Cray Announces First Quarter Financial Results

April 29, 2014

SEATTLE, Wash., April 29 — Global supercomputer leader Cray Inc. today announced financial results for the first quarter ended March 31, 2014.

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.  Given the nature of the business, the Company’s results can fluctuate dramatically quarter-to-quarter.

Revenue for the quarter was $55.1 million compared to $79.5 million in the prior year period.  The Company reported a net loss for the quarter of $12.9 million, or $0.34 per diluted share, compared to a net loss of $7.6 million, or $0.20 per diluted share in the first quarter of 2013.  Non-GAAP net loss was $17.6 million, or $0.46 per diluted share for the quarter, compared to $8.4 million, or $0.23 per diluted share for the same period last year.

Overall gross profit margin for the first quarter of 2014 was 33% compared to 30% for the first quarter of 2013.  Total non-GAAP gross profit margin for the first quarter of 2014 was 34% compared to 32% for the first quarter of 2013.

Operating expenses for the first quarter were $39.8 million compared to $36.9 million for the prior year period.  Non-GAAP operating expenses for the first quarter were $37.3 million, compared to $35.2 million for the prior year period.

As of March 31, 2014, cash, investments and restricted cash totaled $278.6 million compared to $220.4 million at December 31, 2013.  Working capital at the end of the first quarter was $314.9 million, compared to $334.9 million at December 31, 2013.

“We’re off to a solid start to the year,” said Peter Ungaro, president and CEO of Cray. “We exceeded our revenue target for the first quarter, led by several CS300 supercomputer installations in the U.S. and Japan, and we were recently awarded a significant new contract by the U.S. Department of Energy for a next generation XC supercomputer which is expected to be NERSC’s next flagship system.  Our big data storage and analytics offerings continue to expand, and we were recently awarded our first contract for our latest storage offering called Tiered Adaptive Storage, which enables the transparent management and access of data across a dynamic storage hierarchy.  While we still have a lot of work left to do to achieve our outlook for the year, I am excited about the progress we are making as we continue to target growth at two-times the market rates in our targeted markets.”

For 2014, while a wide range of results remains possible, the Company anticipates revenue to be in the range of $600 million for the year.  Revenue is expected to ramp quarterly during 2014, with about $75 million for the second quarter and somewhat more than 50% of the year weighted to the fourth quarter.  Non-GAAP gross margin for 2014 is anticipated to be in the mid-30% range.  Total non-GAAP operating expenses for the year are anticipated to be about $175 million.  Based on this outlook, the Company expects to be profitable on both a GAAP and non-GAAP basis for 2014.

The Company’s 2014 effective non-GAAP tax rate is expected to be about 10%.

Actual results for any future period are subject to large fluctuations given the nature of Cray’s business.

Recent Highlights

  • In April, the U.S. Department of Energy’s National Energy Research Scientific Computing Center (NERSC) chose a next-generation Cray XC supercomputer for its future system to address a broad range of demanding computational challenges.  The multi-year contract is valued at more than $70 million and the supercomputer and storage solution is expected to be delivered in 2016.
  • In April, Cray was awarded a contract to deliver a Cray Tiered Adaptive Storage (TAS) solution to the North German Supercomputing Alliance (HLRN).  Cray TAS is an open storage and archiving solution for big data and high performance computing environments, and gives HLRN a long-term data management solution for its High Performance Computing Center located in Hannover, Germany.
  • In March, Cray was awarded a contract to provide the Hong Kong Sanatorium & Hospital (HKSH) with a Cray XC30 supercomputer — the first XC30 system in China.  One of the largest private hospitals in Hong Kong, HKSH will use its Cray XC30 system to further medical research in the areas of bioinformatics and next generation sequencing.
  • In March, Cray announced the opening of the Company’s new supercomputer manufacturing facility in Chippewa Falls, Wisconsin.  With the addition of this second facility and recent upgrades to its existing primary manufacturing site, Cray has roughly doubled its manufacturing capacity.
  • Cray’s YarcData division was recently awarded a new contract by an international government customer for its Urika data discovery appliance based on its capability to scale on very large graph applications.
  • In February, Cray was selected as part of a consortium of industry, academia and government organizations to partner with the U.S. federal government in an effort to improve manufacturing capabilities in the U.S.  Cray is a member of the Digital Manufacturing and Design Innovation (DMDI) Institute team that is led by UI Labs and headquartered in Chicago, Illinois.  Other members of the DMDI team include ANSYS, Boeing, General Dynamics, General Electric, Honeywell, Procter & Gamble, Rolls-Royce, Siemens, and The Dow Chemical Company.

Conference Call Information

Cray will host a conference call today, Tuesday, April 29, 2014 at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss its first quarter 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 and enter the access code 32831166. International callers should dial (832) 900-4685.  To listen to the audio webcast, go to the Investors section of the Cray website at http://investors.cray.com.

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 access code 32831166.  The conference call replay will be available for 48 hours, beginning at 4:30 p.m. PDT on Tuesday, April 29, 2014.

About Cray Inc.

Global supercomputing leader Cray Inc. provides innovative systems and solutions enabling scientists and engineers in industry, academia and government to meet existing and future simulation and analytics challenges.  Leveraging 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.

Source: Cray Inc.

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