 was $148.2 million for the second quarter, compared to $128.0 million in the same period in 2018, an increase of 16%. Adjusted EBITDA5 was $127.3 million for the second quarter, compared to $110.6 million in the same period in 2018, an increase of 15%.

Normalized Funds From Operations (“Normalized FFO”)6 was $102.1 million for the second quarter, compared to $80.7 million in the same period in 2018, an increase of 27%. Normalized FFO per diluted common share was $0.90 in the second quarter of 2019.

Leasing Activity

CyrusOne leased approximately 6 MW of power and 46,000 CSF in the second quarter, representing $1.1 million in monthly recurring rent, inclusive of the monthly impact of installation charges, or approximately $13.1 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 67 months (5.6 years), and the weighted average remaining lease term of CyrusOne’s portfolio is 54 months (taking into account the impact of the backlog). Recurring rent churn8 for the second quarter was 0.6%, compared to 1.1% for the same period in 2018.

Portfolio Development and CSF Leased

In the second quarter, the Company completed construction on 59,000 CSF and 21 MW of power capacity across four projects in Raleigh-Durham, the New York Metro area, London, and Frankfurt. CSF leased9 as of the end of the second quarter was 89% for stabilized properties10 and 84% overall. In addition, the Company has development projects underway in Northern Virginia, Dallas, the New York Metro area, Austin, Frankfurt, London, and Amsterdam that are expected to add approximately 146,000 CSF and 55 MW of power capacity.

Balance Sheet and Liquidity

As of June 30, 2019, the Company had gross asset value11 totaling approximately $7.1 billion, an increase of approximately 28% over gross asset value as of June 30, 2018. CyrusOne had $2.73 billion of long-term debt12, $144.1 million of cash and cash equivalents, and $1.26 billion available under its unsecured revolving credit facility as of June 30, 2019. Net debt12 was $2.62 billion as of June 30, 2019, representing approximately 29% of the Company's total enterprise value as of June 30, 2019 of $9.1 billion, or 5.1x Adjusted EBITDA for the last quarter annualized. 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 $1.41 billion as of June 30, 2019.

As previously announced, CyrusOne raised approximately $200 million through the sale of approximately 5.7 million ADSs of GDS in April 2019. The Company used the proceeds to pay down $200 million of its $1.0 billion term loan maturing in March 2023, decreasing the remaining balance to $800 million. CyrusOne continues to hold approximately 2.3 million ADSs, valued at approximately $90 million based on the GDS closing price on July 30, 2019.

Additionally, as previously announced, the settlement of approximately 2.9 million shares and receipt of $148 million in net proceeds from first quarter 2019 sales through the Company’s ATM equity program occurred in April 2019.

Dividend

On May 1, 2019, the Company announced a dividend of $0.46 per share of common stock for the second quarter of 2019. The dividend was paid on July 12, 2019, to stockholders of record at the close of business on June 28, 2019.


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Additionally, today the Company is announcing a dividend of $0.50 per share of common stock for the third quarter of 2019, a 9% increase in the quarterly dividend compared to the second quarter of 2019. The dividend will be paid on October 11, 2019, to stockholders of record at the close of business on September 27, 2019.

Guidance

CyrusOne is updating guidance for full year 2019, tightening the guidance ranges for Total Revenue and Adjusted EBITDA, increasing the guidance range for Normalized FFO per diluted common share, and decreasing the guidance ranges for Capital Expenditures and Capital Expenditures - Development. 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
$970 - 990 million
   Lease and Other Revenues from Customers
$835 - 865 million
$842 - 857 million
   Metered Power Reimbursements
$125 - 135 million
$128 - 133 million
Adjusted EBITDA
$500 - 525 million
$507 - 517 million
Normalized FFO per diluted common share
$3.30 - 3.40
$3.50 - 3.60
Capital Expenditures
$900 - 1,000 million
$850 - 950 million
   Development(1)
$890 - 985 million
$840 - 935 million
   Recurring
$10 - 15 million
$10 - 15 million
 
 
 
(1)Development capital expenditures include the acquisition of land for future development.

Upcoming Conferences and Events

Cowen Communications Infrastructure Summit on August 12-13 in Boulder, CO
Raymond James Park City Summit on August 14-15 in Park City, UT
Bank of America Merrill Lynch 2019 Global Real Estate Conference on September 10-11 in New York City
BMO Capital Markets Annual Real Estate Conference on September 17-18 in Chicago

Conference Call Details

CyrusOne will host a conference call on August 1, 2019, at 11:00 AM Eastern Time (10:00 AM Central Time) to discuss its results for the second quarter of 2019. A live webcast of the conference call will be available in the “Investors / Events & Presentations” section of the Company's website at http://investor.cyrusone.com/events.cfm. The presentation to be made during the call is now available in this location. 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 August 1, 2019, through August 15, 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 10132375.

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

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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 2Q’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 2Q’18 results are being shown solely for comparative and investor usefulness purposes with respect to the Company’s 2Q’19 results. There is no impact on 2Q’18 Revenue. The estimated impacts on 2Q’18 Net income, Adjusted EBITDA, Normalized FFO, Net income per share, and Normalized FFO per share are $1.4 million, $4.3 million, $2.3 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.
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 113.1 million for the second 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.

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We calculate NOI as net income (loss), adjusted for sales and marketing expenses, general and administrative expenses, depreciation and amortization expenses, transaction, acquisition, integration and other related expenses, interest expense, (gain) loss on marketable equity investment, loss on early extinguishment of debt, other expenses, income tax expense and other 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 net (loss) income 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, 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, (gain) loss on marketable equity investment, other expenses and other 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 (loss) income computed in accordance with GAAP before real estate depreciation and amortization. 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; loss (gain) 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 and other items as appropriate. We believe our 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 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 (loss) income 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.
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.

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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.

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 more than 200 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 nearly 50 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

















                                                                                                                                                                                

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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 more than 200 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 nearly 50 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
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
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



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

 
Three Months
 
 
June 30,
March 31,
June 30,
Growth %
 
2019
2019
2018
Yr/Yr
Revenue
$
251.5

$
225.0

$
196.9

28
 %
Net operating income
148.2

141.7

128.0

16
 %
Net (loss) income
(8.5
)
89.4

105.9

n/m

Funds from Operations ("FFO") - Nareit defined
91.7

189.5

175.7

(48
)%
Normalized Funds from Operations ("Normalized FFO")
102.1

89.3

80.7

27
 %
Weighted average number of common shares outstanding - diluted for Normalized FFO
113.1

108.8

99.4

14
 %
(Loss) income per share - basic
$
(0.08
)
$
0.82

$
1.07

n/m

(Loss) income per share - diluted
$
(0.08
)
$
0.82

$
1.06

n/m

Normalized FFO per diluted common share
$
0.90

$
0.82

$
0.81

11
 %
Adjusted EBITDA
$
127.3

$
119.2

$
110.6

15
 %
Adjusted EBITDA as a % of Revenue
50.6
%
53.0
%
56.2
%
(5.6) pts



 
As of
 
 
June 30,
March 31,
June 30,
Growth %
 
2019
2019
2018
Yr/Yr
Balance Sheet Data
 
 
 
 
Gross investment in real estate
$
5,707.0

$
5,508.8

$
4,145.6

38
%
Accumulated depreciation
(1,207.4
)
(1,122.5
)
(900.3
)
34
%
Total investment in real estate, net
4,499.6

4,386.3

3,245.3

39
%
Cash and cash equivalents
144.1

126.0

116.2

24
%
Market value of common equity
6,532.5

5,785.0

5,784.3

13
%
Long-term debt
2,729.9

2,915.8

2,200.0

24
%
Net debt
2,617.4

2,823.2

2,098.7

25
%
Total enterprise value
9,149.9

8,608.2

7,883.0

16
%
Net debt to LQA Adjusted EBITDA(a)
5.1x

5.2x

4.7x

0.4x

 
 
 
 
 
Dividend Activity
 
 
 
 
Dividends per share
$
0.46

$
0.46

$
0.46

-

 
 
 
 
 
Portfolio Statistics
 
 
 
 
Data centers
47

48

43

9
%
Stabilized CSF (000)
3,744

3,721

3,097

21
%
Stabilized CSF % leased
89
%
90
%
92
%
(3) pts

Total CSF (000)
4,116

4,061

3,369

22
%
Total CSF % leased
84
%
86
%
88
%
(4) pts

Total NRSF (000)
7,085

7,004

5,842

21
%


(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.

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

 
Three Months
 
 
Six Months
 
 
 
Ended June 30,
Change
Ended June 30,
Change
 
2019
2018
$
%
2019
2018
$
%
Revenue(a)
$
251.5

$
196.9

$
54.6

28
 %
$
476.5

$
393.5

83.0

21
 %
Operating expenses:
 
 
 
 
 
 
 
 
Property operating expenses
103.3

68.9

34.4

50
 %
186.6

136.7

49.9

37
 %
Sales and marketing
5.3

4.4

0.9

20
 %
10.6

9.7

0.9

9
 %
General and administrative
19.7

18.6

1.1

6
 %
41.9

37.9

4.0

11
 %
Depreciation and amortization
102.1

77.6

24.5

32
 %
204.2

152.2

52.0

34
 %
Transaction, acquisition, integration and other related expenses
1.4

0.4

1.0

n/m

1.7

2.3

(0.6
)
(26
)%
Total operating expenses
231.8

169.9

61.9

36
 %
445.0

338.8

106.2

31
 %
Operating income
19.7

27.0

(7.3
)
(27
)%
31.5

54.7

(23.2
)
(42
)%
Interest expense
(21.1
)
(22.8
)
1.7

(7
)%
(44.8
)
(43.6
)
(1.2
)
3
 %
(Loss) gain on marketable equity investment
(8.5
)
102.7

(111.2
)
n/m

92.7

143.2

(50.5
)
(35
)%
Loss on early extinguishment of debt



n/m


(3.1
)
3.1

n/m

Other expense



n/m

(0.1
)

(0.1
)
n/m

Net (loss) income before income taxes
(9.9
)
106.9

(116.8
)
n/m

79.3

151.2

(71.9
)
(48
)%
Income tax benefit (expense)
1.4

(1.0
)
2.4

n/m

1.6

(1.8
)
3.4

n/m

Net (loss) income
$
(8.5
)
$
105.9

$
(114.4
)
n/m

$
80.9

$
149.4

$
(68.5
)
(46
)%
(Loss) income per share - basic
$
(0.08
)
$
1.07

$
(1.15
)
n/m

$
0.73

$
1.53

$
(0.80
)
(52
)%
(Loss) income per share - diluted
$
(0.08
)
$
1.06

$
(1.14
)
n/m

$
0.73

$
1.52

$
(0.79
)
(52
)%
            
(a) The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $31.7 million and $24.8 million for the three months ended June 30, 2019 and 2018, respectively, and includes metered power reimbursements of $60.3 million and $46.4 million for the six months ended June 30, 2019 and 2018, respectively.















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

 
June 30,
December 31,
Change
 
2019
2018
$
%
Assets
 
 
 
 
Investment in real estate:
 
 
 
 
Land
$
148.0

$
118.5

$
29.5

25
 %
Buildings and improvements
1,689.7

1,677.5

12.2

1
 %
Equipment
2,869.7

2,630.2

239.5

9
 %
Gross operating real estate
4,707.4

4,426.2

281.2

6
 %
Less accumulated depreciation
(1,207.4
)
(1,054.5
)
(152.9
)
14
 %
Net operating real estate
3,500.0

3,371.7

128.3

4
 %
Construction in progress, including land under development
799.2

744.9

54.3

7
 %
Land held for future development
200.4

176.4

24.0

14
 %
Total investment in real estate, net
4,499.6

4,293.0

206.6

5
 %
Cash and cash equivalents
144.1

64.4

79.7

n/m

Rent and other receivables, net
268.4

234.9

33.5

14
 %
Restricted cash
1.3


1.3

n/m

Operating lease right-of-use assets, net
78.5


78.5

n/m

Equity investments
91.9

198.1

(106.2
)
(54
)%
Goodwill
455.1

455.1


n/m

Intangible assets, net
215.3

235.7

(20.4
)
(9
)%
Other assets
115.5

111.3

4.2

4
 %
Total assets
$
5,869.7

$
5,592.5

$
277.2

5
 %
Liabilities and equity
 
 


Debt
$
2,713.8

$
2,624.7

$
89.1

3
 %
Capital lease obligations
31.6

33.4

(1.8
)
(5
)%
Operating lease liabilities
114.1


114.1

n/m

Lease financing arrangements

123.3

(123.3
)
n/m

Construction costs payable
149.5

195.3

(45.8
)
(23
)%
Accounts payable and accrued expenses
112.8

121.3

(8.5
)
(7
)%
Dividends payable
53.0

51.0

2.0

4
 %
Deferred revenue and prepaid rents
166.8

148.6

18.2

12
 %
Deferred tax liability
65.5

68.9

(3.4
)
(5
)%
Total liabilities
3,407.1

3,366.5

40.6

1
 %
Stockholders' equity
 
 


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



n/m

Common stock, $.01 par value, 500,000,000 shares authorized and 113,176,370 and 108,329,314 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
1.1

1.1


n/m

Additional paid in capital
3,089.5

2,837.4

252.1

9
 %
Accumulated deficit
(613.0
)
(600.2
)
(12.8
)
2
 %
Accumulated other comprehensive loss
(15.0
)
(12.3
)
(2.7
)
22
 %
Total stockholders’ equity
2,462.6

2,226.0

236.6

11
 %
Total liabilities and equity
$
5,869.7

$
5,592.5

$
277.2

5
 %



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

 
For the three months ended:
June 30,
March 31,
December 31,
September 30,
June 30,
 
2019
2019
2018
2018
2018
Revenue(a)
$
251.5

$
225.0

$
221.3

$
206.6

$
196.9

Operating expenses:
 
 
 
 
 
Property operating expenses
103.3

83.3

78.0

77.7

68.9

Sales and marketing
5.3

5.3

5.6

4.3

4.4

General and administrative
19.7

22.2

23.4

19.3

18.6

Depreciation and amortization
102.1

102.1

97.9

84.0

77.6

Transaction, acquisition, integration and other related expenses
1.4

0.3

1.6

1.1

0.4

Total operating expenses
231.8

213.2

206.5

186.4

169.9

Operating income
19.7

11.8

14.8

20.2

27.0

Interest expense
(21.1
)
(23.7
)
(25.3
)
(25.8
)
(22.8
)
(Loss) gain on marketable equity investment
(8.5
)
101.2

(96.7
)
(36.6
)
102.7

Loss on early extinguishment of debt





Other expense

(0.1
)



Net (loss) income before income taxes
(9.9
)
89.2

(107.2
)
(42.2
)
106.9

Income tax benefit (expense)
1.4

0.2

1.4

(0.2
)
(1.0
)
Net (loss) income
$
(8.5
)
$
89.4

$
(105.8
)
$
(42.4
)
$
105.9

(Loss) income per share - basic
$
(0.08
)
$
0.82

$
(1.00
)
$
(0.43
)
$
1.07

(Loss) income per share - diluted
$
(0.08
)
$
0.82

$
(1.00
)
$
(0.43
)
$
1.06


(a) The Company adopted the new accounting standard, ASC 842, “Leases”, in the first quarter of 2019. Revenue includes metered power reimbursements of $31.7 million, $28.5 million, $28.4 million, $29.3 million and $24.8 million for the three months ended June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018 and June 30, 2018, respectively.
















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CyrusOne Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)
(Unaudited) 
 
June 30,
March 31,
December 31,
September 30,
June 30,
 
2019
2019
2018
2018
2018
Assets
 
 
 
 
 
Investment in real estate:
 
 
 
 
 
Land
$
148.0

$
124.9

$
118.5

$
125.2

$
107.4

Buildings and improvements
1,689.7

1,649.2

1,677.5

1,587.3

1,461.1

Equipment
2,869.7

2,799.6

2,630.2

2,452.5

2,050.3

Gross operating real estate
4,707.4

4,573.7

4,426.2

4,165.0

3,618.8

Less accumulated depreciation
(1,207.4
)
(1,122.5
)
(1,054.5
)
(973.4
)
(900.3
)
Net operating real estate
3,500.0

3,451.2

3,371.7

3,191.6

2,718.5

Construction in progress, including land under development
799.2

734.7

744.9

738.6

452.6

Land held for future development
200.4

200.4

176.4

189.6

74.2

Total investment in real estate, net
4,499.6

4,386.3

4,293.0

4,119.8

3,245.3

Cash and cash equivalents
144.1

126.0

64.4

61.0

116.2

Rent and other receivables, net
268.4

248.7

234.9

224.6

201.4

Restricted cash
1.3

1.3




Operating lease right-of-use assets, net
78.5

83.8




Equity investments
91.9

299.3

198.1

282.2

318.8

Goodwill
455.1

455.1

455.1

455.1

455.1

Intangible assets, net
215.3

226.1

235.7

248.4

190.5

Other assets
115.5

114.8

111.3

102.0

101.4

Total assets
$
5,869.7

$
5,941.4

$
5,592.5

$
5,493.1

$
4,628.7

Liabilities and equity
 
 
 
 
 
Debt
$
2,713.8

$
2,898.6

$
2,624.7

$
2,576.2

$
2,179.5

Capital lease obligations
31.6

33.4

33.4

36.9

14.9

Operating lease liabilities
114.1

119.6




Lease financing arrangements


123.3

125.8

127.8

Construction costs payable
149.5

155.5

195.3

160.5

113.3

Accounts payable and accrued expenses
112.8

81.6

121.3

96.8

91.4

Dividends payable
53.0

51.5

51.0

49.7

46.5

Deferred revenue and prepaid rents
166.8

155.9

148.6

139.5

127.1

Deferred tax liability
65.5

67.2

68.9

68.7


Total liabilities
3,407.1

3,563.3

3,366.5

3,254.1

2,700.5

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 113,176,370 and 108,329,314 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
1.1

1.1

1.1

1.1

1.0

Additional paid in capital
3,089.5

2,938.2

2,837.4

2,685.3

2,281.5

Accumulated deficit
(613.0
)
(552.2
)
(600.2
)
(444.3
)
(353.0
)
Accumulated other comprehensive loss
(15.0
)
(9.0
)
(12.3
)
(3.1
)
(1.3
)
Total stockholders' equity
2,462.6

2,378.1

2,226.0

2,239.0

1,928.2

Total liabilities and equity
$
5,869.7

$
5,941.4

$
5,592.5

$
5,493.1

$
4,628.7





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CyrusOne Inc.
Condensed Consolidated Statements of Cash Flow
(Dollars in millions)
(Unaudited) 
 
Six Months Ended June 30, 2019
Six Months Ended June 30, 2018
Three Months Ended June 30, 2019
Three Months Ended June 30, 2018
Cash flows from operating activities:
 
 
 
 
Net income
$
80.9

$
149.4

$
(8.5
)
$
105.9

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
204.2

152.2

102.1

77.6

Provision for bad debt expense
(0.3
)
0.4

(0.3
)
(0.1
)
Unrealized gain on marketable equity investment
(25.8
)
(143.2
)
75.4

(102.7
)
Realized gain on marketable equity investment
(66.9
)

(66.9
)

Loss on early extinguishment of debt

3.1



Interest expense amortization, net
2.3

1.8

1.1

1.1

Stock-based compensation expense
8.2

8.4

3.7

4.5

Deferred income tax expense
(3.4
)

(2.6
)

Operating lease cost
9.6


4.6


Other
(0.2
)

0.3


 
 
 
 
 
Change in operating assets and liabilities:
 
 
 
 
Rent and other receivables, net and other assets
(41.1
)
(36.8
)
(23.1
)
(18.8
)
Accounts payable and accrued expenses
(8.2
)
(3.1
)
31.6

25.8

Deferred revenue and prepaid rents
18.0

16.3

10.9

11.0

Operating lease liabilities
(9.8
)

(4.7
)

Net cash provided by operating activities
167.5

148.5

123.6

104.3

Cash flows from investing activities:
 
 
 
 
Investment in real estate
(514.8
)
(322.7
)
(212.9
)
(177.5
)
Proceeds from sale of equity investments
199.8


199.8


Equity investments
(0.3
)

(0.3
)

Net cash used in investing activities
(315.3
)
(322.7
)
(13.4
)
(177.5
)
Cash flows from financing activities:
 
 
 
 
Issuance of common stock, net
252.6

152.2

147.6

9.3

Dividends paid
(101.3
)
(86.6
)
(50.9
)
(45.6
)
Proceeds from revolving credit facility
287.8


12.1


Proceeds from unsecured term loan

985.4


(0.2
)
Repayments of unsecured term loan
(200.0
)
(902.7
)
(200.0
)

Payments on finance lease liabilities
(1.2
)
(5.1
)
(0.6
)
(2.5
)
Tax payment upon exercise of equity awards
(8.8
)
(4.7
)
(0.1
)
(0.3
)
Net cash provided by (used in) financing activities
229.1

138.5

(91.9
)
(39.3
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(0.3
)

(0.2
)

Net increase (decrease) in cash, cash equivalents and restricted cash
81.0

(35.7
)
18.1

(112.5
)
Cash, cash equivalents and restricted cash at beginning of period
64.4

151.9

127.3

228.7

Cash, cash equivalents and restricted cash at end of period
$
145.4

$
116.2

$
145.4

$
116.2

 
 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest, including amounts capitalized of $18.1 million and $10.4 million in 2019 and 2018, respectively
$
62.7

$
53.3

$
16.0

$
11.1

Cash paid for income taxes
2.8

3.0

2.8

2.7

Non-cash investing and financing activities:
 
 
 
 
Construction costs payable
149.5

113.3

149.5

113.3

Dividends payable
53.0

46.5

53.0

46.5


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CyrusOne Inc.
Reconciliation of Net Income (Loss) to Net Operating Income
(Dollars in millions)
(Unaudited)
 
Three Months Ended
 
 
Six Months Ended
 
 
 
June 30,
Change
June 30,
Change
2019
2018
$
%
2019
2018
$
%
Net (Loss) Income
$
(8.5
)
$
105.9

$
(114.4
)
n/m

$
80.9

$
149.4

$
(68.5
)
(46
)%
Sales and marketing expenses
5.3

4.4

0.9

20
 %
10.6

9.7

0.9

9
 %
General and administrative expenses
19.7

18.6

1.1

6
 %
41.9

37.9

4.0

11
 %
Depreciation and amortization expenses
102.1

77.6

24.5

32
 %
204.2

152.2

52.0

34
 %
Transaction, acquisition, integration and other related expenses
1.4

0.4

1.0

n/m

1.7

2.3

(0.6
)
(26
)%
Interest expense
21.1

22.8

(1.7
)
(7
)%
44.8

43.6

1.2

3
 %
Loss (gain) on marketable equity investment
8.5

(102.7
)
111.2

n/m

(92.7
)
(143.2
)
50.5

(35
)%
Loss on early extinguishment of debt



n/m


3.1

(3.1
)
n/m

Other expense



n/m

0.1


0.1

n/m

Income tax (benefit) expense
(1.4
)
1.0

(2.4
)
n/m

(1.6
)
1.8

(3.4
)
n/m

Net Operating Income
$
148.2

$
128.0

$
20.2

16
 %
$
289.9

$
256.8

$
33.1

13
 %

CyrusOne Inc.
Net Operating Income and Reconciliation of Net Income (Loss) to Adjusted EBITDA
(Dollars in millions)
(Unaudited)
 
Six Months Ended
 
 
Three Months Ended
 
June 30,
Change
June 30,
March 31,
December 31,
September 30,
June 30,
 
2019
2018
$
%
2019
2019
2018
2018
2018
Net Operating Income
 
 
 
 
 
 
 
 
 
Revenue
$
476.5

$
393.5

$
83.0

21%
$
251.5

$
225.0

$
221.3

$
206.6

$
196.9

Property operating expenses
186.6

136.7

49.9

37%
103.3

83.3

78.0

77.7

68.9

Net Operating Income (NOI)
$
289.9

$
256.8

$
33.1

13%
$
148.2

$
141.7

$
143.3

$
128.9

$
128.0

NOI as a % of Revenue
60.8
%
65.3
%
 
 
58.9
%
63.0
%
64.8
%
62.4
%
65.0
%
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
80.9

$
149.4

$
(68.5
)
(46)%
$
(8.5
)
$
89.4

$
(105.8
)
$
(42.4
)
$
105.9

Interest expense
44.8

43.6

1.2

3%
21.1

23.7

25.3

25.8

22.8

Income tax (benefit) expense
(1.6
)
1.8

(3.4
)
n/m
(1.4
)
(0.2
)
(1.4
)
0.2

1.0

Depreciation and amortization
204.2

152.2

52.0

34%
102.1

102.1

97.9

84.0

77.6

EBITDA (Nareit definition)(a)
$
328.3

$
347.0

$
(18.7
)
(5)%
$
113.3

$
215.0

$
16.0

$
67.6

$
207.3

 
 
 
 
 
 
 
 
 
 
Transaction, acquisition, integration and other related expenses
1.7

2.3

(0.6
)
(26)%
1.4

0.3

1.4

1.1

0.4

Legal claim costs
0.2

0.3

(0.1
)
(33)%
0.1

0.1

0.2

0.1

0.1

Stock-based compensation expense
8.2

8.4

(0.2
)
(2)%
3.7

4.5

4.5

4.6

4.5

Severance and management transition costs
0.1

0.7

(0.6
)
(86)%

0.1

1.6



Loss on early extinguishment of debt

3.1

(3.1
)
n/m





New accounting standards and regulatory compliance and the related system implementation costs
0.6

1.5

(0.9
)
(60)%
0.3

0.3

0.7

0.8

1.0

(Gain) loss on marketable equity investment
(92.7
)
(143.2
)
50.5

(35)%
8.5

(101.2
)
96.7

36.6

(102.7
)
Other expenses
0.1


0.1

n/m

0.1

0.1



Adjusted EBITDA
$
246.5

$
220.1

$
26.4

12%
$
127.3

$
119.2

$
121.2

$
110.8

$
110.6

Adjusted EBITDA as a % of Revenue
51.7
%
55.9
%
 
 
50.6
%
53.0
%
54.8
%
53.6
%
56.2
%
(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) and depreciation and amortization. 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.

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CyrusOne Inc.
Reconciliation of Net Income (Loss) to FFO and Normalized FFO
(Dollars in millions)
(Unaudited)
 
 
Six Months Ended
 
 
Three Months Ended
 
June 30,
Change
June 30,
March 31,
December 31,
September 30,
June 30,
2019
2018
$
%
2019
2019
2018
2018
2018
Reconciliation of Net Income (Loss) to FFO and Normalized FFO:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
80.9

$
149.4

$
(68.5
)
(46
)%
$
(8.5
)
$
89.4

$
(105.8
)
$
(42.4
)
$
105.9

Real estate depreciation and amortization
200.3

148.1

52.2

35
 %
100.2

100.1

95.5

81.9

75.6

Funds from Operations ("FFO") - Nareit defined
$
281.2

$
297.5

$
(16.3
)
(5
)%
$
91.7

$
189.5

$
(10.3
)
$
39.5

$
181.5

 
 
 
 


 
 
 
 
 
Loss on early extinguishment of debt

3.1

(3.1
)
n/m






Net (gain) loss on marketable equity investment
(92.7
)
(143.2
)
50.5

(35
)%
8.5

(101.2
)
96.7

36.6

(102.7
)
New accounting standards and regulatory compliance and the related system implementation costs
0.6

1.5

(0.9
)
(60
)%
0.3

0.3

0.7

0.8

1.0

Amortization of tradenames
0.3

0.7

(0.4
)
(57
)%
0.1

0.2

0.6

0.4

0.4

Transaction, acquisition, integration and other related expenses
1.7

2.3

(0.6
)
(26
)%
1.4

0.3

1.4

1.1

0.4

Severance and management transition costs
0.1

0.7

(0.6
)
(86
)%

0.1

1.6



Legal claim costs
0.2

0.3

(0.1
)
(33
)%
0.1

0.1

0.2

0.1

0.1

Normalized Funds from Operations (Normalized FFO)
$
191.4

$
162.9

$
28.5

17
 %
$
102.1

$
89.3

$
90.9

$
78.5

$
80.7

Normalized FFO per diluted common share
$
1.72

$
1.66

$
0.06

4
 %
$
0.90

$
0.82

$
0.86

$
0.79

$
0.81

Weighted average diluted common shares outstanding
111.1

98.1

13.0

13
 %
113.1

108.8

106.1

99.5

99.4

 
 
 
 
 
 
 
 
 
 
Additional Information:
 
 
 
 
 
 
 
 
 
Amortization of deferred financing costs and bond premium
2.4

1.8

0.6

33
 %
1.2

1.2

1.1

1.1

1.1

Stock-based compensation expense
8.2

8.4

(0.2
)
(2
)%
3.7

4.5

4.5

4.6

4.5

Non-real estate depreciation and amortization
3.8

3.4

0.4

12
 %
1.9

1.9

1.8

1.7

1.6

Straight line rent adjustments(a) 
(16.9
)
(13.0
)
(3.9
)
30
 %
(6.8
)
(10.1
)
(8.9
)
(5.8
)
(5.8
)
Deferred revenue, primarily installation revenue(b)
10.6

5.6

5.0

89
 %
4.7

5.9

16.1

7.6

2.4

Leasing commissions
(6.8
)
(6.9
)
0.1

(1
)%
(3.1
)
(3.7
)
(6.5
)
(3.3
)
(3.7
)
Recurring capital expenditures
(4.3
)
(4.7
)
0.4

(9
)%
(1.6
)
(2.7
)
(2.1
)
(3.7
)
(2.3
)

(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.






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CyrusOne Inc.
Market Capitalization Summary, Reconciliation of Net Debt, Debt Schedule and Interest Summary
(Unaudited)
Market Capitalization (as of June 30, 2019)
(dollars in millions)
Shares or
Equivalents
Outstanding
Market Price
as of
June 30, 2019
Market Value
Equivalents
(in millions)
Common shares
113,176,370

$
57.72

$
6,532.5

Net Debt
 
 
2,617.4

Total Enterprise Value (TEV)
 
 
$
9,149.9

Reconciliation of Net Debt
 
June 30,
March 31,
(dollars in millions)
2019
2019
Long-term debt(a)
$
2,729.9

$
2,915.8

Capital lease obligations
31.6

33.4

Less:
 
 
Cash and cash equivalents
(144.1
)
(126.0
)
Net Debt
$
2,617.4

$
2,823.2

(a)Excludes adjustment for deferred financing costs and bond premiums.
Debt Schedule (as of June 30, 2019)
(dollars in millions)
 
 
 
Long-term debt:
Amount
Interest Rate(a)
Maturity Date
Revolving credit facility - EUR(b)
$
153.5

EURIBOR + 145 bps(c)
March 2023(d)
Revolving credit facility - GBP(e)
6.4

GBP LIBOR + 145 bps(f)
March 2023(d)
Revolving credit facility - USD(g)
270.0

USD LIBOR + 145 bps(h)
March 2023(d)
Term loan
800.0

USD LIBOR + 140 bps(i)
March 2023
Term loan
300.0

USD LIBOR + 170bps(j)
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(k)
$
2,729.9

4.02%(l)
 
 
 
 
 
Weighted average term of debt:
4.9

years
 
(a)
Interest rate margins were 155 bps for the revolving credit facility, 150 bps for the term loan maturing March 2023, and 180 bps for the term loan maturing March 2025 as of June 30, 2019, but subsequent to quarter end each decreased by 10 bps.
(b)
Amount outstanding is USD equivalent of €135 million.
(c)
Interest rate as of June 30, 2019: 1.55%; decreased to 1.45% subsequent to quarter end.
(d)
Assuming exercise of one-year extension option.
(e)
Amount outstanding is USD equivalent of £5 million.
(f)
Interest rate as of June 30, 2019: 2.28%; decreased to 2.18% subsequent to quarter end.
(g)
Amount converted into €238 million pursuant to USD-EUR cross currency swap.
(h)
Interest rate as of June 30, 2019: 3.97%, decreased to 3.87% subsequent to quarter end; adjusted rate pursuant to USD-EUR cross currency swap: 0.99%.
(i)
Interest rate as of June 30, 2019: 3.91%; decreased to 3.81% subsequent to quarter end.
(j)
Interest rate as of June 30, 2019: 4.21%; decreased to 4.11% subsequent to quarter end.
(k)
Excludes adjustment for deferred financing costs.
(l)
Weighted average interest rate calculated using lower interest rate on swapped amount and 10 bp decreases in interest rate margins for the revolving credit facility and term loans that occurred subsequent to quarter end.
Interest Summary
Three Months Ended
 
 
June 30,
March 31,
June 30,
Growth %
(dollars in millions)
2019
2019
2018
Yr/Yr
Interest expense and fees
$
28.8

$
31.8

$
27.0

7
 %
Amortization of deferred financing costs and bond premium
1.2

1.2

1.1

9
 %
Capitalized interest
(8.9
)
(9.3
)
(5.3
)
68
 %
Total interest expense
$
21.1

$
23.7

$
22.8

(7
)%

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

 
As of June 30, 2019
As of March 31, 2019
As of June 30, 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
%
1,113

91
%
673

98
%
Dallas
621

70
%
621

70
%
550

81
%
Phoenix
509

100
%
509

100
%
509

92
%
Cincinnati
402

79
%
402

85
%
402

93
%
Houston
308

68
%
308

70
%
308

76
%
San Antonio
300

100
%
300

100
%
300

100
%
New York Metro
228

77
%
228

77
%
218

82
%
Chicago
203

72
%
207

71
%
213

67
%
Austin
106

81
%
106

80
%
106

72
%
Raleigh-Durham
83

100
%
83

99
%
76

88
%
Total - Domestic
3,872

84
%
3,876

85
%
3,356

88
%
Frankfurt
125

99
%
98

99
%

%
London
116

72
%
84

100
%
10

94
%
Singapore
3

22
%
3

22
%
3

22
%
Total - International
244

85
%
185

98
%
13

76
%
Total - Portfolio
4,116

84
%
4,061

86
%
3,369

88
%
Stabilized Properties(c)
3,744

89
%
3,721

90
%
3,097

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.
























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CyrusOne Inc.
2019 Guidance

Category
Previous
 2019 Guidance
Revised
2019 Guidance
Total Revenue
$960 - 1,000 million
$970 - 990 million
   Lease and Other Revenues from Customers
$835 - 865 million
$842 - 857 million
   Metered Power Reimbursements
$125 - 135 million
$128 - 133 million
Adjusted EBITDA
$500 - 525 million
$507 - 517 million
Normalized FFO per diluted common share
$3.30 - 3.40
$3.50 - 3.60
Capital Expenditures
$900 - 1,000 million
$850 - 950 million
   Development(1)
$890 - 985 million
$840 - 935 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, tightening the guidance ranges for Total Revenue and Adjusted EBITDA, increasing the guidance range for Normalized FFO per diluted common share, and decreasing the guidance ranges for Capital Expenditures and Capital Expenditures - Development. 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.

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CyrusOne Inc.
Data Center Portfolio
As of June 30, 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
$
76,451

305

84
%
84
%
82

45
%
111

498


44

Northern Virginia - Sterling V
Northern Virginia
52,037

383

84
%
92
%
11

100
%
145

539

64

63

Northern Virginia - Sterling VI
Northern Virginia
42,394

272

88
%
88
%
35

%

307


57

Northern Virginia - Sterling II
Northern Virginia
33,657

159

100
%
100
%
9

100
%
55

223


30

San Antonio III
San Antonio
33,389

132

100
%
100
%
9

100
%
43

184


24

Houston - Houston West I
Houston
31,273

112

86
%
86
%
11

100
%
37

161

3

28

Somerset I
New York Metro
31,002

106

79
%
82
%
27

89
%
89

222

188

15

Chicago - Aurora I
Chicago
30,462

113

98
%
98
%
34

100
%
223

371

27

71

Cincinnati - 7th Street***
Cincinnati
30,032

197

66
%
66
%
6

61
%
175

378

46

16

Dallas - Lewisville*
Dallas
26,815

114

83
%
83
%
11

84
%
54

180


21

Totowa - Madison**
New York Metro
26,814

51

88
%
90
%
22

93
%
59

133


6

Cincinnati - North Cincinnati
Cincinnati
25,063

65

99
%
99
%
45

79
%
53

163

65

14

Phoenix - Chandler VI
Phoenix
23,779

148

100
%
100
%
6

100
%
32

187

279

24

Frankfurt I
Frankfurt
22,433

53

97
%
97
%
8

91
%
57

118


18

San Antonio I
San Antonio
21,751

44

100
%
100
%
6

83
%
46

96

11

12