SGI Reports Financial Results for the Third Quarter of Fiscal 2015
Highest Bookings in Over 3 Years
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MILPITAS, CA -- (Marketwired) -- 04/29/15 -- SGI (NASDAQ: SGI), a global leader in high performance solutions for compute, data analytics, and data management, today reported financial results for its fiscal third quarter 2015 ended March 27, 2015.
Total revenue for the fiscal third quarter was $119 million, a decrease of 14% from $138 million in the previous quarter and a decrease of 5% from $124 million in the third fiscal quarter of 2014.
GAAP net loss for the fiscal third quarter was $9 million, or $(0.25) per share, compared with a GAAP net loss of $10 million, or $(0.30) per share, in the prior quarter, and a GAAP net loss of $22 million, or $(0.64) per share, in the third quarter of fiscal 2014. Non-GAAP net loss for the quarter was $3.4 million, or $(0.10) per share, compared with a non-GAAP net income of $0.1 million, or breakeven per diluted share, in the prior quarter and a non-GAAP net loss of $7 million, or $(0.22) per share, in the year-ago period.
"Demand for our HPC solutions remained robust this quarter as bookings increased significantly, driven by multiple large program wins across the company, including our Federal business and international operations," said Jorge Titinger, President and CEO of SGI. "In addition, we received certification for our UV solution for SAP HANA for up to 16-sockets, which represents a significant milestone as we position to capture share in the In-Memory market."
"Looking at the fiscal year, it now appears likely that revenue for one of our large DoD projects will be delayed one quarter, adding to what we believe will be a strong first half of fiscal 2016. Overall, we remain encouraged by our progress in diversifying our HPC business, entering the In-Memory market with our UV products and continuing our focus on operational excellence," continued Titinger.
Recent Highlights
- SGI's Federal business continues to strengthen with significant successes across the intelligence community, the Department of Defense and multiple civilian agencies. SGI's HPC and HPDA capabilities are providing mission focused capability and speeding time to insight and discovery. SGI has been awarded several large programs and contract vehicles with multi-year funding available for data analytics solutions, shared memory and cluster products.
- The fourth largest oil and gas company in the world, TOTAL S.A., selected SGI to upgrade its supercomputer "Pangea," with a new ICE" X system to increase Pangea with an additional 4.4 petaflops of compute power. With this upgrade, Pangea will continue to be the largest commercial supercomputer in the world.
- The UK Atomic Weapons Establishment (AWE) selected SGI's record-breaking ICE XA systems for its new supercomputer to support complex scientific modeling at high resolution and faster processing speeds for research and development. This will be one of the first global customer installations of SGI ICE XA, taking energy efficiency and flexible packaging to new levels.
- The Japan Atomic Energy Agency awarded SGI a contract for its fully integrated, 2.4 petaflop, 35 rack ICE-X supercomputer and storage system for its comprehensive R&D institute dedicated to nuclear energy. This system will be the largest Intel Xeon-based supercomputer in Japan.
Fiscal Fourth Quarter and Full Year Guidance
- The company expects total revenue for its fiscal fourth quarter ending June 26, 2015 to be in the range of $130 million to $145 million.
- The company expects non-GAAP net loss for the fiscal fourth quarter is expected to be in the range of $4 to $8 million, or $(0.12) to $(0.24) per share after excluding approximately $5 million of recurring adjustments for stock-based compensation expense, restructuring and severance costs, intangibles amortization and other items. GAAP net loss for the fiscal fourth quarter to be in the range of $9 to $13 million, or $(0.26) to $(0.38) per share.
- The company expects total revenue for its fiscal year ending June 26, 2015 to be in the range of $500 million to $515 million.
Webcast and Conference Call Information
Management will host a conference call and a live webcast of the earnings conference call will be available on the Investor Relations section of the Company's website at investors.sgi.com beginning at 1:30 p.m. PT (4:30 p.m. ET). A replay of the webcast will be available approximately two hours after the conclusion of the call and will remain available until the next earnings call.
The public can also listen to the 1:30 p.m. PT (4:30 p.m. ET) earnings conference call by dialing (888) 463-5422 (toll-free) or (970) 315-0484 (international). An audio replay of the conference call will also be made available approximately two hours after the conclusion of the call. The audio replay will remain available for five days and can be accessed by dialing (855) 859-2056 (toll-free) or (404) 537-3406 (international) and entering the confirmation code: 24094588.
About SGI
SGI is a global leader in high performance solutions for compute, data analytics and data management that enable customers to accelerate time to discovery, innovation and profitability. Visit sgi.com for more information.
Connect with SGI on Twitter (@sgi_corp), YouTube (youtube.com/sgicorp), Facebook (facebook.com/sgiglobal) and LinkedIn (linkedin.com/company/sgi).
Forward Looking Statements
The statements made in this press release regarding projected financial results, including SGI's guidance and outlook, and certain statements made in the earnings conference call, are forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Actual results could differ materially from those described by these statements due to a number of factors, including, but not limited to the following: substantial sales to U.S. government entities, which are subject to the government's budgetary constraints; customer concentration risks; fluctuations in the buying patterns and sizes of customer orders from one quarter to the next; increased competition causing SGI to sell products or services at lower margins than expected; lengthy acceptance cycles of SGI's products by certain customers and their effects on SGI's revenue and liquidity; development or product delivery delays, delays in obtaining necessary components from suppliers or delays in customer acceptance once products are delivered; the addition of new customers or loss of existing customers; unexpected changes in the price for, and the availability of, components from SGI's suppliers; SGI's ability to enhance its products with new and better designs and functionality; actions taken by competitors, such as new product announcements or introductions or changes in pricing; market acceptance of newer products; and risks related to SGI's term loan. Some of these risks and uncertainties are described in more detail in SGI's most recent Form 10-Q, Form 10-K and other filings with the Securities and Exchange Commission ("SEC") and are available at the SEC's web site at http://www.sec.gov. Forward-looking statements are made based on information available to the company on the date of this press release. The company assumes no obligation to update the information in this press release.
Use of Non-GAAP Financial Measures
This press release and the related earnings conference call include financial measures that are not determined in accordance with U.S. generally accepted accounting principles ("GAAP"), including non-GAAP gross margin, non-GAAP net income (loss) and non-GAAP basic and diluted net income (loss) per share. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and management exercises judgment in determining which items should be excluded in the calculation of non-GAAP measures. In addition, these non-GAAP measures may be different from non-GAAP measures used by other companies. While we believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, we believe that non-GAAP measures are valuable in evaluating the company's operating performance and analyzing our business operations. Management may exclude the following items from one or more of non-GAAP measures: (1) share-based compensation; (2) amortization and impairment of intangible assets; (3) restructuring and severance charges; (4) excess and obsolete inventory write-offs; (5) gains or losses on investments; and (6) other non-recurring costs. Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between GAAP and non-GAAP financial results is provided in this press release. The adjustments made should not be construed as an inference that all such adjustments or costs are unusual, infrequent or non-recurring. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in this release and SGI's SEC filings.
For a full reconciliation of historical non-GAAP measures referenced in this press release or today's presentation to the comparable measures under GAAP, please refer to the company's press releases on its website at www.sgi.com.
� 2015 Silicon Graphics International Corp. All rights reserved. SGI and the SGI logo are trademarks or registered trademarks of Silicon Graphics International Corp. or its subsidiaries in the United States and/or other countries. All other trademarks are property of their respective holders.
Silicon Graphics International Corp.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
------------------------ ------------------------
March 27, March 28, March 27, March 28,
2015 2014 2015 2014
----------- ----------- ----------- -----------
Revenue $ 118,504 $ 124,283 $ 368,355 $ 387,862
Cost of revenue 84,845 93,213 265,515 285,061
----------- ----------- ----------- -----------
Gross profit 33,659 31,070 102,840 102,801
----------- ----------- ----------- -----------
Operating expenses:
Research and
development 13,016 17,327 40,995 47,063
Sales and marketing 14,248 19,105 46,889 55,516
General and
administrative 12,840 16,431 41,399 43,460
Restructuring - 9 116 646
----------- ----------- ----------- -----------
Total operating
expenses 40,104 52,872 129,399 146,685
----------- ----------- ----------- -----------
Loss from operations (6,445) (21,802) (26,559) (43,884)
----------- ----------- ----------- -----------
Interest expense, net (1,614) (41) (1,714) (94)
Other income
(expense), net (575) 533 (679) 2,521
----------- ----------- ----------- -----------
Total other income
(expense), net (2,189) 492 (2,393) 2,427
----------- ----------- ----------- -----------
Loss before income taxes (8,634) (21,310) (28,952) (41,457)
Income tax provision 128 548 581 908
----------- ----------- ----------- -----------
Net loss $ (8,762) $ (21,858) $ (29,533) $ (42,365)
=========== =========== =========== ===========
Basic and diluted net
loss per share $ (0.25) $ (0.64) $ (0.86) $ (1.24)
=========== =========== =========== ===========
Shares used in computing
basic and diluted net
loss per share 34,586 34,325 34,462 34,199
=========== =========== =========== ===========
Share-based compensation
by category is as
follows:
Cost of revenue $ 559 $ 431 $ 1,591 $ 1,332
Research and development 663 532 1,881 1,745
Sales and marketing 717 832 2,282 2,159
General and
administrative 1,957 1,473 5,812 4,525
----------- ----------- ----------- -----------
Total $ 3,896 $ 3,268 $ 11,566 $ 9,761
=========== =========== =========== ===========
Silicon Graphics International Corp.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 27, June 27,
2015 2014
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 79,922 $ 109,297
Current portion of restricted cash 2,110 2,273
Accounts receivable, net 83,307 72,076
Inventories 100,351 47,354
Current portion of deferred cost of revenue 10,118 12,180
Prepaid expenses and other current assets 16,071 19,802
----------- -----------
Total current assets 291,879 262,982
Non-current portion of restricted cash 2,167 2,177
Property and equipment, net 37,711 34,584
Goodwill and Intangible assets, net 11,536 13,207
Non-current portion of deferred cost of revenue 7,951 7,592
Other non-current assets 43,897 44,396
----------- -----------
Total assets $ 395,141 $ 364,938
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 45,652 $ 53,128
Accrued compensation 17,832 20,049
Short-term debt 4,258 -
Current portion of deferred tax liabilities 15,846 15,846
Current portion of deferred revenue 81,325 78,675
Other current liabilities 28,282 37,814
----------- -----------
Total current liabilities 193,195 205,512
Long-tem debt 68,250 -
Non-current portion of deferred revenue 45,693 45,422
Long-term income taxes payable 8,949 10,114
Retirement benefit obligations 10,336 12,931
Other non-current liabilities 7,770 8,807
----------- -----------
Total liabilities 334,193 282,786
Stockholders' equity 60,948 82,152
----------- -----------
Total liabilities and stockholders' equity $ 395,141 $ 364,938
=========== ===========
Silicon Graphics International Corp.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended
------------------------------------------------------
March 27, 2015
Gross Profit
Net ------------------------- Operating
Loss EPS Product Service Total Expenses
-------- ------- ------- ------- ------- --------
GAAP $ (8,762) $ (0.25) $18,604 $15,055 $33,659 $ 40,104
Share-based
compensation (1) 3,896 0.11 145 414 559 (3,337)
Amortization
and impairment
of acquired
intangibles (1) 106 - 75 - 75 (31)
Restructuring
and severance (2) 708 0.02 (5) 479 474 (234)
Other non-
recurring
items (2) 688 0.02 - 68 68 (390)
-------- ------- ------- ------- ------- --------
Non-GAAP $ (3,364) $ (0.10) $18,819 $16,016 $34,835 $ 36,112
======== ======= ======= ======= ======= ========
Gross Margin
Gross margin on
a GAAP basis 22.6% 41.7% 28.4%
Gross margin on
a Non-GAAP
basis 22.8% 44.4% 29.4%
Weighted average
shares used in
computing:
Basic and
diluted net
loss per share 34,586
Three Months Ended
------------------------------------------------------
March 28, 2014
Gross Profit
Net ------------------------- Operating
Loss EPS Product Service Total Expenses
-------- ------- ------- ------- ------- --------
GAAP $(21,858) $ (0.64) $15,168 $15,902 $31,070 $ 52,872
Share-based
compensation (1) 3,268 0.10 141 290 431 (2,837)
Amortization of
acquired
intangibles (1) 1,047 0.03 441 - 441 (606)
Restructuring
and severance (2) 7,145 0.21 176 1,275 1,451 (5,694)
Excess and
obsolete
inventory (2) 2,182 0.06 2,182 - 2,182 -
Other non-
recurring
items (2) 819 0.02 2 - 2 (817)
-------- ------- ------- ------- ------- --------
Non-GAAP $ (7,397) $ (0.22) $18,110 $17,467 $35,577 $ 42,918
======== ======= ======= ======= ======= ========
Gross Margin
Gross margin on
a GAAP basis 17.7% 41.5% 25.0%
Gross margin on
a Non-GAAP
basis 21.1% 45.5% 28.6%
Weighted average
shares used in
computing:
Basic and
diluted net
loss per share 34,325
Three Months Ended
------------------------------------------------------
December 26, 2014
Gross Profit
Net -------------------------
(Loss)/ Operating
Income EPS Product Service Total Expenses
-------- ------- ------- ------- ------- --------
GAAP $(10,438) $ (0.30) $21,547 $15,262 $36,809 $ 46,813
Share-based
compensation (1) 4,171 0.12 122 444 566 (3,605)
Amortization
and impairment
of acquired
intangibles (1) 1,310 0.04 900 - 900 (410)
Restructuring
and severance (2) 3,792 0.11 8 693 701 (3,091)
Other non-
recurring
items (2) 1,268 0.03 - 10 10 (1,258)
-------- ------- ------- ------- ------- --------
Non-GAAP $ 103 $ 0.00 $22,577 $16,409 $38,986 $ 38,449
======== ======= ======= ======= ======= ========
Gross Margin
Gross margin on
a GAAP basis 21.5% 40.3% 26.6%
Gross margin on
a Non-GAAP
basis 22.5% 43.3% 28.2%
Weighted average
shares used in
computing:
Basic net loss
per share 34,375
Diluted net
income per
share 35,134
Silicon Graphics International Corp.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)
Nine Months Ended
-------------------------------------------------------
March 27, 2015
Gross Profit
Net -------------------------- Operating
Loss EPS Product Service Total Expenses
-------- ------- ------- ------- -------- --------
GAAP $(29,533) $ (0.86) $56,260 $46,580 $102,840 $129,399
Share-based (1)
compensation 11,566 0.34 375 1,216 1,591 (9,975)
Amortization (1)
and
impairment of
acquired
intangibles 1,631 0.05 1,119 - 1,119 (512)
Restructuring (2)
and severance 5,592 0.16 160 1,452 1,612 (3,980)
Other non- (2)
recurring
items 2,506 0.07 - 78 78 (2,198)
-------- ------- ------- ------- -------- --------
Non-GAAP $ (8,238) $ (0.24) $57,914 $49,326 $107,240 $112,734
======== ======= ======= ======= ======== ========
Gross Margin
Gross margin
on a GAAP
basis 21.8% 42.1% 27.9%
Gross margin
on a Non-GAAP
basis 22.5% 44.6% 29.1%
Weighted average
shares used in
computing:
Basic and
diluted net
loss per
share 34,462
Nine Months Ended
-------------------------------------------------------
March 28, 2014
Gross Profit
Net -------------------------- Operating
Loss EPS Product Service Total Expenses
-------- ------- ------- ------- -------- --------
GAAP $(42,365) $ (1.24) $51,287 $51,514 $102,801 $146,685
Share-based (1)
compensation 9,761 0.28 444 888 1,332 (8,429)
Amortization (1)
of acquired
intangibles 2,933 0.09 1,138 - 1,138 (1,795)
Restructuring (2)
and severance 9,995 0.29 920 1,735 2,655 (7,340)
Excess and (2)
obsolete
inventory 5,424 0.16 5,424 - 5,424 -
Other non- (2)
recurring
items 3,649 0.11 106 - 106 (3,543)
Gain on (2)
investment (1,717) (0.05) - - - -
Income tax (2)
abatement (611) (0.02) - - - -
-------- ------- ------- ------- -------- --------
Non-GAAP $(12,931) $ (0.38) $59,319 $54,137 $113,456 $125,578
======== ======= ======= ======= ======== ========
Gross Margin
Gross margin
on a GAAP
basis 18.8% 44.5% 26.5%
Gross margin
on a Non-GAAP
basis 21.8% 46.8% 29.3%
Weighted average
shares used in
computing:
Basic and
diluted net
loss per
share 34,199
NOTE: This presentation includes certain financial measures not in
conformity with Generally Accepted Accounting Principles in the United
States (non-GAAP measures). Our non-GAAP measures are not meant to be
considered in isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our consolidated financial
statements prepared in accordance with GAAP.
(1) Adjustments to exclude certain non-cash expenses such as share-based
compensation and amortization and impairment of intangible assets.
(2) Adjustments to exclude the items discussed below because such items are
either operating expenses which would not otherwise have been incurred by
the company in the normal course of the company's business operations or are
not reflective of the company's core results over time. These items may
include recurring as well as non-recurring items.
(a) Restructuring charges and severance -- Restructuring charges consist
primarily of severance expense, facility closure and relocation costs.
(b) Other non-recurring items include settlements, headquarters relocation
costs, asset impairments, acquisition- related costs, and costs
associated with contract manufacturing transition / termination.
(c) Excess and obsolete charges related to our strategic withdrawal from
legacy cloud infrastructure and other products that are at the end of
the product life cycle.
Silicon Graphics International Corp.
TRENDED FINANCIAL DATA
(In thousands)
(Unaudited)
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15
-------- -------- -------- -------- -------- -------- --------
Total
Revenue
Americas $102,212 $ 62,648 $ 56,554 $ 56,122 $ 67,670 $ 87,615 $ 72,585
APJ 24,266 24,383 52,508 35,182 26,418 33,671 32,155
EMEA 21,041 29,029 15,221 50,780 17,613 16,864 13,764
-------- -------- -------- -------- -------- -------- --------
Total
revenue $147,519 $116,060 $124,283 $142,084 $111,701 $138,150 $118,504
======== ======== ======== ======== ======== ======== ========
Revenue
Product $108,820 $ 77,334 $ 85,927 $102,484 $ 75,002 $100,288 $ 82,398
Service 38,699 38,726 38,356 39,600 36,699 37,862 36,106
-------- -------- -------- -------- -------- -------- --------
Total
revenue $147,519 $116,060 $124,283 $142,084 $111,701 $138,150 $118,504
======== ======== ======== ======== ======== ======== ========
Cost of
revenue
Product $ 88,692 $ 61,343 $ 70,759 $ 84,991 $ 58,893 $ 78,741 $ 63,794
Service 20,579 21,234 22,454 21,487 20,436 22,600 21,051
-------- -------- -------- -------- -------- -------- --------
Total
cost of
revenue $109,271 $ 82,577 $ 93,213 $106,478 $ 79,329 $101,341 $ 84,845
======== ======== ======== ======== ======== ======== ========
Gross margin
by Product
and Service
Product
Gross
Margin 18.5% 20.7% 17.7% 17.1% 21.5% 21.5% 22.6%
Service
Gross
Margin 46.8% 45.2% 41.5% 45.7% 44.3% 40.3% 41.7%
Total
gross
margin 25.9% 28.8% 25.0% 25.1% 29.0% 26.6% 28.4%
-------- -------- -------- -------- -------- -------- --------
Silicon Graphics International Corp.
CORE REVENUE TREND
(In thousands)
(Unaudited)
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15
-------- -------- -------- -------- -------- -------- --------
Core Revenue
Federal (*) $ 76,374 $ 44,402 $ 45,013 $ 37,077 $ 60,674 $ 72,286 $ 57,143
Interna-
tional /
Commercial
(**) 55,259 62,482 77,215 103,470 49,841 65,191 60,391
-------- -------- -------- -------- -------- -------- --------
Total
Core
Revenue 131,633 106,884 122,228 140,547 110,515 137,477 117,534
-------- -------- -------- -------- -------- -------- --------
Legacy Cloud 15,886 9,176 2,055 1,537 1,186 673 970
-------- -------- -------- -------- -------- -------- --------
Total
Revenue $147,519 $116,060 $124,283 $142,084 $111,701 $138,150 $118,504
======== ======== ======== ======== ======== ======== ========
(*) Core Federal revenue includes U.S. government customers, system
integrators, and higher education and research institutions
(**) Core International / Commercial revenue excludes revenue related to
legacy cloud infrastructure
Contact Information: SGI Investor Relations Annie Leschin (415) 775-1788 Email Contact Ben Liao (669) 900-8090 Email Contact
Source: SGI
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