2014

Savvis Reports First Quarter 2011 Results

ST. LOUIS, April 27, 2011 /PRNewswire/ -- Savvis, Inc. (NASDAQ: SVVS), a global leader in cloud infrastructure and hosted IT solutions for enterprises, today reported its first quarter 2011 financial results, with revenue of $257.0 million, compared to $216.6 million in the first quarter of 2010.  Adjusted EBITDA* was $75.0 million, compared to $54.0 million of adjusted EBITDA in the first quarter of 2010.  

Income from continuing operations for the first quarter of 2011 was $16.5 million, compared to $4.8 million in the first quarter of 2010.  Savvis reported a net loss of ($1.8) million, or ($0.03) per share, in the first quarter of 2011, compared to a first quarter 2010 net loss of ($11.3) million, or ($0.21) per share.

First Quarter Financial Results


US$ in millions

Three months ended


            3/31/11

             12/31/10

            3/31/10

Hosting

$191.8

$185.7

$152.8

Network

$65.2

$67.0

$63.8

Total revenue

$257.0

$252.7

$216.6





Cost of revenue(1)

$132.8

$129.6

$119.4

SG&A expenses(1) (2)

$57.2

$61.7

$51.7

Non-cash, equity-based compensation(1)

$7.9

$5.2

$8.5

Income from continuing operations

$16.5

$14.0

$4.8

Net income (loss) from continuing operations

($1.8)

($3.1)

($11.3)

Income (loss) from discontinued operations, net of income tax(3)

--

$0.2

--

Net income (loss)

($1.8)

($2.9)

($11.3)





Adjusted EBITDA

$75.0

$67.8

$54.0

Adjusted EBITDA margin

29%

27%

25%

(1) Both cost of revenue and SG&A expenses exclude depreciation, amortization and accretion and include non-cash, equity-based compensation.  Total non-cash, equity-based compensation attributed to cost of revenue for the three months ended 3/31/11, 12/31/10, and 3/31/10, was $2.7 million, $1.3 million and $1.6 million and to SG&A expenses was $5.2 million, $4.0 million and $6.8 million, respectively.  (2) SG&A expenses include acquisition and integration costs of $1.1 million for the three months ended 12/31/10.  (3) Includes income from the application services business acquired from Fusepoint, which was sold on 12/31/10.  Total income attributed to net income for the three months ended 12/31/10 was $160,000.



First Quarter Overview

Total Savvis revenue for the first quarter was $257.0 million, up 2% compared to fourth quarter 2010 revenue of $252.7 million.  Adjusted EBITDA was $75.0 million for the first quarter of 2011, up 11% compared to $67.8 million of adjusted EBITDA in the fourth quarter of 2010.  

Hosting


US$ in millions

Percent of Revenue

Three months ended


3/31/11

12/31/10

3/31/10

Managed Services

48%

$92.3

$89.3

$70.3

Percentage change



3%

31%

Colocation

52%

$99.6

$96.4

$82.5

Percentage change



3%

21%

Total Hosting revenue


$191.8

$185.7

$152.8

Percentage change



3%

26%




Network


US$ in millions

Percent of Revenue

Three months ended


3/31/11

12/31/10

3/31/10

Core

60%

$38.8

$38.4

$31.7

Percentage change



1%

23%

Sustaining

40%

$26.4

$28.6

$32.2

Percentage change



(8%)

(18%)

Total Network revenue


$65.2

$67.0

$63.8

Percentage change



(3%)

2%




Other

The Financial Vertical represented 28% of total revenue, or $72.9 million, in the first quarter of 2011.  Revenue in the quarter was up 5%, compared to the fourth quarter of 2010, and was up 31%, compared to the first quarter of 2010.  

Cash Flow and Balance Sheet

Net cash provided by operating activities was $36.7 million in the first quarter of 2011, compared to $39.0 million in the first quarter of 2010.  Cash capital expenditures for the first quarter of 2011 totaled $31.0 million.  

The company's cash position at Mar. 31, 2011, was $121.6 million, compared to $120.3 million at Dec. 31, 2010.  As of Mar. 31, 2011, the long-term debt and capital leases for Savvis (net of current portion) totaled $763.8 million, up from $747.2 million as of Dec. 31, 2010.  

Financial Outlook

Based on first quarter results, Savvis now expects the following for full year 2011:

  • Revenue of $1,030 to $1,060 million
  • Adjusted EBITDA of $265 to $290 million
  • Total cash capital expenditures of $220 to $240 million
  • Cash interest expense (net) of approximately $65 million

As a result of the CenturyLink transaction announced this morning, Savvis will not host its previously scheduled conference call to discuss its first quarter financial results, but will briefly address these results on a conference call to discuss the CenturyLink announcement at 8:30 a.m. EDT / 7:30 a.m. CDT

About Savvis

Savvis, Inc. (NASDAQ: SVVS) is a global leader in cloud infrastructure and hosted IT solutions for enterprises. Nearly 2,500 unique clients, including 32 of the top 100 companies in the Fortune 500, use Savvis to reduce capital expense, improve service levels and harness the latest advances in cloud computing. For more information, please visit www.savvis.com.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Actual results may differ materially from Savvis' expectations.  Certain factors that could adversely affect actual results are set forth as risk factors described in Savvis' SEC reports and filings, including its annual report on Form 10-K for the year ended Dec. 31, 2010, and subsequent filings.  Those risk factors include, but are not limited to, uncertainties in economic conditions, including conditions that could pressure enterprise IT spending; introduction of, demand for and market acceptance of Savvis' products and services; whether or not Savvis is able to sign additional outsourcing deals; variability in pricing for those products and services; merger and acquisition activity by Savvis customers or other customer activity that affects the level of business done with Savvis; rapid evolution of technology; changes in the operating environment; and changes or proposed changes in, or introduction of new, regulatory schemes or environments that impact Savvis and/or its customers' businesses.  The forward-looking statements contained in this document speak only as of the date of publication, Apr. 27, 2011.  Subsequent events and developments may cause the company's forward-looking statements to change, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.

* Non-GAAP Measures

Savvis includes information pertaining to certain non-GAAP measures in conjunction with reporting of its quarterly and year-end financial results.  Adjusted EBITDA represents income from continuing operations before depreciation, amortization and accretion, and non-cash, equity-based compensation and excludes acquisition and integration costs.  We have included information concerning adjusted EBITDA because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity.  Leveraged free cash flow represents adjusted EBITDA less cash paid acquisition and integration costs, less cash capital expenditures and less cash interest, net.  We have included information concerning leveraged free cash flow because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity.  We do not provide forward looking guidance for certain financial data, such as income from operations, depreciation, amortization and accretion, non-cash, equity-based compensation, and interest income.  As a result, we are unable to provide a reconciliation of non-GAAP measures, such as adjusted EBITDA and leveraged free cash flow, for forward looking data, including 2011 full-year guidance. The calculations of adjusted EBITDA and leveraged free cash flow are not specified by United States generally accepted accounting principles.  Our calculations of adjusted EBITDA and leveraged free cash flow may not be comparable to similarly-titled measures of other companies.

SAVVIS, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)






Three Months Ended




March 31,




2011


2010







Revenue

$              257,041


$              216,587

Operating Expenses:





Cost of revenue (including non-cash, equity-based






compensation of $2,692 and $1,630) (1)

132,764


119,368


Sales, general and administrative expenses (including






non-cash, equity-based compensation of $5,202 and $6,823) (1)

57,195


51,719


Depreciation, amortization and accretion

50,562


40,737

Total Operating Expenses

240,521


211,824

Income from Continuing Operations

16,520


4,763


Other income and expense

17,884


15,757

Income (Loss) from Continuing Operations




before Income Taxes

(1,364)


(10,994)


Income tax (benefit) expense

441


355

Income (Loss) from Continuing Operations,




net of Income Taxes

$                (1,805)


$              (11,349)


Income from discontinued operations,





net of income taxes

-


-

Net Income (Loss)

$                (1,805)


$              (11,349)







Net Income (Loss) from Continuing Operations





Basic earnings per share

$                  (0.03)


$                  (0.21)


Diluted earnings per share

$                  (0.03)


$                  (0.21)







Weighted-Average Common Shares Outstanding





Basic

56,917


54,494


Diluted

56,917


54,494







(1)

Excludes depreciation, amortization and accretion, which is reported separately.



SAVVIS, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(in thousands)






March 31,


December 31,


2011


2010

ASSETS




Current Assets:




Cash and cash equivalents

$                     121,576


$                   120,344

Trade accounts receivable, net

76,768


65,058

Prepaid expenses and other current assets

32,163


32,359

Total Current Assets

230,507


217,761

Property and equipment, net

847,786


843,801

Goodwill

78,146


75,883

Intangible assets, net

18,385


19,540

Other non-current assets

28,299


26,665

Total Assets

$                  1,203,123


$                1,183,650





LIABILITIES AND STOCKHOLDERS' EQUITY








Current Liabilities:




Payables and other trade accruals

$                       65,037


$                     73,445

Current portion of long-term debt and lease obligations

19,939


17,881

Other accrued liabilities

77,426


84,101

Total Current Liabilities

162,402


175,427

Long-term debt, net of current portion

529,999


530,649

Capital and financing method lease obligations, net of current portion

233,817


216,508

Other accrued liabilities

73,585


74,937

Total Liabilities

999,803


997,521





Stockholders' Equity:




Common stock

575


566

Additional paid-in capital

895,063


886,593

Accumulated deficit

(690,193)


(688,388)

Accumulated other comprehensive loss

(2,125)


(12,642)

Total Stockholders' Equity

203,320


186,129

Total Liabilities and Stockholders' Equity

$                  1,203,123


$                1,183,650



SAVVIS, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)









Three Months Ended








March 31,








2011


2010

Cash Flows from Operating Activities:





Net income (loss)




$                 (1,805)


$              (11,349)

Reconciliation of net income (loss) from continuing operations to






net cash provided by operating activities:





Depreciation, amortization and accretion


50,562


40,737

Non-cash, equity-based compensation


7,894


8,453

Accrued interest, net




541


3,286

Amortization of debt discount



725


3,767

Other, net




47


332

Net changes in operating assets and liabilities:






Trade accounts receivable, net


(10,844)


(6,581)


Prepaid expenses and other current and non-current assets


(1,441)


(6,572)


Payables and other trade accruals


181


7,455


Other accrued liabilities



(9,191)


(556)

Net cash provided by operating activities


36,669


38,972











Cash Flows from Investing Activities:





Payments for capital expenditures


(30,951)


(50,691)

Net cash used in investing activities


(30,951)


(50,691)











Cash Flows from Financing Activities:





Principal payments on long-term debt


(1,375)


(1,650)

Proceeds from stock option exercises


4,364


6,648

Payments for employee taxes on equity-based instruments


(5,770)


(2,812)

Principal payments under capital lease obligations


(3,980)


(2,538)

Other, net




-


(612)

Net cash provided by (used in) financing activities


(6,761)


(964)

Effect of exchange rate changes on






cash and cash equivalents



2,275


(2,204)











Net Increase (Decrease) in Cash and Cash Equivalents


1,232


(14,887)

Cash and Cash Equivalents, Beginning of Period


120,344


160,815

Cash and Cash Equivalents, End of Period


$              121,576


$              145,928











Supplemental Disclosures of Cash Flow Information:





Cash paid for interest



$                16,924


$                  7,832



SAVVIS, Inc. and Subsidiaries

Unaudited Selected Condensed Consolidated Financial Information

(in thousands)





Three Months Ended




March 31,


December 31,




2011


2010


2010

Segment Revenue:







Hosting


$              191,840


$             152,751


$                 185,697

Network


65,201


63,836


67,043

Total Revenue


$              257,041


$             216,587


$                 252,740









Segment Adjusted EBITDA:







Hosting


$                78,785


$               58,960


$                   76,127

Network


17,779


16,265


17,142

Corporate - Other (1)


(21,588)


(21,272)


(25,482)

Total Adjusted EBITDA (2)


$                74,976


$               53,953


$                   67,787

















Adjusted EBITDA Reconciliation:






Income from continuing operations

$                16,520


$                 4,763


$                   14,041

Depreciation, amortization and accretion

50,562


40,737


47,390

Non-cash, equity-based compensation

7,894


8,453


5,245

Acquisition and integration costs

-


-


1,111

Adjusted EBITDA


$                74,976


$               53,953


$                   67,787









Reconciliation of Adjusted EBITDA to Income (Loss)




from Continuing Operations before Income Taxes:




Adjusted EBITDA


$                74,976


$               53,953


$                   67,787

Depreciation, amortization and accretion

(50,562)


(40,737)


(47,390)

Non-cash, equity-based compensation

(7,894)


(8,453)


(5,245)

Acquisition and integration costs

-


-


(1,111)

Interest income


36


30


34

Interest expense


(18,191)


(15,475)


(18,132)

Other income (expense)


271


(312)


263

Income (Loss) from Continuing Operations




before Income Taxes


$                (1,364)


$              (10,994)


$                    (3,794)

























Leveraged Free Cash Flow Reconciliation:






Adjusted EBITDA


$                74,976


$               53,953


$                   67,787

Acquisition and integration costs

-


-


(1,111)

Cash capital expenditures


(30,951)


(50,691)


(43,811)

Cash interest paid


(16,924)


(7,832)


(10,500)

Interest income


36


30


34

Leveraged Free Cash Flow (3)

$                27,137


$                (4,540)


$                   12,399

















(1)

Corporate - Other adjusted EBITDA includes all costs not directly associated with hosting services or network services. Costs not directly associated with hosting services or network services include, but are not limited to, general and administrative costs.

(2)

Adjusted EBITDA represents income from continuing operations before depreciation, amortization, accretion and non-cash, equity-based compensation and excludes acquisition and integration costs.  We have included information concerning adjusted EBITDA because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity.  The calculation of adjusted EBITDA is not specified by United States generally accepted accounting principles.  Our calculation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

(3)

Leveraged Free Cash Flow represents adjusted EBITDA less cash paid acquisition and integration costs, less cash capital expenditures and less cash interest, net. We have included information concerning leveraged free cash flow because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity.




SAVVIS, Inc. and Subsidiaries


Unaudited Supplemental Revenue Information


(in thousands, except per square foot amounts)














Three Months Ended



March 31,


June 30,


September 30,


December 31,


March 31,



2010


2010


2010


2010


2011

Data Center Revenue










Colocation

$                      82,467


$                      84,281


$                      95,211


$                      96,430


$                      99,577

Managed hosting

70,284


73,898


81,513


89,267


92,263























 Data Center Metrics (1)










 Total raised floor

1,477


1,477


1,564


1,541


1,541



889


885


957


938


964

 Billed square feet

601


622


678


680


694

 Utilization

68%


70%


71%


73%


72%












 Average Billed Square Feet










 Colocation

572.1


586.6


623.4


651.2


658.6

 Managed hosting

23.8


25.1


26.8


28.1


28.3

 Total Average Billed Square Feet

595.9


611.7


650.3


679.2


686.9












 Average Monthly Data Center Revenue









        Per Billed Square Foot (2)










 Colocation

$                          48.1


$                          47.5


$                          50.9


$                          49.4


$                          50.4

 Managed hosting

984.5


974.4


1,012.7


1,059.5


1,086.9












(1)

Data center metrics are calculated as of period end for each respective quarter.






(2)

Average monthly data center revenue per billed square foot is calculated as the revenue per quarter divided by the average billed square feet per quarter stated on a monthly basis.















 SAVVIS Revenue by Vertical 











Three Months Ended



March 31,


June 30,


September 30,


December 31,


March 31,



2010


2010


2010


2010


2011












 Financial vertical

$                      55,532


$                      60,417


$                      67,007


$                      69,698


$                      72,924

 Other

161,055


161,339


174,894


183,042


184,117

 Total Revenue

$                    216,587


$                    221,756


$                    241,901


$                    252,740


$                    257,041

























 Network Revenue Supplemental Information:











Three Months Ended



March 31,


June 30,


September 30,


December 31,


March 31,



2010


2010


2010


2010


2011












 Core (1)

$                      31,670


$                      33,459


$                      36,339


$                      38,443


$                      38,813

 Sustaining (2)

32,166


30,118


28,838


28,600


26,388

 Total Network Revenue

$                      63,836


$                      63,577


$                      65,177


$                      67,043


$                      65,201












(1)

Core network includes revenue from Thomson Reuters and from other financial vertical and data center customers, who also purchase bundled network and hosting services.

(2)

Sustaining network includes revenue from services that are either in slower growth or declining markets or are not directly tied to the future growth of the company's network and hosting businesses.



SOURCE Savvis, Inc.



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