FREMONT, Calif., Aug. 7, 2013 - SGI (NASDAQ:SGI), the trusted leader in technical computing and Big Data, today reported financial results for its fiscal fourth quarter and year ended June 28, 2013.
Total revenue for the fiscal fourth quarter was $171 million, which compares with $233 million in the previous quarter and $179 million in the fiscal fourth quarter of 2012. For fiscal year 2013, total revenue was $767 million, an increase of 2% from $753 million in fiscal year 2012.
GAAP net loss for the fiscal fourth quarter was $4 million, or $(0.13) per diluted share, which compares with net income of $9 million, or $0.27 per diluted share, in the prior quarter, and a net loss of $18 million, or $(0.58) per diluted share, in the fourth quarter of fiscal 2012. Non-GAAP net income for the quarter was $6 million, or $0.17 per diluted share, which compares with non-GAAP net income of $6 million, or $0.18 per diluted share, in the prior quarter and a non-GAAP net loss of $3 million, or $(0.10) per diluted share, in the year-ago period.
For fiscal year 2013, GAAP net loss was $3 million, or $(0.09) per diluted share, which compares with a net loss of $24 million, or $(0.77) per diluted share in fiscal 2012. On a non-GAAP basis, the company reported full-year net income of $12 million, or $0.36 per diluted share, which compares with net income of $4 million, or $0.12 per diluted share in fiscal 2012.
A reconciliation of the company's GAAP to non-GAAP results is included in the tables accompanying this press release.
Cash as of the end of the fiscal fourth quarter was $179 million, which compares with $153 million for the prior quarter and $94 million (net of debt outstanding) as of the same period a year ago.
"We achieved another solid financial quarter, capping a year in which we tripled non-GAAP net income and nearly doubled the company's net cash balance, while repositioning SGI for more profitable growth in fiscal 2014," said Jorge Titinger, president and CEO of SGI. "In fiscal year 2014, we expect to achieve solid double-digit revenue growth in our core high-performance computing (HPC), storage, and Big Data solutions, while managing the run-off of our lower margin legacy cloud infrastructure business. We are on track with our operational and financial objectives for the year, including further improvement in profitability, however because of the timing of many large deal opportunities as well as the ramp of new products, we expect our financial performance to be weighted toward the second half of the fiscal year."
- SGI announced on August 5 that SKODA Auto has selected SGI® ICE X and SGI® UVTM 2000 computing systems to augment its computer-aided engineering (CAE) system. The new systems allow engineers to reduce processing time and improve design efficiency, quality and safety, speeding up the development process and making it even more cost effective.
- On July 1, SGI selected Jabil as its primary global manufacturing services and supply chain management provider, subject to completion of definitive agreements.
- Princeton University announced on June 24 that it deployed SGI Rackable® servers in the Department of Geosciences to drive next-generation earthquake research.
- On June 17, SGI announced that the United States Department of Defense (DoD) has deployed the SGI ICE X HPC system for its supercomputer Spirit, making it the 14th fastest supercomputer in the world according to TOP500 (www.top500.org).
- Translational Research Institute (TRI) in Australia announced on June 4 that it has selected SGI to provide a big data HPC solution powered by SGI UV 2000 shared memory platform, SGI® Rackable clusters and SGI® InfiniteStorage™ to accelerate results at its new state-of-the-art research center.
- On May 23, NASA's Ames Research Center announced that it has selected an SGI UV 2000 shared memory system to support more than a thousand active users around the country who are doing research for earth sciences, space and aeronautics missions.
- CQUniversity Australia announced on May 6 that it has selected SGI to supply new HPC server and storage infrastructure to accelerate its research projects. With the deployment of the SGI Rackable HPC system, CQUniversity can now analyze, store and process big data in record time, increasing ROI and results for healthcare and environmental projects.
Outlook for Fiscal Q1 2014
The company provides technical computing solutions to large government, public, and commercial customers. Any given customer deal can include a varying mix of compute and storage hardware, software, and services, and generally will carry terms that result in most of the product revenue associated with the deal being recognized upon final shipment or acceptance of the system. The timing of final delivery or acceptance of large deals is difficult to predict and can cause significant swings in quarterly revenue. Management provides guidance on quarterly revenue and other items based on its current expectations of the timing of revenue and associated costs; however there can be no assurance that revenues and associated costs will be recognized according to expected schedules and management assumes no obligation to update its guidance if the timing of revenues or other circumstances in the business differ from current expectations.
For the first quarter ending September 27, 2013, the company is providing the following guidance:
- Revenue for the first fiscal quarter is expected to be $160 million to $170 million.
- GAAP net loss per diluted share for the first fiscal quarter is expected to be $(0.14) to $(0.07) and is expected to reflect approximately $7 million of total adjustments, including restructuring and severance charges, stock-based compensation expense, and intangibles amortization.
- Non-GAAP net income per diluted share for the first fiscal quarter is expected to be $0.07 to $0.14 and is expected to exclude the $7 million of total adjustments mentioned above.
A live webcast of the earnings conference call will be available on the Investor Relations section of SGI'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 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: 18057562.
SGI, the trusted leader in technical computing, is focused on helping customers solve their most demanding business and technology challenges. Visit www.sgi.com for more information.
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Cautionary Statement Regarding Forward Looking Statements
The statements made in this press release regarding projected financial results, financial objectives, and strategic plans, including SGI's 2014 first fiscal quarter financial guidance, anticipated growth and profitability, 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 uncertainties, including, but not limited to:
- 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, development or product delivery delays, and delays in obtaining necessary components from suppliers;
- The addition of new customers or loss of existing customers;
- Customer concentration risks;
- Substantial sales to U.S. government entities, which are subject to the government's budgetary constraints;
- Write-offs of excess and obsolete inventory;
- 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; and
- Market acceptance of newer products.
In addition, SGI's actual revenue, earnings per share and other projections on a GAAP and non-GAAP basis for the fiscal quarter ending September 27, 2013 could differ materially from the targets stated under "Outlook for Fiscal Q1 2014" above for a number of reasons, including, but not limited to (i) application of the actual consolidated GAAP and non-GAAP tax rates for such periods, or judgment by management to increase or decrease an income tax asset or liability, (ii) a determination by SGI that any portion of its goodwill or intangible assets have become impaired, (iii) changes in the anticipated amount of employee stock-based compensation expense recognized on SGI's financial statements, (iv) increases or decreases to estimated capital expenditures, (v) changes driven by new accounting or tax rules, regulations, interpretations or guidance, (vi) changes in the anticipated amounts and timing of restructuring charges to be incurred and cost savings expected to be realized from our restructuring actions in Europe, (vii) charges or gains resulting from litigation or dispute settlement, and (viii) other risks as detailed in SGI's filings with the Securities and Exchange Commission ("SEC"), including those described in SGI's Annual Report on Form 10-K under the caption "Risk Factors" filed with the SEC on Sept. 10, 2012, 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 obligation to update the information in this earnings release or the related earnings conference call, whether as a result of new information, future events or otherwise, unless otherwise required by law.
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. general accepted accounting principles ("GAAP"), including non-GAAP gross profit and gross margin, non-GAAP operating expenses, 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 excludes the following items from one or more of non-GAAP measures: (1) share-based compensation; (2) amortization of intangible assets; (3) restructuring and severance charges; and (4) other non-recurring costs, including settlements and other items. 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 SGI'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 SGI'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 SGI's financial and operational performance in the same way that management evaluates the company'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 SGI'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 SGI'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 SGI's SEC filings.
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