SOURCE: SGI

SGI

August 11, 2016 16:19 ET

SGI Announces Fourth Quarter and Fiscal Year 2016 Financial Results

MILPITAS, CA--(Marketwired - Aug 11, 2016) - SGI (NASDAQ: SGI), a global leader in high-performance solutions for compute, data analytics and data management, today announced financial results for its fourth quarter and fiscal year 2016 ended June 24, 2016. Data in this release is presented on both a GAAP and non-GAAP basis and a reconciliation of GAAP to non-GAAP measures is included in the financial tables in this press release.

Total revenue for the fiscal fourth quarter was $123 million compared to $153 million in the fourth quarter of fiscal 2015. GAAP net income for the fiscal fourth quarter was $0.1 million, or breakeven per share compared with a net loss of $10 million, or $(0.28) per share in the fourth quarter of fiscal year 2015. Non-GAAP net income for the fiscal fourth quarter was $3 million, or $0.08 per share compared with a net loss of $4 million, or $(0.12) per share in the same quarter a year ago.

Total revenue for fiscal 2016 was $533 million compared with $521 million in fiscal 2015. GAAP net loss for fiscal 2016 was $11 million, or $(0.31) per share compared with a net loss of $39 million, or $(1.13) per share in fiscal 2015. Non-GAAP net income was $4 million, or $0.11 per share for fiscal 2016, compared with a net loss of $13 million, or $(0.36) per share for fiscal 2015.

Conference Call and Webcast Information

Due to the earlier announcement of Hewlett Packard Enterprise's acquisition of SGI, the previously scheduled conference call has been cancelled.

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 (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).

© 2016 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.

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) gains or losses on sale of assets; and (5) 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 to the comparable measures under GAAP, please refer to the company's press releases on its website at www.sgi.com.

                         
                         
Silicon Graphics International Corp.  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share amounts)  
                         
    Three Months Ended     Year Ended  
    June 24,     June 26,     June 24,     June 26,  
    2016     2015     2016     2015  
                                 
Revenue   $ 122,714     $ 152,904     $ 532,930     $ 521,259  
Cost of revenue     85,226       121,106       388,385       386,621  
                                 
Gross profit     37,488       31,798       144,545       134,638  
                                 
Operating expenses:                                
  Research and development     11,786       12,211       50,697       53,206  
  Sales and marketing     12,823       14,655       51,525       61,544  
  General and administrative     11,123       12,462       43,435       53,861  
  Restructuring     -       -       -       116  
    Total operating expenses     35,732       39,328       145,657       168,727  
                                 
Income (loss) from operations     1,756       (7,530 )     (1,112 )     (34,089 )
                                 
  Interest expense, net     (1,888 )     (2,030 )     (7,932 )     (3,744 )
  Other expense, net     (1,385 )     (193 )     (2,760 )     (872 )
    Total other expense, net     (3,273 )     (2,223 )     (10,692 )     (4,616 )
Loss before income taxes     (1,517 )     (9,753 )     (11,804 )     (38,705 )
Income tax (benefit) provision     (1,651 )     (141 )     (626 )     440  
                                 
Net income (loss)   $ 134     $ (9,612 )   $ (11,178 )   $ (39,145 )
                                 
Basic net income (loss) per share   $ 0.00     $ (0.28 )   $ (0.31 )   $ (1.13 )
Diluted net income (loss) per share   $ 0.00     $ (0.28 )   $ (0.31 )   $ (1.13 )
                                 
Shares used in computing basic net income (loss) per share     36,319       34,839       35,745       34,559  
Shares used in computing diluted net income (loss) per share     37,379       34,839       35,745       34,559  
                                 
Share-based compensation by category is as follows:                          
                                 
Cost of revenue - product   $ 67     $ 78     $ 384     $ 452  
Cost of revenue - service     213       293       1,238       1,510  
Research and development     364       437       2,132       2,318  
Sales and marketing     299       489       1,675       2,771  
General and administrative     1,072       1,686       6,608       7,498  
Total   $ 2,015     $ 2,983     $ 12,037     $ 14,549  
       
       
Silicon Graphics International Corp.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
       
  June 24,   June 26,
  2016   2015
ASSETS          
Current assets:          
  Cash and cash equivalents $ 92,946   $ 67,191
  Current portion of restricted cash   2,109     2,109
  Accounts receivable, net   85,834     118,219
  Inventories   55,911     82,832
  Current portion of deferred cost of revenue   15,453     12,108
  Prepaid expenses and other current assets   11,698     17,547
    Total current assets   263,951     300,006
Non-current portion of restricted cash   1,360     2,251
Property and equipment, net   40,526     38,480
Goodwill and Intangible assets, net   10,610     11,303
Non-current portion of deferred cost of revenue   11,459     9,648
Other non-current assets   28,223     25,896
           
        Total assets $ 356,129   $ 387,584
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
  Accounts payable $ 55,761   $ 48,677
  Accrued compensation   15,849     17,797
  Short-term debt, net of unamortized debt issuance costs   3,776     3,096
  Current portion of deferred revenue   64,392     96,473
  Other current liabilities   27,605     33,180
    Total current liabilities   167,383     199,223
Long-tem debt, net of unamortized debt issuance costs   60,722     65,581
Non-current portion of deferred revenue   46,619     43,781
Long-term income taxes payable   7,529     8,420
Retirement benefit obligations   10,868     9,330
Other non-current liabilities   7,818     7,871
      Total liabilities   300,939     334,206
           
Stockholders' equity   55,190     53,378
        Total liabilities and stockholders' equity $ 356,129   $ 387,584
                   
                                     
Silicon Graphics International Corp.  
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES  
(In thousands, except per share data)  
(Unaudited)  
                                     
    Three Months Ended  
    June 24, 2016  
    Net           Gross Profit     Operating  
    Income     EPS     Product     Service     Total     Expenses  
GAAP   $ 134     $ 0.00     $ 23,626     $ 13,862     $ 37,488     $ 35,732  
                                                 
  Share-based compensation (1)   2,015       0.05       67       213       280       (1,735 )
  Amortization of acquired intangibles (1)   187       0.01       175       -       175       (12 )
  Severance (2)   163       -       -       123       123       (40 )
  Other non-recurring items (2)   589       0.02       -       9       9       (580 )
Non-GAAP   $ 3,088     $ 0.08     $ 23,868     $ 14,207     $ 38,075     $ 33,365  
                                                 
Gross Margin                                                
  Gross margin on a GAAP basis                     26.4 %     41.5 %     30.5 %        
  Gross margin on a Non-GAAP basis                     26.7 %     42.6 %     31.0 %        
                                                 
Weighted average shares used in computing:                                                
  Basic net income per share             36,319                                  
  Diluted net income per share             37,379                                  
                                                 
                                                 
    Three Months Ended  
    June 26, 2015  
    Net           Gross Profit     Operating  
    Loss     EPS     Product     Service     Total     Expenses  
GAAP   $ (9,612 )   $ (0.28 )   $ 16,262     $ 15,536     $ 31,798     $ 39,328  
                                                 
  Share-based compensation (1)   2,983       0.09       78       293       371       (2,612 )
  Amortization of acquired intangibles (1)   223       0.01       205       -       205       (18 )
  Severance (2)   722       0.02       -       4       4       (718 )
  Other non-recurring items (2)   1,372       0.04       -       121       121       (1,251 )
Non-GAAP   $ (4,312 )   $ (0.12 )   $ 16,545     $ 15,954     $ 32,499     $ 34,729  
                                                 
Gross Margin                                                
  Gross margin on a GAAP basis                     13.7 %     45.3 %     20.8 %        
  Gross margin on a Non-GAAP basis                     13.9 %     46.5 %     21.3 %        
                                                 
Weighted average shares used in computing:                                                
  Basic and diluted net loss per share             34,839                                  
                                                 
                                                 
    Three Months Ended  
    March 25, 2016  
    Net           Gross Profit     Operating  
    Income     EPS     Product     Service     Total     Expenses  
GAAP   $ 739     $ 0.02     $ 22,137     $ 15,631     $ 37,768     $ 32,853  
                                                 
  Share-based compensation (1)   2,948       0.08       110       295       405       (2,543 )
  Amortization of acquired intangibles (1)   191       -       175       -       175       (16 )
  Severance (2)   723       0.02       5       -       5       (718 )
  Other non-recurring items (2)   (3,485 )     (0.09 )     -       (21 )     (21 )     3,442  
Non-GAAP   $ 1,116     $ 0.03     $ 22,427     $ 15,905     $ 38,332     $ 33,018  
                                                 
                                                 
Gross Margin                                                
  Gross margin on a GAAP basis                     23.0 %     43.8 %     28.6 %        
  Gross margin on a Non-GAAP basis                     23.3 %     44.6 %     29.0 %        
                                                 
Weighted average shares used in computing:                                                
  Basic net income per share             35,954                                  
  Diluted net income per share             37,028                                  
                                     
Silicon Graphics International Corp.  
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES  
(In thousands, except per share data)  
(Unaudited)  
                                     
    Year Ended  
    June 24, 2016  
    Net           Gross Profit     Operating  
    (Loss) / Income     EPS     Product     Service     Total     Expenses  
GAAP   $ (11,178 )   $ (0.31 )   $ 85,577     $ 58,968     $ 144,545     $ 145,657  
                                                 
  Share-based compensation (1)   12,037       0.34       384       1,238       1,622       (10,415 )
  Amortization of acquired intangibles (1)   662       0.02       600       -       600       (62 )
  Severance (2)   2,560       0.07       5       246       251       (2,309 )
  Other non-recurring items (2)   (217 )     (0.01 )     -       (1 )     (1 )     194  
Non-GAAP   $ 3,864     $ 0.11     $ 86,566     $ 60,451     $ 147,017     $ 133,065  
                                                 
Gross Margin                                                
  Gross margin on a GAAP basis                     21.7 %     42.7 %     27.1 %        
  Gross margin on a Non-GAAP basis                     21.9 %     43.8 %     27.6 %        
                                                 
Weighted average shares used in computing:                                                
  Basic net loss per share             35,745                                  
  Diluted net income per share             36,445                                  
                                                 
    Year Ended  
    June 26, 2015  
    Net           Gross Profit     Operating  
    Loss     EPS     Product     Service     Total     Expenses  
GAAP   $ (39,145 )   $ (1.13 )   $ 72,522     $ 62,116     $ 134,638     $ 168,727  
                                                 
  Share-based compensation (1)   14,549       0.42       453       1,509       1,962       (12,587 )
  Amortization and impairment of acquired intangibles (1)   1,854       0.06       1,324       -       1,324       (530 )
  Restructuring and severance (2)   6,314       0.18       160       1,456       1,616       (4,698 )
  Other non-recurring items (2)   3,878       0.11       -       199       199       (3,449 )
Non-GAAP   $ (12,550 )   $ (0.36 )   $ 74,459     $ 65,280     $ 139,739     $ 147,463  
                                                 
Gross Margin                                                
  Gross margin on a GAAP basis                     19.3 %     42.8 %     25.8 %        
  Gross margin on a Non-GAAP basis                     19.8 %     45.0 %     26.8 %        
                                                 
Weighted average shares used in computing:                                                
  Basic and diluted net loss per share             34,559                                  
 
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, asset impairments, sale of assets, and other non-recurring items.
 
                 
Silicon Graphics International Corp.  
TRENDED FINANCIAL DATA  
(In thousands)  
(Unaudited)  
                 
  Q4 FY16   Q4 FY15   FY16   FY15  
                         
Revenue                        
  Americas $ 78,391   $ 95,915   $ 295,518   $ 323,785  
  APJ   25,138     31,919     129,973     124,163  
  EMEA   19,185     25,070     107,439     73,311  
    Total revenue $ 122,714   $ 152,904   $ 532,930   $ 521,259  
                         
Revenue                        
  Federal (*) $ 53,134   $ 89,803   $ 231,657   $ 279,906  
  International / Commercial   69,580     63,101     301,273     241,353  
    Total revenue $ 122,714   $ 152,904   $ 532,930   $ 521,259  
                         
Revenue                        
  Product $ 89,326   $ 118,606   $ 394,844   $ 376,294  
  Service   33,388     34,298     138,086     144,965  
    Total revenue $ 122,714   $ 152,904   $ 532,930   $ 521,259  
Cost of revenue                        
  Product $ 65,700   $ 102,344   $ 309,267   $ 303,772  
  Service   19,526     18,762     79,118     82,849  
    Total cost of revenue $ 85,226   $ 121,106   $ 388,385   $ 386,621  
Gross margin by Product and Service                        
  Product Gross Margin   26.4 %   13.7 %   21.7 %   19.3 %
  Service Gross Margin   41.5 %   45.3 %   42.7 %   42.8 %
    Total gross margin   30.5 %   20.8 %   27.1 %   25.8 %
                         
(*) Federal revenue includes U.S. government customers, system integrators, and higher education and research institutions  
   

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