Cray Announces Full Year and Fourth Quarter Financial Results
Global supercomputer leader Cray Inc. today announced financial results for the year and fourth quarter ended December 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.
For 2014, Cray reported total revenue of $561.6 million, which compares with $525.7 million for 2013. Net income for 2014 was $62.3 million, or $1.54 per diluted share, compared to $32.2 million, or $0.81 per diluted share for 2013. Net income results for 2014 benefited from a $52.6 million income tax benefit which resulted from a reduction of substantially all of the valuation allowance held against Cray’s U.S. deferred tax assets. This reduction was determined after considering both past financial results and future expectations for profitability.
Non-GAAP net income, which adjusts for selected unusual and non-cash items, such as the reduction of the valuation allowance, was $24.3 million, or $0.60 per diluted share for 2014, compared to $30.3 million, or $0.76 per diluted share for 2013.
Revenue for the fourth quarter was $261.9 million, compared to $307.4 million in the fourth quarter of 2013. The Company reported net income for the fourth quarter of $74.6 million, or $1.84 per diluted share, compared to net income of $51.0 million, or $1.27 per diluted share in the prior year period. Non-GAAP net income was $40.3 million, or $0.99 per diluted share for the quarter, compared to non-GAAP net income of $59.2 million, or $1.48 per diluted share for the same period last year.
Overall gross profit margin for 2014 was 33%, compared to 35% for 2013. Total non-GAAP gross profit margin for 2014 was 34%, compared to 36% for 2013. The change in gross profit margin in 2014 was driven primarily by product mix.
Operating expenses for 2014 were $175.2 million, compared to $162.7 million for 2013. Non-GAAP operating expenses for 2014 were $163.7 million, compared to $155.5 million for 2013.
As of December 31, 2014, cash, investments and restricted cash totaled $146 million. Working capital increased $27 million to $362 million, compared to $335 million at the end of 2013.
“We had a great year, highlighted by company records in both revenue and new contract awards,” said Peter Ungaro, president and CEO of Cray. “Our global presence continues to expand, with significant wins in the U.K., Korea, Saudi Arabia and the U.S. We refreshed our entire product line in the second half of the year across supercomputing, storage and analytics, further strengthening our competitive position and targeting ways to leverage our expertise and technology into high-growth markets. As we look to the future, I’m excited about our prospects to continue to grow and drive increased profitability in 2015 and beyond.”
Outlook
For 2015, while a wide range of results remains possible, the Company anticipates revenue for the year to be in the range of $715 million. Revenue is expected to ramp quarterly during 2015, with about $80 million in the first quarter and roughly 40-45% of the total year in the fourth quarter. Non-GAAP gross margin for 2015 is expected to be about 35%. Total non-GAAP operating expenses for the year are anticipated to be about $195 million. Based on this outlook, we expect to improve our GAAP and non-GAAP operating profit margin significantly for 2015.
The Company’s 2015 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 December, the Department of Defense High Performance Computing Modernization Program awarded Cray an additional contract for $30 million to provide it with two Cray XC40 supercomputers and two Cray Sonexion storage systems. The systems are expected to be installed at the John C. Stennis Space Center in Mississippi in 2015.
- In December, Cray announced that the University of Hawaii (UH) had put a Cray CS cluster supercomputer into production. The new Cray system is the University’s first centralized high performance computing system, and is located on the UH Manoa Campus in a new state-of-the-art data center.
- In November, Cray was awarded a contract to provide the King Abdullah University of Science and Technology (KAUST) in Saudi Arabia with multiple Cray systems that span the Company’s line of compute, storage and analytics products. The contract with KAUST marks Cray’s return to the Middle East for the first time in nearly 20 years.
- In November, Cray announced the pre-integration of Cloudera Enterprise into Cray’s new big data analytics appliance, the Cray Urika-XA system.
- In November, Cray launched the Cray Sonexion 2000 system — the latest addition to its line of scale-out storage solutions. The new Sonexion system combines Cray’s expertise in designing, scaling and managing end-to-end Lustre solutions with a unique architecture that allows for maximum scalability. The Sonexion 2000 features 50 percent more performance and capacity than its predecessor in the same storage footprint, and provides more than 45 gigabytes-per-second of performance and two petabytes of useable capacity in a single rack.
- In November, at the 2014 Supercomputing Conference in New Orleans Cray won six awards from the readers and editors of HPCwire as part of the publication’s 2014 Readers’ and Editors’ Choice Awards.
- In December, Cray named Ryan Waite senior vice president of products. With more than 20 years of experience in big data, supercomputing and software at Amazon Web Services and Microsoft, Waite will be responsible for leading Cray’s products division, which manages the Company’s line of compute, storage and big data analytics solutions.
