2014

SGI Reports Financial Results for First Quarter of Fiscal 2012

FREMONT, Calif., Nov. 8, 2011 /PRNewswire/ -- SGI (NASDAQ: SGI), the trusted leader in technical computing, today announced financial results for its first quarter of fiscal 2012.

Financial Highlights for Q1 FY12

  • Revenue was a period record of $178.9 million, up 58% Y/Y
  • Gross margin was 29.4%, up 197 bps Y/Y
  • EPS was ($0.08) compared to ($0.37) Y/Y; Non-GAAP EPS was $0.07 compared to ($0.06) Y/Y
  • Re-affirming FY2012 guidance

"Our strategy is working.  We achieved record Q1 revenues and four consecutive quarters of non-GAAP profitability," said SGI CEO Mark J. Barrenechea.  "We added over 100 new customers in the quarter and won key new business in Life Sciences."

"The SGI business is showing resiliency, despite macro-concerns, with strong quarter performance in US Federal, Japan and America's Commercial.  Further, we are reaffirming our fiscal 2012 guidance, based on current visibility," Barrenechea concluded.

Business Highlights for Q1 FY12 including recent events

  • Customer successes in the first quarter include Norwegian University of Science and Technology, Poznanskie Centrum Superkomputer, Skoda, Donostia International Physics Center, and NATO-related awards in EMEA; Toyota and Jamstec in Japan; iVEC, James Cook University, Swinburne University, ANU, Tata Motors, and Honeywell India in APAC; Amazon, eBay, Microsoft, and Carbonite in Americas' Commercial
  • In Life Sciences, our customer successes include Bayer BioScience N.V., BIOGEMMA, Kyoto University, IRB Barcelona and St. Jude Children's Hospital
  • Strong revenue contribution from International, at 41%
  • Announced partnership with Cloudera to resell and offer support for Cloudera software, and a Hadoop performance world-record
  • Filed SEC Form S-3 universal shelf registration statement to raise up to $100 million to pursue acquisitions
  • Tony Carrozza named EVP, Field Operations

The Company's channel business contributed 10% and direct was 90%.  Domestic business was 59%, while international contributed 41%. Products were 72% of revenue and services contributed 28%. Public sector, cloud and manufacturing were the strongest vertical markets this quarter. The Company also won new business in Life Sciences.

Summary of Results


GAAP Results


Q1 FY12

Q4 FY11

Q1 FY11

Revenue (million)

$178.9

$195.5

$112.9

Gross Margin

29.4%

23.5%

27.5%

GAAP EPS (Loss)

($0.08)

($0.39)

($0.37)

Non-GAAP EPS (Loss)

$0.07

$0.12

($0.06)



SGI ended Q1 FY12 with $115.5 million in cash (including cash equivalents and restricted cash), down from $143.2 million last quarter, primarily due to increased inventory for business awarded to SGI.

Fiscal Year 2012 Guidance

SGI is reiterating its previously released guidance for fiscal 2012.

Guidance Metric

FY12 Guidance

Revenue

$740 million to $780 million

Gross Margin

28% to 30%

EPS

$0.15 to $0.30

Non-GAAP EPS

$0.60 to $0.80



Registration to Offer Securities

SGI filed a universal shelf registration statement on Form S-3 today with the Securities and Exchange Commission to raise up to an aggregate of $100 million, either through equity or debt instruments. The shelf registration is intended to provide strategic flexibility to pursue acquisitions.  While SGI has no immediate plans to sell stock or issue debt pursuant to the shelf registration statement, it is reasonable to assume the Company may do so in the future.  

Conference Call Information

In conjunction with this earnings press release, SGI has posted an earnings presentation which incorporates commentary from James Wheat, SGI's CFO, to the Investor Relations section of its website at investors.sgi.com.  

The public is invited to listen to the earnings conference call at 2:00 p.m. PT (5:00 p.m. ET) by dialing (888) 463-5422 (toll-free) or (970) 315-0484 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, 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.

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. 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: 17482661.

About SGI

SGI, the trusted leader in technical computing, is focused on helping customers solve their most demanding business and technology challenges. Visit sgi.com for more information.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements; including statements regarding SGI's guidance for 2012 financial performance, general business outlook and anticipated product performance and offerings. Any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Actual results may differ materially from forward-looking statements due to a number of risks and uncertainties including those associated with: SGI's more extensive international operations; economic conditions impacting the purchasing decisions of SGI's customers; SGI operates in a very competitive market, and increased competition and competitors' new products, have in the past, and may continue, to cause pricing pressure on SGI's products, which would negatively affect SGI's gross and operating margins, as well as other financial measures; a significant portion of the Company's revenues has come from a limited number of customers and such customer concentration increases the risk of quarterly fluctuations in our revenues and operating results and the loss or reduction of business from one or a combination of our significant customers could materially affect our revenues, financial condition and results of operations; SGI relies on sales to U.S. government entities and has limited experience dealing with the U.S. government as a customer; SGI is unable to control the supply of components, and, as a result, is experiencing and may experience in the future component shortages and delivery delays that can cause components to not be available at all and the price of components to increase and can result in component quality issues; SGI is unable to control component pricing, such as what our suppliers charge for central processing units, and, as has happened in the past, component pricing can rise unexpectedly, negatively impacting SGI's gross margins as well as other financial measures; SGI's operations in Japan, which may be negatively affected by earthquakes and other natural disasters, as well as potential power supply disruptions following the March 2011 earthquake and tsunami; and SGI may be required to write-off additional significant amounts of excess and obsolete inventory. Detailed information about these and other potential factors that could affect SGI's business, financial condition and results of operations is included in SGI's annual report on Form 10-K under the caption "Risk Factors," in Part I, Item 1A of that report, filed with the Securities and Exchange Commission ("SEC") on August 29, 2011, as updated by SGI's subsequent filings with the SEC, all of which are available at the SEC's Web site at http://www.sec.gov. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this announcement. SGI undertakes no responsibility to update the information in this announcement, except as may be required by law.

Use of Non-GAAP Financial Measures

The non-GAAP financial measures discussed in the text of this press release and accompanying non-GAAP supplemental information are financial measures used by SGI's management to evaluate the operating performance of the Company and to conduct its business operations.  In evaluating the Company's performance, management uses one or more of the following measures that are not determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"): non-GAAP net income and non-GAAP basic and diluted net income per share. These measures are adjusted as described in the reconciliation of GAAP and non-GAAP numbers at the end of this release, but these adjustments should not be construed as an inference that all of these adjustments or costs are unusual, infrequent or non-recurring.

In addition, Management uses these non-GAAP financial measures to facilitate its review of the comparability of the Company's core operating performance on a period to period basis as well as to better understand the fundamental economics of a specific period's operational and financial performance. Management uses this view of the Company's operating performance for purposes of comparison with its business plan and individual operating budgets and allocations of resources.

Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the Company's financial and operational performance in the same way that management evaluates SGI's financial performance. However, these non-GAAP financial measures have limitations as an analytical tool, as they exclude the financial impact of transactions necessary or advisable for the conduct of the Company's business, such as the granting of equity compensation awards and are not intended to be an alternative to financial measures prepared in accordance with GAAP. Hence, to compensate for these limitations, management does not review these non-GAAP financial metrics in isolation from its GAAP results, nor should investors. Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between the Company's GAAP and non-GAAP financial results is provided at the end of this press release. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company's SEC filings.

Contact Information:

Ben Liao
SGI Investor Relations
+1-510-933-8430
bliao@sgi.com

© 2011 SGI. SGI and its product names and logos 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






September 30,


June 24,


September 24,






2011


2011


2010













Revenue



$   178,895


$   195,486


$   112,894



Cost of revenue



126,257


149,502


81,897













Gross profit



52,638


45,984


30,997













Operating expenses:










Research and development  



16,190


13,594


13,753



Sales and marketing



21,798


26,247


14,938



General and administrative



16,885


15,626


12,754



Restructuring



133


3,356


635



Acquisition-related



-


177


-



Total operating expenses



55,006


59,000


42,080













Loss from operations



(2,368)


(13,016)


(11,083)













Total other income (expense), net










Interest income, net



(98)


(141)


130



Other income (expense), net



(858)


203


415



Total other income (expense), net



(956)


62


545



Loss before income taxes



(3,324)


(12,954)


(10,538)



Income tax provision (benefit)



(667)


(856)


649



Net loss



(2,657)


(12,098)


(11,187)













Basic and diluted net loss per share



$       (0.08)


$       (0.39)


$       (0.37)













Shares used in computing basic and diluted net loss per share



31,303


31,029


30,536













Share-based compensation by category is as follows:

















Cost of revenue



$         282


$         186


$         178



Research and development



515


280


162



Sales and marketing



361


283


209



General and administrative



911


1,201


643



Total



$       2,069


$       1,950


$       1,192
































Silicon Graphics International Corp.



UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



(in thousands)



















September 30,


June 24,





2011


2011



ASSETS







Current assets:







Cash and cash equivalents


$        112,490


$        139,868



Current portion of restricted cash and cash equivalents


998


948



Accounts receivable, net


101,296


108,675



Inventories


110,726


80,965



Deferred cost of revenue


58,290


59,306



Prepaid expenses and other current assets


16,021


17,937



             Total current assets


399,821


407,699



Non-current portion of restricted cash and cash equivalents


2,025


2,390



Property and equipment, net


29,687


29,573



Intangible assets, net


12,296


13,289



Non-current portion of deferred cost of revenue


38,132


45,219



Other assets


40,604


39,839



Total assets


$        522,565


$        538,009










LIABILITIES AND STOCKHOLDERS’ EQUITY














Liabilities:







Accounts payable


$          65,250


$          71,299



Accrued compensation


24,047


29,477



Current portion of deferred revenue


134,691


132,986



Other current liabilities


42,518


39,967



             Total current liabilities


266,506


273,729



Non-current portion of deferred revenue


84,085


93,146



Long-term income taxes payable


21,886


24,104



Retirement benefit obligations


15,247


15,569



Other non-current liabilities


8,315


8,175



Total liabilities


396,039


414,723










Stockholders’ equity


126,526


123,286



Total liabilities and stockholders’ equity


$        522,565


$        538,009



























Silicon Graphics International Corp.





Q1 FISCAL 2012 FINANCIAL RESULTS





RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES





($ in thousands, except per share data)























Three months ended










September 30,


June 24,


September 24,










2011


2011


2010






GAAP Net Loss


(2,657)


(12,098)


(11,187)





















Share-based Compensation

(1)

2,069


1,950


1,192







Amortization of Intangibles

(1)

1,648


3,283


1,020







Restructuring Charges

(2)

133


3,356


635







Transaction Related

(2)

-


177


-







Revenue Recognition Related

(2)

-


3,760


5,288







Other

(3)

1,000


3,486


1,214






Non-GAAP Net Income (Loss)


2,193


3,914


(1,838)




















Weighted average shares used in computing:














Basic net income/(loss) per share


31,303


31,029


30,536








Dilutive net income/(loss) per share


32,704


33,005


30,536




















GAAP Basic and diluted net loss per share


(0.08)


(0.39)


(0.37)




















Non-GAAP Basic net income/(loss) per share


0.07


0.13


(0.06)






Non-GAAP Dilutive net income/(loss) per share


0.07


0.12


(0.06)




















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 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.





















Restructuring Charges — Restructuring charges consist primarily of severance expense, facility closure and relocation costs.






















Transaction-Related Costs — The Company excludes certain expense items resulting from actual or potential transactions such as business combinations, mergers, acquisitions, and financing transactions, including expenses for advisors and representatives such as investment bankers, consultants, attorneys, and accounting firms.





















Revenue Recognition Related - The Company added back gross margin impacts from revenue arrangements deferred under Software Revenue Recognition rules (ASC 985-605) and fair value allocation rules (ASC 605-25) in fiscal year 2011. These add backs are no longer presented for fiscal year 2012.



















(3)  Adjustments to exclude certain non-cash expenses and/or certain items which 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 such as: (i) realized gains/losses on the Company's auction rate securities, (ii) other-than-temporary impairment of an equity investment, (iii) litigation or dispute settlement charges or gains, (iv) inventory step-up from acquisitions, and (v) incremental excess and obsolete long-term service inventory charges.















































SOURCE SGI



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