Global supercomputer leader Cray Inc. (Nasdaq:CRAY) today announced
financial results for the year and fourth quarter ended December
31, 2017.
All figures in this release are based on U.S. GAAP unless
otherwise noted. A reconciliation of GAAP to non-GAAP
measures is included in the financial tables in this press
release.
For 2017, Cray reported total revenue of $392.5 million, which
compares with $629.8 million in 2016. Net loss for 2017 was $133.8
million, or $3.33 per diluted share, compared to net income of
$10.6 million, or $0.26 per diluted share in 2016. Non-GAAP
net loss, which adjusts for selected unusual and non-cash items,
was $40.5 million, or $1.01 per diluted share for 2017, compared to
non-GAAP net income of $19.9 million, or $0.49 per diluted share in
2016.
Revenue for the fourth quarter of 2017 was $166.6 million,
compared to $346.6 million in the fourth quarter of 2016. Net
loss for the fourth quarter of 2017 was $97.5 million, or $2.42 per
diluted share, compared to net income of $51.8 million, or $1.27
per diluted share in the fourth quarter of 2016. Non-GAAP net
income was $9.2 million, or $0.22 per diluted share for the fourth
quarter of 2017, compared to non-GAAP net income of $56.3 million,
or $1.38 per diluted share for the same period in 2016.
The Company’s GAAP Net Loss for the fourth quarter and year
ended December 31, 2017 was significantly impacted by both the
enactment of the Tax Cuts and Jobs Act of 2017 and by its decision
to record a valuation allowance against all of its U.S. deferred
tax assets. The combined GAAP impact totaled $103
million. These items have been excluded for non-GAAP
purposes.
For 2017, overall gross profit margin on a GAAP and non-GAAP
basis was 33% and 34%, respectively, compared to 35% on a GAAP and
non-GAAP basis for 2016.
Operating expenses for 2017 were $196.4 million, compared to
$211.1 million in 2016. Non-GAAP operating expenses for 2017
were $176.5 million, compared to $199.7 million in 2016. GAAP
operating expenses in 2017 included $8.6 million in restructuring
charges associated with our recent workforce reduction.
As of December 31, 2017, cash, investments and restricted cash
totaled $147 million. Working capital at the end of the
fourth quarter was $354 million, compared to $373 million at
December 31, 2016.
“Despite difficult conditions in our core market we finished
2017 strong, highlighted by several large acceptances at multiple
sites around the world, including completing the installation of
what is now the largest supercomputing complex in India at the
Ministry of Earth Sciences,” said Peter Ungaro, president and CEO
of Cray. “As we shift to 2018, we’re seeing signs of a
rebound at the high-end of supercomputing as well as considerable
growth opportunities in the coming years. Supercomputing
continues to expand in importance to both government and commercial
customers, driving growth and competitiveness across many different
disciplines and industries. As the leader at the high-end of
the market, we’re poised to play a key role in this growth and I’m
excited about where we’re headed.”
OutlookFor 2018, while a wide range of results
remains possible, Cray continues to expect revenue to grow in the
range of 10-15% over 2017. Revenue is expected to be about
$50 million for the first quarter of 2018. For 2018, GAAP and
non-GAAP gross margins are expected to be in the low- to mid-30%
range. Non-GAAP operating expenses for 2018 are expected to
be in the range of $190 million. For 2018, non-GAAP
adjustments are expected to total about $14 million, driven
primarily by share-based compensation. For the year, GAAP
operating expenses are anticipated to be about $12 million higher
than non-GAAP operating expenses, and GAAP gross profit is expected
to be about $2 million lower than non-GAAP gross profit.
Based on this outlook, Cray’s effective GAAP and non-GAAP tax
rates for 2018 are both expected to be in the low-single digit
range, on a percentage basis.
Actual results for any future periods are subject to large
fluctuations given the nature of Cray’s business.
Recent Highlights
- In January, Cray announced it had deployed two Cray XC40
supercomputers and two Cray ClusterStor storage systems as part of
a $67 million contract with the Ministry of Earth Sciences in
India. The combined systems are the largest supercomputing
resource in India and were accepted in late 2017.
- In December, Cray announced that it has joined the Big Data
Center at the Department of Energy’s National Energy Research
Scientific Computing Center (NERSC). The collaboration is
representative of Cray’s commitment to leverage its supercomputing
expertise, technologies, and best practices to advance the adoption
of Artificial Intelligence (AI), deep learning, and data-intensive
computing.
- In November, Cray announced that Samsung Electronics Co. Ltd.
has purchased a Cray CS-Storm accelerated cluster supercomputer.
The Samsung Strategy & Innovation Center procured the system
for use in its research into AI and deep learning workloads,
including systems for connected cars and autonomous
technologies.
- In November, Cray announced new high performance computing
storage solutions including Cray View for ClusterStor – providing
customers with dramatically improved job productivity; Cray
ClusterStor L300N – a flash-based acceleration solution; and Cray
DataWarp for the Cray XC50 supercomputer – exponentially reducing
data access time.
- In November, Cray announced the Company is creating an
Arm-based supercomputer with the addition of Cavium ThunderX2
processors to the Cray XC50 supercomputer. Cray customers will have
a complete Arm-based supercomputer that features a full software
environment, including the Cray Linux Environment, the Cray
Programming Environment, and Arm-optimized compilers, libraries,
and tools for running today’s supercomputing workloads.
- In November, Cray announced a comprehensive set of AI products
and programs that will empower customers to learn, start, and scale
their deep learning initiatives. These include the new Cray
Accel AI lab, new Cray Accel AI offerings, a new Cray Urika-XC
analytics software suite, and an AI collaboration agreement with
Intel.
- In December, Cray announced that Catriona Fallon was appointed
to Cray’s board of directors. Fallon is currently the Senior
Vice President, Networks Segment at Itron Inc. and was Chief
Financial Officer before Itron’s acquisition of Silver Springs
Networks in January 2018.
Conference Call InformationCray will host a
conference call today, Thursday, February 15, 2018 at 1:30 p.m. PT
(4:30 p.m. ET) to discuss its year and fourth quarter ended
December 31, 2017 financial results. To access the call,
please dial into the conference at least 10 minutes prior to the
beginning of the call at (855) 894-4205. International callers
should dial (765) 889-6838 and use the conference ID
#56308204. To listen to the audio webcast, go to the
Investors section of the Cray website at
www.cray.com/company/investors.
If you are unable to attend the live conference call, an audio
webcast replay will be available in the Investors section of the
Cray website for 180 days. A telephonic replay of the call
will also be available by dialing (855) 859-2056, international
callers dial (404) 537-3406, and entering the conference ID
#56308204. The conference call replay will be available for
72 hours, beginning at 4:45 p.m. PT on Thursday, February 15,
2018.
Use of Non-GAAP Financial MeasuresThis press
release contains “non-GAAP financial measures” under the rules of
the U.S. Securities and Exchange Commission (“SEC”). A
reconciliation of U.S. generally accepted accounting principles, or
GAAP, to non-GAAP results is included in the financial tables
included in this press release. Management believes that the
non-GAAP financial measures that we have set forth provide
additional insight for analysts and investors and facilitate an
evaluation of Cray’s financial and operational performance that is
consistent with the manner in which management evaluates Cray’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 Cray’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. Non-GAAP financial measures
are not based on a comprehensive set of accounting rules or
principles. This non-GAAP information supplements, and is not
intended to represent a measure of performance in accordance with,
or disclosures required by GAAP. These measures are adjusted
as described in the reconciliation of GAAP to 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. Non-GAAP financial
measures should be considered in addition to, and not as a
substitute for or superior to, financial measures determined in
accordance with GAAP. Investors are advised to carefully
review and consider this non-GAAP information as well as the GAAP
financial results that are disclosed in Cray’s SEC filings.
Additionally, we have not quantitatively reconciled the non-GAAP
guidance measures disclosed under “Outlook” to their corresponding
GAAP measures because we do not provide specific guidance for the
various reconciling items such as share-based compensation,
adjustments to the provision for income taxes, amortization of
intangibles, costs related to acquisitions, purchase accounting
adjustments, and gain on significant asset sales, as certain items
that impact these measures have not occurred, are out of our
control or cannot be reasonably predicted. Accordingly,
reconciliations to the non-GAAP guidance measures are not available
without unreasonable effort. Please note that the unavailable
reconciling items could significantly impact our financial
results.
About Cray Inc.Global supercomputing leader
Cray Inc. (Nasdaq:CRAY) provides innovative systems and solutions
enabling scientists and engineers in industry, academia and
government to meet existing and future simulation and analytics
challenges. Leveraging more than 40 years of experience in
developing and servicing the world’s most advanced supercomputers,
Cray offers a comprehensive portfolio of supercomputers and big
data storage and analytics solutions delivering unrivaled
performance, efficiency and scalability. Cray’s Adaptive
Supercomputing vision is focused on delivering innovative
next-generation products that integrate diverse processing
technologies into a unified architecture, allowing customers to
meet the market’s continued demand for realized performance. Go to
www.cray.com for more information.
Safe Harbor StatementThis press release
contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933, including, but not limited to, statements
related to Cray’s financial guidance and expected operating
results, Cray’s competitive position in the high-end supercomputing
market and the timing of a rebound in that market, Cray’s ability
to grow in the future, and its product development, sales and
delivery plans. These statements involve current expectations,
forecasts of future events and other statements that are not
historical facts. Inaccurate assumptions and estimates as well as
known and unknown risks and uncertainties can affect the accuracy
of forward-looking statements and cause actual results to differ
materially from those anticipated by these forward-looking
statements. Factors that could affect actual future events or
results include, but are not limited to, the risk that Cray does
not achieve the operational or financial results that it expects,
the risk that Cray will not be able to secure orders for Cray
systems to be accepted in the future when or at the levels
expected, the risk that the segments of the high-end of the
supercomputing market that Cray targets do not recover from the
current downturn as early or as completely as expected or at all,
the risk that the systems ordered by customers are not delivered
when expected, do not perform as expected once delivered or have
technical issues that must be corrected before acceptance, the risk
that the acceptance process for delivered systems is not completed,
or customer acceptances are not received, when expected or at all,
the risk that Cray is not able to successfully sell products and
services in the big data, artificial intelligence and commercial
markets as expected or at all, the risk that Cray is not able to
reach new customers through cloud services offerings as expected or
at all, the risk that Cray is not able to expand and penetrate its
addressable market as expected or at all, the risk that the expense
and/or effort to address Cray systems at customer sites that have
issues with third party components or with Cray components,
including issues related to the “Spectre” and “Meltdown” processor
security vulnerabilities, is material, the risk that Cray is not
able to successfully complete its planned product development
efforts in a timely fashion or at all, the risk that government
funding for research and development projects is less than
expected, the risk that new third-party processors and other
components for our systems are not available with the anticipated
performance, timing or pricing, the risk that Cray is not able to
achieve anticipated gross margin or expense levels and such other
risks as identified in Cray’s Annual Report on Form 10-K for the
year ended December 31, 2017, and from time to time in other
reports filed by Cray with the SEC. You should not rely unduly on
these forward-looking statements, which apply only as of the date
of this release. Cray undertakes no duty to publicly announce or
report revisions to these statements as new information becomes
available that may change Cray’s expectations.
CRAY, the stylized CRAY mark and Urika are registered trademarks
of Cray Inc. in the United States and other countries, and
ClusterStor, CS-Storm, DataWarp and the XC family of supercomputers
are trademarks of Cray Inc.
|
CRAY INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited and in
thousands, except per share data) |
|
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue: |
|
|
|
|
|
|
|
|
Product |
|
$ |
132,256 |
|
|
$ |
311,408 |
|
|
$ |
250,195 |
|
|
$ |
499,432 |
|
Service |
|
34,387 |
|
|
35,166 |
|
|
142,314 |
|
|
130,377 |
|
Total
revenue |
|
166,643 |
|
|
346,574 |
|
|
392,509 |
|
|
629,809 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Cost of
product revenue |
|
99,474 |
|
|
206,827 |
|
|
188,830 |
|
|
332,016 |
|
Cost of
service revenue |
|
17,109 |
|
|
19,256 |
|
|
72,975 |
|
|
77,578 |
|
Total
cost of revenue |
|
116,583 |
|
|
226,083 |
|
|
261,805 |
|
|
409,594 |
|
Gross
profit |
|
50,060 |
|
|
120,491 |
|
|
130,704 |
|
|
220,215 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Research
and development, net |
|
22,186 |
|
|
29,807 |
|
|
98,777 |
|
|
112,130 |
|
Sales and
marketing |
|
16,602 |
|
|
18,502 |
|
|
59,894 |
|
|
64,893 |
|
General
and administrative |
|
6,089 |
|
|
9,728 |
|
|
29,113 |
|
|
34,053 |
|
Restructuring |
|
915 |
|
|
— |
|
|
8,568 |
|
|
— |
|
Total
operating expenses |
|
45,792 |
|
|
58,037 |
|
|
196,352 |
|
|
211,076 |
|
Income
(loss) from operations |
|
4,268 |
|
|
62,454 |
|
|
(65,648 |
) |
|
9,139 |
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
|
(356 |
) |
|
(196 |
) |
|
5,002 |
|
|
(1,365 |
) |
Interest income,
net |
|
621 |
|
|
493 |
|
|
3,276 |
|
|
2,147 |
|
Gain on strategic
transaction |
|
91 |
|
|
— |
|
|
4,480 |
|
|
— |
|
Income
(loss) before income taxes |
|
4,624 |
|
|
62,751 |
|
|
(52,890 |
) |
|
9,921 |
|
Income tax benefit
(expense) |
|
(102,166 |
) |
|
(10,976 |
) |
|
(80,939 |
) |
|
694 |
|
Net
income (loss) |
|
$ |
(97,542 |
) |
|
$ |
51,775 |
|
|
$ |
(133,829 |
) |
|
$ |
10,615 |
|
|
|
|
|
|
|
|
|
|
Basic net
income (loss) per common share |
|
$ |
(2.42 |
) |
|
$ |
1.30 |
|
|
$ |
(3.33 |
) |
|
$ |
0.27 |
|
Diluted
net income (loss) per common share |
|
$ |
(2.42 |
) |
|
$ |
1.27 |
|
|
$ |
(3.33 |
) |
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding |
|
40,309 |
|
|
39,974 |
|
|
40,139 |
|
|
39,833 |
|
Diluted
weighted average shares outstanding |
|
40,309 |
|
|
40,816 |
|
|
40,139 |
|
|
41,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRAY INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited and in thousands, except share
amounts) |
|
|
December 31, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
137,326 |
|
|
$ |
222,962 |
|
Restricted cash |
1,964 |
|
|
— |
|
Short-term investments |
6,997 |
|
|
— |
|
Accounts
and other receivables, net |
162,034 |
|
|
197,941 |
|
Inventory |
186,307 |
|
|
88,254 |
|
Prepaid
expenses and other current assets |
25,015 |
|
|
20,006 |
|
Total
current assets |
519,643 |
|
|
529,163 |
|
|
|
|
|
Long-term restricted
cash |
1,030 |
|
|
1,655 |
|
Long-term investment in
sales-type lease, net |
23,367 |
|
|
31,050 |
|
Property and equipment,
net |
36,623 |
|
|
30,620 |
|
Service spares,
net |
2,551 |
|
|
3,023 |
|
Goodwill |
14,182 |
|
|
14,182 |
|
Intangible assets other
than goodwill, net |
4,345 |
|
|
1,637 |
|
Deferred tax
assets |
1,106 |
|
|
85,613 |
|
Other non-current
assets |
15,910 |
|
|
17,629 |
|
TOTAL
ASSETS |
$ |
618,757 |
|
|
$ |
714,572 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
57,207 |
|
|
$ |
45,504 |
|
Accrued
payroll and related expenses |
18,546 |
|
|
17,199 |
|
Other
accrued liabilities |
9,471 |
|
|
10,303 |
|
Deferred
revenue |
80,119 |
|
|
83,129 |
|
Total
current liabilities |
165,343 |
|
|
156,135 |
|
|
|
|
|
Long-term deferred
revenue |
38,622 |
|
|
27,258 |
|
Other non-current
liabilities |
14,495 |
|
|
5,703 |
|
TOTAL
LIABILITIES |
218,460 |
|
|
189,096 |
|
|
|
|
|
Shareholders’
equity: |
|
|
|
Preferred
stock — Authorized and undesignated, 5,000,000 shares; no shares
issued or outstanding |
— |
|
|
— |
|
Common
stock and additional paid-in capital, par value $.01 per share —
Authorized, 75,000,000 shares; issued and outstanding 40,464,963
and 40,757,458 shares, respectively |
633,408 |
|
|
622,604 |
|
Accumulated other comprehensive income |
915 |
|
|
2,782 |
|
Accumulated deficit |
(234,026 |
) |
|
(99,910 |
) |
TOTAL
SHAREHOLDERS’ EQUITY |
400,297 |
|
|
525,476 |
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
618,757 |
|
|
$ |
714,572 |
|
|
|
|
|
|
|
|
|
CRAY INC. AND SUBSIDIARIES |
|
Reconciliation of Selected U.S. GAAP Measures
to non-GAAP Measures(Unaudited; in millions, except
EPS) |
|
|
|
Three Months Ended December 31,
2017 |
|
|
Net Income (Loss) |
|
Diluted EPS |
|
Operating Income |
|
Gross Profit |
|
Operating Expenses |
GAAP |
|
$ |
(97.5 |
) |
|
$ |
(2.42 |
) |
|
$ |
4.3 |
|
|
$ |
50.1 |
|
|
$ |
45.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation |
(1 |
) |
3.2 |
|
|
|
|
3.2 |
|
|
0.2 |
|
|
3.0 |
|
Amortization of
acquired and other intangibles |
(2 |
) |
0.3 |
|
|
|
|
0.3 |
|
|
0.2 |
|
|
0.1 |
|
Restructuring |
(3 |
) |
0.9 |
|
|
|
|
0.9 |
|
|
|
|
0.9 |
|
Gain on strategic
transaction |
(4 |
) |
(0.1 |
) |
|
|
|
|
|
|
|
|
Income tax on
reconciling items |
(5 |
) |
(1.2 |
) |
|
|
|
|
|
|
|
|
Other items impacting
tax provision |
(6 |
) |
103.6 |
|
|
|
|
|
|
|
|
|
Total reconciling
items |
|
106.7 |
|
|
2.64 |
|
|
4.4 |
|
|
0.4 |
|
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
9.2 |
|
|
$ |
0.22 |
|
|
$ |
8.7 |
|
|
$ |
50.5 |
|
|
$ |
41.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
2016 |
|
|
Net Income |
|
Diluted EPS |
|
Operating Income |
|
Gross Profit |
|
Operating Expenses |
GAAP |
|
$ |
51.8 |
|
|
$ |
1.27 |
|
|
$ |
62.5 |
|
|
$ |
120.5 |
|
|
$ |
58.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation |
(1 |
) |
2.8 |
|
|
|
|
2.8 |
|
|
0.1 |
|
|
2.7 |
|
Amortization of
acquired and other intangibles |
(2 |
) |
0.2 |
|
|
|
|
0.2 |
|
|
|
|
0.2 |
|
Income tax on
reconciling items |
(5 |
) |
(1.1 |
) |
|
|
|
|
|
|
|
|
Other items impacting
tax provision |
(6 |
) |
2.6 |
|
|
|
|
|
|
|
|
|
Total reconciling
items |
|
4.5 |
|
|
0.11 |
|
|
3.0 |
|
|
0.1 |
|
|
2.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
56.3 |
|
|
$ |
1.38 |
|
|
$ |
65.5 |
|
|
$ |
120.6 |
|
|
$ |
55.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
(1)
Adjustments to exclude non-cash expenses related to share-based
compensation |
(2)
Adjustments to exclude amortization of acquired intangible and
other intangible assets |
(3)
Adjustments to exclude restructuring costs |
(4)
Adjustments to exclude gain on strategic transaction with
Seagate |
(5)
Adjustments associated with the estimated tax impact on non-GAAP
reconciling items at our marginal U.S. tax rate of approximately
35% |
(6) As
part of an alternative non-GAAP income measure, we have adjusted
GAAP taxes as reported including the impact to the GAAP tax
provision of the non-GAAP reconciling items (adjusted for note (5)
above), related to the utilization or increase of our net operating
loss carryforwards. And when applicable, we also adjust for changes
in our valuation allowance held against deferred tax assets and any
applicable change in tax law, including the Tax Cuts and Jobs Act
of 2017. |
CRAY INC. AND SUBSIDIARIES |
Reconciliation of Selected U.S. GAAP Measures
to non-GAAP Measures(Unaudited; in millions, except
EPS) |
|
|
|
Year Ended December 31, 2017 |
|
|
Net Loss |
|
Diluted EPS |
|
Operating Loss |
|
Gross Profit |
|
Operating Expenses |
GAAP |
|
$ |
(133.8 |
) |
|
$ |
(3.33 |
) |
|
$ |
(65.6 |
) |
|
$ |
130.7 |
|
|
$ |
196.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation |
(1 |
) |
10.9 |
|
|
|
|
10.9 |
|
|
0.6 |
|
|
10.3 |
|
Amortization of
acquired and other intangibles |
(2 |
) |
0.7 |
|
|
|
|
0.7 |
|
|
0.2 |
|
|
0.5 |
|
Restructuring |
(3 |
) |
8.6 |
|
|
|
|
8.6 |
|
|
|
|
8.6 |
|
Strategic
transaction-related costs |
(4 |
) |
0.5 |
|
|
|
|
0.5 |
|
|
|
|
0.5 |
|
Gain on strategic
transaction |
(5 |
) |
(4.5 |
) |
|
|
|
|
|
|
|
|
Gain on sale of
investment |
(6 |
) |
(3.3 |
) |
|
|
|
|
|
|
|
|
Income tax on
reconciling items |
(7 |
) |
(6.1 |
) |
|
|
|
|
|
|
|
|
Other items impacting
tax provision |
(8 |
) |
86.5 |
|
|
|
|
|
|
|
|
|
Total reconciling
items |
|
93.3 |
|
|
2.32 |
|
|
20.7 |
|
|
0.8 |
|
|
19.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
(40.5 |
) |
|
$ |
(1.01 |
) |
|
$ |
(44.9 |
) |
|
$ |
131.5 |
|
|
$ |
176.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016 |
|
|
Net Income |
|
Diluted EPS |
|
Operating Income |
|
Gross Profit |
|
Operating Expenses |
GAAP |
|
$ |
10.6 |
|
|
$ |
0.26 |
|
|
$ |
9.1 |
|
|
$ |
220.2 |
|
|
$ |
211.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation |
(1 |
) |
11.2 |
|
|
|
|
11.2 |
|
|
0.5 |
|
|
10.7 |
|
Purchase accounting
adjustments |
(2 |
) |
0.1 |
|
|
|
|
0.1 |
|
|
0.1 |
|
|
|
Amortization of
acquired and other intangibles |
(2 |
) |
0.7 |
|
|
|
|
0.7 |
|
|
|
|
0.7 |
|
Income tax on
reconciling items |
(7 |
) |
(4.6 |
) |
|
|
|
|
|
|
|
|
Other items impacting
tax provision |
(8 |
) |
1.9 |
|
|
|
|
|
|
|
|
|
Total reconciling
items |
|
9.3 |
|
|
0.23 |
|
|
12.0 |
|
|
0.6 |
|
|
11.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
19.9 |
|
|
$ |
0.49 |
|
|
$ |
21.1 |
|
|
$ |
220.8 |
|
|
$ |
199.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
(1)
Adjustments to exclude non-cash expenses related to share-based
compensation |
(2)
Adjustments to exclude amortization of acquired intangible and
other intangible assets and other acquisition-related charges |
(3)
Adjustments to exclude restructuring costs |
(4)
Adjustments to exclude strategic transaction-related costs |
(5)
Adjustments to exclude gain on strategic transaction with
Seagate |
(6)
Adjustments to exclude gain on sale of investment |
(7)
Adjustments associated with the estimated tax impact on non-GAAP
reconciling items at our marginal U.S. tax rate of approximately
35% |
(8) As
part of an alternative non-GAAP income measure, we have adjusted
GAAP taxes as reported including the impact to the GAAP tax
provision of the non-GAAP reconciling items (adjusted for note (7)
above), related to the utilization or increase of our net operating
loss carryforwards. And when applicable, we also adjust for changes
in our valuation allowance held against deferred tax assets and any
applicable change in tax law, including the Tax Cuts and Jobs Act
of 2017. |
CRAY INC. AND SUBSIDIARIES |
Reconciliation of Selected U.S. GAAP Measures
to non-GAAP Measures(Unaudited; in millions, except
percentages) |
|
|
|
Three Months Ended December 31,
2017 |
|
|
Product |
|
Service |
|
Total |
|
|
Gross Profit |
|
Gross Margin |
|
Gross Profit |
|
Gross Margin |
|
Gross Profit |
|
Gross Margin |
GAAP |
|
$ |
32.8 |
|
|
25 |
% |
|
$ |
17.3 |
|
|
50 |
% |
|
$ |
50.1 |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation |
(1 |
) |
0.1 |
|
|
|
|
|
0.1 |
|
|
|
|
|
0.2 |
|
|
|
|
Amortization of
acquired and other intangibles |
(2 |
) |
0.2 |
|
|
|
|
|
— |
|
|
|
|
|
0.2 |
|
|
|
|
Total reconciling
items |
|
0.3 |
|
|
— |
% |
|
0.1 |
|
|
1 |
% |
|
0.4 |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
33.1 |
|
|
25 |
% |
|
$ |
17.4 |
|
|
51 |
% |
|
$ |
50.5 |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
2016 |
|
|
Product |
|
Service |
|
Total |
|
|
Gross Profit |
|
Gross Margin |
|
Gross Profit |
|
Gross Margin |
|
Gross Profit |
|
Gross Margin |
GAAP |
|
$ |
104.6 |
|
|
34 |
% |
|
$ |
15.9 |
|
|
45 |
% |
|
$ |
120.5 |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation |
(1 |
) |
0.1 |
|
|
|
|
|
— |
|
|
|
|
|
0.1 |
|
|
|
|
Total reconciling
items |
|
0.1 |
|
|
— |
% |
|
— |
|
|
— |
% |
|
0.1 |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
104.7 |
|
|
34 |
% |
|
$ |
15.9 |
|
|
45 |
% |
|
$ |
120.6 |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjustments to exclude non-cash expenses related to share-based
compensation |
(2)
Adjustments to exclude amortization of acquired intangible and
other intangible assets |
CRAY INC. AND SUBSIDIARIES |
Reconciliation of Selected U.S. GAAP Measures
to non-GAAP Measures(Unaudited; in millions, except
percentages) |
|
|
|
Year Ended December 31, 2017 |
|
|
Product |
|
Service |
|
Total |
|
|
Gross Profit |
|
Gross Margin |
|
Gross Profit |
|
Gross Margin |
|
Gross Profit |
|
Gross Margin |
GAAP |
|
$ |
61.4 |
|
|
25 |
% |
|
$ |
69.3 |
|
|
49 |
% |
|
$ |
130.7 |
|
|
33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation |
(1 |
) |
0.3 |
|
|
|
|
|
0.3 |
|
|
|
|
|
0.6 |
|
|
|
|
Amortization of
acquired and other intangibles |
(2 |
) |
0.2 |
|
|
|
|
|
— |
|
|
|
|
|
0.2 |
|
|
|
|
Total reconciling
items |
|
0.5 |
|
|
— |
% |
|
0.3 |
|
|
— |
% |
|
0.8 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
61.9 |
|
|
25 |
% |
|
$ |
69.6 |
|
|
49 |
% |
|
$ |
131.5 |
|
|
34 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016 |
|
|
Product |
|
Service |
|
Total |
|
|
Gross Profit |
|
Gross Margin |
|
Gross Profit |
|
Gross Margin |
|
Gross Profit |
|
Gross Margin |
GAAP |
|
$ |
167.4 |
|
|
34 |
% |
|
$ |
52.8 |
|
|
40 |
% |
|
$ |
220.2 |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation |
(1 |
) |
0.3 |
|
|
|
|
|
0.2 |
|
|
|
|
|
0.5 |
|
|
|
|
Purchase accounting
adjustments |
(2 |
) |
0.1 |
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
|
Total reconciling
items |
|
0.4 |
|
|
— |
% |
|
0.2 |
|
|
1 |
% |
|
0.6 |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
$ |
167.8 |
|
|
34 |
% |
|
$ |
53.0 |
|
|
41 |
% |
|
$ |
220.8 |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjustments to exclude non-cash expenses related to share-based
compensation |
(2)
Adjustments to exclude amortization of acquired intangible and
other intangible assets and other acquisition-related charges |
CRAY INC. AND SUBSIDIARIES |
Reconciliation of GAAP to non-GAAP Net Income
(Loss)(Unaudited; in millions except per share amounts and
percentages) |
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
GAAP Net Income
(Loss) |
|
$ |
(97.5 |
) |
|
$ |
51.8 |
|
|
$ |
(133.8 |
) |
|
$ |
10.6 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
impacting gross profit: |
|
|
|
|
|
|
|
|
Share-based compensation |
(1 |
) |
0.2 |
|
|
0.1 |
|
|
0.6 |
|
|
0.5 |
|
Amortization of acquired and other intangibles |
(2 |
) |
0.2 |
|
|
— |
|
|
0.2 |
|
|
— |
|
Purchase
accounting adjustments |
(2 |
) |
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
Total adjustments
impacting gross profit |
|
0.4 |
|
|
0.1 |
|
|
0.8 |
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross margin
percentage |
|
30 |
% |
|
35 |
% |
|
34 |
% |
|
35 |
% |
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
impacting operating expenses: |
|
|
|
|
|
|
|
|
Share-based compensation |
(1 |
) |
3.0 |
|
|
2.7 |
|
|
10.3 |
|
|
10.7 |
|
Amortization of acquired and other intangibles |
(2 |
) |
0.1 |
|
|
0.2 |
|
|
0.5 |
|
|
0.7 |
|
Restructuring |
(3 |
) |
0.9 |
|
|
— |
|
|
8.6 |
|
|
— |
|
Strategic
transaction-related costs |
(4 |
) |
— |
|
|
— |
|
|
0.5 |
|
|
— |
|
Total adjustments
impacting operating expenses |
|
4.0 |
|
|
2.9 |
|
|
19.9 |
|
|
11.4 |
|
|
|
|
|
|
|
|
|
|
Gain on strategic
transaction |
(5 |
) |
(0.1 |
) |
|
— |
|
|
(4.5 |
) |
|
— |
|
Gain on sale of
investment |
(6 |
) |
— |
|
|
— |
|
|
(3.3 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments
impacting tax provision: |
|
|
|
|
|
|
|
|
Income
tax on reconciling items |
(7 |
) |
(1.2 |
) |
|
(1.1 |
) |
|
(6.1 |
) |
|
(4.6 |
) |
Other
items impacting tax provision |
(8 |
) |
103.6 |
|
|
2.6 |
|
|
86.5 |
|
|
1.9 |
|
|
|
102.4 |
|
|
1.5 |
|
|
80.4 |
|
|
(2.7 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income
(Loss) |
|
$ |
9.2 |
|
|
$ |
56.3 |
|
|
$ |
(40.5 |
) |
|
$ |
19.9 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Diluted Net
Income (Loss) per common share |
|
$ |
0.22 |
|
|
$ |
1.38 |
|
|
$ |
(1.01 |
) |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares |
(9 |
) |
41.3 |
|
|
40.8 |
|
|
40.1 |
|
|
41.0 |
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
(1)
Adjustments to exclude non-cash expenses related to share-based
compensation |
(2)
Adjustments to exclude amortization of acquired intangible and
other intangible assets and other acquisition-related charges |
(3)
Adjustments to exclude restructuring costs |
(4)
Adjustments to exclude strategic transaction-related costs |
(5)
Adjustments to exclude gain on strategic transaction with
Seagate |
(6)
Adjustments to exclude gain on sale of investment |
(7)
Adjustments associated with the estimated tax impact on non-GAAP
reconciling items at our marginal U.S. tax rate of approximately
35% |
(8) As
part of an alternative non-GAAP income measure, we have adjusted
GAAP taxes as reported including the impact to the GAAP tax
provision of the non-GAAP reconciling items (adjusted for note (7)
above), related to the utilization or increase of our net operating
loss carryforwards. And when applicable, we also adjust for changes
in our valuation allowance held against deferred tax assets and any
applicable change in tax law, including the Tax Cuts and Jobs Act
of 2017. |
(9) Cray
recorded a GAAP net loss for the three months ended December 31,
2017 and non-GAAP net income for the same period. As such, the
diluted weighted average shares number on the Reconciliation of
GAAP to non-GAAP Net Income (Loss) differs from the amount on
Cray’s Condensed Consolidated Statement of Operations by the
weighted average number of potential common shares outstanding,
including the additional dilution related to conversion of stock
options, unvested restricted stock and unvested restricted stock
units as computed under the treasury stock method |
|
|
Cray Media: |
Investors: |
Nick Davis |
Paul Hiemstra |
206/701-2123 |
206/701-2044 |
pr@cray.com |
ir@cray.com |
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