STEC, Inc. : STEC Announces First Quarter 2012 Results
05/08/2012| 05:26pm US/Eastern
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SANTA ANA, Calif., May 8, 2012 (GLOBE NEWSWIRE) -- STEC, Inc.
(Nasdaq:STEC), The SSD Company™, announced today the
Company's financial results for the first quarter ended
March 31, 2012.
Revenue for the first quarter of 2012 was $50.4 million, a
decrease of 46.9% from $94.9 million for the first quarter of
2011 and a decrease of 13.3% from $58.1 million for the
fourth quarter of 2011.
GAAP gross profit margin was 35.9% for the first quarter of
2012, compared to 42.4% for the first quarter of 2011 and
41.1% for the fourth quarter of 2011. GAAP diluted loss per
share was $0.23 for the first quarter of 2012, compared to
diluted earnings per share of $0.27 for the first quarter of
2011 and a diluted loss per share of $0.08 for the fourth
quarter of 2011.
Non-GAAP gross profit margin was 36.4% for the first quarter
of 2012, compared to 42.5% for the first quarter of 2011 and
41.5% for the fourth quarter of 2011. Non-GAAP diluted loss
per share was $0.17 for the first quarter of 2012, compared
to diluted earnings per share of $0.32 for the first quarter
of 2011 and a diluted loss per share of $0.02 for the fourth
quarter of 2011.
A reconciliation of GAAP to non-GAAP results is provided in
the tables included in this release.
Business Outlook
"We continue to qualify our products at both existing
and emerging customers," said Manouch Moshayedi,
STEC's Chairman and Chief Executive Officer. "We
remain encouraged by the increase in overall market activity
for enterprise SSDs and are making significant strides with
the fourth-generation of our ZeusIOPS® SSD, and our MACH16™
SSD, PCIe SSD, and EnhanceIO™ caching software.
"In the face of a growing and competitive market, we are
confident in these solutions and in our abilities to innovate
to meet our customers' needs. Although we have
experienced longer-than-expected qualification cycles due to
the complexity and customization of our products, we
anticipate a few customers will qualify some of our products
in this quarter, with several others expected to be completed
in the third quarter of 2012. However, until qualifications
are completed, we cannot accurately project the sales of
these products. That said, we believe that the revenue level
in the second quarter of 2012 represents a trough period for
us. We also believe that our technologies and the products
that are built on those technologies will drive future
revenue growth."
Guidance
STEC's current expectation for the second quarter of 2012
is as follows:
Revenue to range from $40 million to $42 million.
Non-GAAP diluted loss per share to range from $0.26 to
$0.28.
STEC's projected non-GAAP loss per share results exclude
employee stock compensation expense and other items that the
Company does not consider indicative of its underlying
business performance.
Conference Call
Webcast
This call will be webcast. The webcast can be accessed by
clicking on the red "Investors" tab at the top of
the home page at http://www.stec-inc.com/. Then
click on the "Audio Presentations" button.
Replay
The webcast will also be archived and available for replay
beginning approximately two hours after the live call
concludes.
About STEC, Inc. (Nasdaq:STEC)
STEC, Inc., The SSD Company™, is a leading global provider of
solid-state drive (SSD) technologies and solutions tailored
to meet the high-performance, high-reliability needs of
original equipment manufacturers (OEMs). With headquarters in
Santa Ana, California and locations worldwide, STEC leverages
almost two decades of solid-state knowledge and experience to
deliver the most comprehensive line of SSDs to the storage
industry.
For information about STEC and to subscribe to the
Company's "Email Alerts" service, please visit
STEC's web site at www.stec-inc.com, click on the
red "Investors" tab at the top of the home page and
then click "Email Alerts."
STEC, the STEC logo, The SSD Company, ZeusIOPS, MACH16, and
EnhanceIO are either registered trademarks or trademarks of
STEC, Inc. in the United States and certain other
countries. All other trademarks or brand names referred
to herein are the property of their respective owners.
Use of Non-GAAP Financial Information To supplement the
consolidated financial results prepared in accordance with
Generally Accepted Accounting Principles ("GAAP"),
STEC uses non-GAAP financial measures (non-GAAP gross profit,
non-GAAP gross profit percentage, non-GAAP operating
expenses, non-GAAP operating (loss) income, non-GAAP (loss)
income and non-GAAP diluted (loss) earnings per share) that
exclude employee stock compensation, employee severance,
securities litigation and SEC investigation costs, and
intellectual property litigation costs. Management excludes
these items because it believes that the non-GAAP measures
enhance an investor's overall understanding of STEC's
financial performance and future prospects by being more
reflective of the Company's core, recurring operational
activities and to be more comparable with the results of the
Company over various periods. Management uses non-GAAP
financial measures internally for strategic decision making,
forecasting future results and evaluating current
performance. Guidance is provided only on a non-GAAP basis
due to the inherent difficulty of forecasting the timing or
amount of such items. Difficulties in forecasting the
non-GAAP items include the timing of issuing employee stock
compensation, which could impact the valuation and related
expense, and the timing of employee severance payments. These
items could be materially significant to the
Company's GAAP results in any period. By disclosing
non-GAAP financial measures, management intends to provide
investors with a more meaningful, consistent comparison of
the Company's core operating results and trends for the
periods presented. Non-GAAP financial measures are not
prepared in accordance with GAAP; therefore, the information
is not necessarily comparable to other companies'
financial information and should be considered as a
supplement to, not a substitute for, or superior to, the
corresponding measures calculated in accordance with GAAP. A
complete reconciliation between GAAP and non-GAAP information
referred to in this release is provided in tables included in
this release. Certain amounts reported in prior releases may
have been reclassified to conform to the current
quarter's non-GAAP presentation.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 This release contains forward-looking
statements that involve risks and uncertainties, including,
but not limited to, statements concerning growing acceptance,
adoption and qualification of SSDs within the Enterprise
Storage and Server markets; the qualification of STEC's
fourth generation ZeusIOPS SSD, MACH16 SSD, PCIe SSD,
EnhanceIO caching software, and other developing
technologies; the qualification of STEC's products and
solutions into emerging customers; STEC's key product
line initiatives and development; the transition from one
product generation to the next; the length of qualification
cycles; the capabilities, performance, cost advantages, and
benefits of STEC's products and solutions; the rapidly
evolving Enterprise Storage and Server markets; expected
second quarter of 2012 revenue and loss per share; and
anticipated second half of 2012 growth. Such
forward-looking statements are based on current expectations
and involve inherent risks and uncertainties, including
factors that could delay, divert or change any of them, and
could cause actual outcomes and results to differ materially
from current expectations. Although STEC believes that the
forward-looking statements contained in this release are
reasonable, it can give no assurance that its expectations
will be fulfilled. Important factors which could cause actual
results to differ materially from those expressed or implied
in the forward-looking statements are detailed in filings
with the Securities and Exchange Commission made from time to
time by STEC, including its Annual Report on Form 10-K, its
Quarterly Reports on Form 10-Q, and its Current Reports on
Form 8-K. Special attention is directed to the portions of
those documents entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial
Condition and Results of Operations." The
information contained in this press release is a statement of
STEC's present intention, belief or expectation. STEC may
change its intention, belief, or expectation, at any time and
without notice, based upon any changes in such factors, in
STEC's assumptions or otherwise. STEC undertakes no
obligation to release publicly any revisions to any
forward-looking statements to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence
of unanticipated events.
STEC, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
March 31, 2012
December 31, 2011
ASSETS:
Current Assets:
Cash and cash equivalents
$ 205,746
$ 180,853
Accounts receivable, net of allowances of $3,079 at March
31, 2012 and $3,010 at December 31, 2011
21,379
30,475
Inventory
37,453
58,629
Other current assets
9,516
8,967
Total current assets
274,094
278,924
Leasehold interest in land
2,538
2,549
Property, plant and equipment, net
34,806
34,287
Goodwill
1,682
1,682
Long-term intangible assets
5,904
6,185
Deferred income taxes
13,614
12,137
Other long-term assets
818
818
Total assets
$ 333,456
$ 336,582
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable
$ 8,634
$ 6,837
Accrued and other liabilities
15,530
14,309
Total current liabilities
24,164
21,146
Other long-term payables
5,445
5,083
Commitments and contingencies
--
--
Shareholders' Equity:
Preferred stock, $0.001 par value, 20,000 shares
authorized, no shares issued and outstanding
--
--
Common stock, $0.001 par value, 100,000 shares
authorized, 46,198 shares issued and outstanding as of
March 31, 2012 and 46,110 shares issued and outstanding
as of December 31, 2011
46
46
Additional paid-in capital
136,394
132,211
Retained earnings
167,407
178,096
Total shareholders' equity
303,847
310,353
Total liabilities and shareholders' equity
$ 333,456
$ 336,582
STEC, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(in thousands, except per share amounts)
Quarter Ended March 31,
2012
2011
Net revenues
$ 50,415
$ 94,944
Cost of revenues
32,323
54,671
Gross profit
18,092
40,273
Sales and marketing
6,656
5,666
General and administrative
9,214
7,409
Research and development
16,103
12,000
Total operating expenses
31,973
25,075
Operating (loss) income
(13,881)
15,198
Other income (expense)
231
(47)
(Loss) income from operations before income taxes
(13,650)
15,151
(Benefit) provision for income taxes
(2,961)
1,003
Net (loss) income
(10,689)
14,148
Other comprehensive (loss) income
--
--
Comprehensive (loss) income
$ (10,689)
$ 14,148
Net (loss) income per share:
Basic
$ (0.23)
$ 0.28
Diluted
$ (0.23)
$ 0.27
Shares used in per share computation:
Basic
46,140
51,225
Diluted
46,140
52,691
STEC, INC.
Non-GAAP Reconciliations
The non-GAAP financial measures included in the following
tables are non-GAAP gross profit, non-GAAP gross profit
percentage, non-GAAP operating expenses, non-GAAP operating
(loss) income, non-GAAP operating margin percentage, non-GAAP
(loss) income and non-GAAP diluted (loss) earnings per share,
which adjust for the following items: (a) employee stock
compensation expense, (b) employee severance, (c) securities
litigation and SEC investigation costs and (d) intellectual
property litigation costs. Management believes these non-GAAP
financial measures enhance an investor's overall
understanding of the Company's financial performance and
future prospects by being more reflective of the
Company's core, recurring operational activities and are
more comparable with the results of the Company over various
periods. Management uses non-GAAP financial measures
internally for strategic decision making, forecasting future
results and evaluating current performance. Non-GAAP
financial measures are not prepared in accordance with GAAP;
therefore, the information is not necessarily comparable to
other companies' financial information and should be
considered as a supplement to, not a substitute for, or
superior to, the corresponding measures calculated in
accordance with GAAP.
Details of the items excluded from GAAP financial results in
calculating non-GAAP financial measures and explanatory
footnotes are as follows:
a) Employee stock compensation
costs incurred in connection with Accounting Standards
Codification 718, "Compensation -- Stock
Compensation," have been excluded as management omits
these expenses when evaluating its core operating activities,
for strategic decision making, forecasting future results and
evaluating current performance.
b) Employee severance relates
to one-time costs incurred in conjunction with the
termination of certain employees. As an accommodation,
the Company provides compensation in the form of severance to
certain employees subject to termination without
cause. Management believes that excluding severance
costs from operating results provides investors with a better
means for measuring current Company performance.
c) In the fourth quarter of
2009 and first quarter of 2010, certain class action
securities and shareholder derivative actions were filed
against the Company and certain officers and directors of the
Company. In addition, the SEC is conducting a formal
investigation involving the trading in the Company's
securities. Under the Company's Directors and
Officers insurance policies, certain legal fees related to
these matters are not reimbursable. Management believes
these legal fees that are not eligible for insurance
reimbursement should be excluded when evaluating core
operations.
d) On September 7, 2011, Solid
State Storage Solutions, Inc. filed a patent infringement
suit against the Company and several other
defendants. According to the complaint, the patents
relate to solid-state drives employing a controller chip and
a plurality of NAND flash devices. The Company believes
the lawsuit is without merit and intends to vigorously defend
itself. Management believes that legal fees and expenses
incurred in conjunction with this lawsuit should be excluded
when evaluating core operations and current performance.
e) The amount represents the
estimated income tax effect of the non-GAAP
adjustments. Starting in the second quarter of 2011, the
Company calculated the tax effect of non-GAAP adjustments by
applying an applicable estimated jurisdictional tax rate to
each specific non-GAAP item. Prior to the second quarter
of 2011, the Company utilized the consolidated effective tax
rate to estimate the tax effect of non-GAAP adjustments.
STEC, INC.
Schedule Reconciling GAAP (Loss) Income to Non-GAAP
(Loss) Income
($ in thousands, except per share amounts)
(unaudited)
For the Quarters Ended
March 31,
March 31,
December 31,
2012
2011
2011
GAAP net (loss) income
$ (10,689)
$ 14,148
$ (3,586)
The non-GAAP amounts have been adjusted to exclude the
following items:
Excluded from cost of sales:
Employee stock compensation (a)
$ 221
$ 99
$ 232
Employee severance (b)
52
--
--
273
99
232
Excluded from operating expenses:
Employee stock compensation (a)
3,440
2,672
3,596
Employee severance (b)
275
--
--
Securities litigation and SEC investigation costs (c)
204
--
191
IP litigation costs (d)
115
--
132
4,034
2,672
3,919
Total non-GAAP adjustments before income tax
4,307
2,771
4,151
Income tax effect on non-GAAP adjustments (e)
(1,499)
(129)
(1,428)
Net effect of adjustments to GAAP net (loss) income
2,808
2,642
2,723
Non-GAAP (loss) income
$ (7,881)
$ 16,790
$ (863)
GAAP diluted (loss) earnings per share
$ (0.23)
$ 0.27
$ (0.08)
Impact of non-GAAP adjustments on diluted earnings per
share
0.06
0.05
0.06
Non-GAAP diluted (loss) earnings per share
$ (0.17)
$ 0.32
$ (0.02)
(a) - (e) See corresponding footnotes above.
STEC, INC.
Selected Non-GAAP Financial Information
($ in thousands)
(unaudited)
For the Quarters Ended
March 31,
March 31,
December 31,
2012
2011
2011
GAAP gross profit
$ 18,092
$ 40,273
$ 23,875
Employee stock compensation (a)
221
99
232
Employee severance (b)
52
--
--
Non-GAAP gross profit
$ 18,365
$ 40,372
$ 24,107
GAAP gross profit %
35.9%
42.4%
41.1%
Effect of reconciling item on gross profit %
0.5%
0.1%
0.4%
Non-GAAP gross profit %
36.4%
42.5%
41.5%
GAAP operating expenses
$ 31,973
$ 25,075
$ 29,301
Employee stock compensation (a)
(3,440)
(2,672)
(3,596)
Employee severance (b)
(275)
--
--
Securities litigation and SEC investigation costs (c)
(204)
--
(191)
IP litigation costs (d)
(115)
--
(132)
Non-GAAP operating expenses
$ 27,939
$ 22,403
$ 25,382
GAAP operating (loss) income
$ (13,881)
$ 15,198
$ (5,426)
Employee stock compensation (a)
3,661
2,771
3,828
Employee severance (b)
327
--
--
Securities litigation and SEC investigation costs (c)
204
--
191
IP litigation costs (d)
115
--
132
Non-GAAP operating (loss) income
$ (9,574)
$ 17,969
$ (1,275)
GAAP operating margin %
-27.5%
16.0%
-9.3%
Effect of reconciling items on operating margin %
8.5%
2.9%
7.1%
Non-GAAP operating margin %
-19.0%
18.9%
-2.2%
(a) - (d) Refer to the corresponding footnotes above.
CONTACT:
STEC, Inc.
Mitch Gellman, Vice President of Investor Relations
(949) 260-8328 ir@stec-inc.com
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