Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - SAVVIS, Inc. | d8k.htm |
|
Exhibit 99.1 |
| CONTACT: | ||
| Investors: Jennifer Heisserer | Media: George Csolak | |
| 314-628-7397 | 314-628-7266 | |
| jennifer.heisserer@savvis.com | george.csolak@savvis.com |
Savvis Reports First Quarter 2011 Results
ST. LOUIS, Apr. 27, 2011 – Savvis, Inc. (NASDAQ: SVVS), a global leader in cloud infrastructure and hosted IT solutions for enterprises, today reported its first quarter 2011 financial results, with revenue of $257.0 million, compared to $216.6 million in the first quarter of 2010. Adjusted EBITDA* was $75.0 million, compared to $54.0 million of adjusted EBITDA in the first quarter of 2010.
Income from continuing operations for the first quarter of 2011 was $16.5 million, compared to $4.8 million in the first quarter of 2010. Savvis reported a net loss of ($1.8) million, or ($0.03) per share, in the first quarter of 2011, compared to a first quarter 2010 net loss of ($11.3) million, or ($0.21) per share.
First Quarter Financial Results
| Three months ended | ||||||||||||
| US$ in millions | 3/31/11 | 12/31/10 | 3/31/10 | |||||||||
| Hosting |
$ | 191.8 | $ | 185.7 | $ | 152.8 | ||||||
| Network |
$ | 65.2 | $ | 67.0 | $ | 63.8 | ||||||
| Total revenue |
$ | 257.0 | $ | 252.7 | $ | 216.6 | ||||||
| Cost of revenue(1) |
$ | 132.8 | $ | 129.6 | $ | 119.4 | ||||||
| SG&A expenses(1) (2) |
$ | 57.2 | $ | 61.7 | $ | 51.7 | ||||||
| Non-cash, equity-based compensation(1) |
$ | 7.9 | $ | 5.2 | $ | 8.5 | ||||||
| Income from continuing operations |
$ | 16.5 | $ | 14.0 | $ | 4.8 | ||||||
| Net income (loss) from continuing operations |
($ | 1.8 | ) | ($ | 3.1 | ) | ($ | 11.3 | ) | |||
| Income (loss) from discontinued operations, net of income tax(3) |
— | $ | 0.2 | — | ||||||||
| Net income (loss) |
($ | 1.8 | ) | ($ | 2.9 | ) | ($ | 11.3 | ) | |||
| Adjusted EBITDA |
$ | 75.0 | $ | 67.8 | $ | 54.0 | ||||||
| Adjusted EBITDA margin |
29 | % | 27 | % | 25 | % | ||||||
| (1) | Both cost of revenue and SG&A expenses exclude depreciation, amortization and accretion and include non-cash, equity-based compensation. Total non-cash, equity-based compensation attributed to cost of revenue for the three months ended 3/31/11, 12/31/10, and 3/31/10, was $2.7 million, $1.3 million and $1.6 million and to SG&A expenses was $5.2 million, $4.0 million and $6.8 million, respectively. (2) SG&A expenses include acquisition and integration costs of $1.1 million for the three months ended 12/31/10. (3) Includes income from the application services business acquired from Fusepoint, which was sold on 12/31/10. Total income attributed to net income for the three months ended 12/31/10 was $160,000. |
First Quarter Overview
Total Savvis revenue for the first quarter was $257.0 million, up 2% compared to fourth quarter 2010 revenue of $252.7 million. Adjusted EBITDA was $75.0 million for the first quarter of 2011, up 11% compared to $67.8 million of adjusted EBITDA in the fourth quarter of 2010.
Hosting
| US$ in millions | Percent of Revenue |
Three months ended | ||||||||||||||
| 3/31/11 | 12/31/10 | 3/31/10 | ||||||||||||||
| Managed Services |
48 | % | $ | 92.3 | $ | 89.3 | $ | 70.3 | ||||||||
| Percentage change |
3 | % | 31 | % | ||||||||||||
| Colocation |
52 | % | $ | 99.6 | $ | 96.4 | $ | 82.5 | ||||||||
| Percentage change |
3 | % | 21 | % | ||||||||||||
| Total Hosting revenue |
$ | 191.8 | $ | 185.7 | $ | 152.8 | ||||||||||
| Percentage change |
3 | % | 26 | % | ||||||||||||
Network
| US$ in millions | Percent of Revenue |
Three months ended | ||||||||||||||
| 3/31/11 | 12/31/10 | 3/31/10 | ||||||||||||||
| Core |
60 | % | $ | 38.8 | $ | 38.4 | $ | 31.7 | ||||||||
| Percentage change |
1 | % | 23 | % | ||||||||||||
| Sustaining |
40 | % | $ | 26.4 | $ | 28.6 | $ | 32.2 | ||||||||
| Percentage change |
(8 | %) | (18 | %) | ||||||||||||
| Total Network revenue |
$ | 65.2 | $ | 67.0 | $ | 63.8 | ||||||||||
| Percentage change |
(3 | %) | 2 | % | ||||||||||||
Other
The Financial Vertical represented 28% of total revenue, or $72.9 million, in the first quarter of 2011. Revenue in the quarter was up 5%, compared to the fourth quarter of 2010, and was up 31%, compared to the first quarter of 2010.
Cash Flow and Balance Sheet
Net cash provided by operating activities was $36.7 million in the first quarter of 2011, compared to $39.0 million in the first quarter of 2010. Cash capital expenditures for the first quarter of 2011 totaled $31.0 million.
The company’s cash position at Mar. 31, 2011, was $121.6 million, compared to $120.3 million at Dec. 31, 2010. As of Mar. 31, 2011, the long-term debt and capital leases for Savvis (net of current portion) totaled $763.8 million, up from $747.2 million as of Dec. 31, 2010.
Financial Outlook
Based on first quarter results, Savvis now expects the following for full year 2011:
| • | Revenue of $1,030 to $1,060 million |
| • | Adjusted EBITDA of $265 to $290 million |
| • | Total cash capital expenditures of $220 to $240 million |
| • | Cash interest expense (net) of approximately $65 million |
2
As a result of the CenturyLink transaction announced this morning, Savvis will not host its previously scheduled conference call to discuss its first quarter financial results, but will briefly address these results on a conference call to discuss the CenturyLink announcement at 8:30 a.m. EDT / 7:30 a.m. CDT
About Savvis
Savvis, Inc. (NASDAQ: SVVS) is a global leader in cloud infrastructure and hosted IT solutions for enterprises. Nearly 2,500 unique clients, including 32 of the top 100 companies in the Fortune 500, use Savvis to reduce capital expense, improve service levels and harness the latest advances in cloud computing. For more information, please visit www.savvis.com.
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from Savvis’ expectations. Certain factors that could adversely affect actual results are set forth as risk factors described in Savvis’ SEC reports and filings, including its annual report on Form 10-K for the year ended Dec. 31, 2010, and subsequent filings. Those risk factors include, but are not limited to, uncertainties in economic conditions, including conditions that could pressure enterprise IT spending; introduction of, demand for and market acceptance of Savvis’ products and services; whether or not Savvis is able to sign additional outsourcing deals; variability in pricing for those products and services; merger and acquisition activity by Savvis customers or other customer activity that affects the level of business done with Savvis; rapid evolution of technology; changes in the operating environment; and changes or proposed changes in, or introduction of new, regulatory schemes or environments that impact Savvis and/or its customers’ businesses. The forward-looking statements contained in this document speak only as of the date of publication, Apr. 27, 2011. Subsequent events and developments may cause the company’s forward-looking statements to change, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.
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* Non-GAAP Measures
Savvis includes information pertaining to certain non-GAAP measures in conjunction with reporting of its quarterly and year-end financial results. Adjusted EBITDA represents income from continuing operations before depreciation, amortization and accretion, and non-cash, equity-based compensation and excludes acquisition and integration costs. We have included information concerning adjusted EBITDA because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity. Leveraged free cash flow represents adjusted EBITDA less cash paid acquisition and integration costs, less cash capital expenditures and less cash interest, net. We have included information concerning leveraged free cash flow because we believe that in our industry such information is a relevant measurement of a company’s operating financial performance and liquidity. We do not provide forward looking guidance for certain financial data, such as income from operations, depreciation, amortization and accretion, non-cash, equity-based compensation, and interest income. As a result, we are unable to provide a reconciliation of non-GAAP measures, such as adjusted EBITDA and leveraged free cash flow, for forward looking data, including 2011 full-year guidance. The calculations of adjusted EBITDA and leveraged free cash flow are not specified by United States generally accepted accounting principles. Our calculations of adjusted EBITDA and leveraged free cash flow may not be comparable to similarly-titled measures of other companies.
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SAVVIS, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
| Three Months Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| Revenue |
$ | 257,041 | $ | 216,587 | ||||
| Operating Expenses: |
||||||||
| Cost of revenue (including non-cash, equity-based compensation of $2,692 and $1,630) (1) |
132,764 | 119,368 | ||||||
| Sales, general and administrative expenses (including non-cash, equity-based compensation of $5,202 and $6,823) (1) |
57,195 | 51,719 | ||||||
| Depreciation, amortization and accretion |
50,562 | 40,737 | ||||||
| Total Operating Expenses |
240,521 | 211,824 | ||||||
| Income from Continuing Operations |
16,520 | 4,763 | ||||||
| Other income and expense |
17,884 | 15,757 | ||||||
| Income (Loss) from Continuing Operations before Income Taxes |
(1,364 | ) | (10,994 | ) | ||||
| Income tax (benefit) expense |
441 | 355 | ||||||
| Income (Loss) from Continuing Operations, net of Income Taxes |
$ | (1,805 | ) | $ | (11,349 | ) | ||
| Income from discontinued operations, net of income taxes |
— | — | ||||||
| Net Income (Loss) |
$ | (1,805 | ) | $ | (11,349 | ) | ||
| Net Income (Loss) from Continuing Operations |
||||||||
| Basic earnings per share |
$ | (0.03 | ) | $ | (0.21 | ) | ||
| Diluted earnings per share |
$ | (0.03 | ) | $ | (0.21 | ) | ||
| Weighted-Average Common Shares Outstanding |
||||||||
| Basic |
56,917 | 54,494 | ||||||
| Diluted |
56,917 | 54,494 | ||||||
| (1) | Excludes depreciation, amortization and accretion, which is reported separately. |
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SAVVIS, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| March 31, 2011 |
December 31, 2010 |
|||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 121,576 | $ | 120,344 | ||||
| Trade accounts receivable, net |
76,768 | 65,058 | ||||||
| Prepaid expenses and other current assets |
32,163 | 32,359 | ||||||
| Total Current Assets |
230,507 | 217,761 | ||||||
| Property and equipment, net |
847,786 | 843,801 | ||||||
| Goodwill |
78,146 | 75,883 | ||||||
| Intangible assets, net |
18,385 | 19,540 | ||||||
| Other non-current assets |
28,299 | 26,665 | ||||||
| Total Assets |
$ | 1,203,123 | $ | 1,183,650 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Payables and other trade accruals |
$ | 65,037 | $ | 73,445 | ||||
| Current portion of long-term debt and lease obligations |
19,939 | 17,881 | ||||||
| Other accrued liabilities |
77,426 | 84,101 | ||||||
| Total Current Liabilities |
162,402 | 175,427 | ||||||
| Long-term debt, net of current portion |
529,999 | 530,649 | ||||||
| Capital and financing method lease obligations, net of current portion |
233,817 | 216,508 | ||||||
| Other accrued liabilities |
73,585 | 74,937 | ||||||
| Total Liabilities |
999,803 | 997,521 | ||||||
| Stockholders’ Equity: |
||||||||
| Common stock |
575 | 566 | ||||||
| Additional paid-in capital |
895,063 | 886,593 | ||||||
| Accumulated deficit |
(690,193 | ) | (688,388 | ) | ||||
| Accumulated other comprehensive loss |
(2,125 | ) | (12,642 | ) | ||||
| Total Stockholders’ Equity |
203,320 | 186,129 | ||||||
| Total Liabilities and Stockholders’ Equity |
$ | 1,203,123 | $ | 1,183,650 | ||||
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SAVVIS, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
| Three Months
Ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| Cash Flows from Operating Activities: |
||||||||
| Net income (loss) |
$ | (1,805 | ) | $ | (11,349 | ) | ||
| Reconciliation of net income (loss) from continuing operations to net cash provided by operating activities: |
||||||||
| Depreciation, amortization and accretion |
50,562 | 40,737 | ||||||
| Non-cash, equity-based compensation |
7,894 | 8,453 | ||||||
| Accrued interest, net |
541 | 3,286 | ||||||
| Amortization of debt discount |
725 | 3,767 | ||||||
| Other, net |
47 | 332 | ||||||
| Net changes in operating assets and liabilities: |
||||||||
| Trade accounts receivable, net |
(10,844 | ) | (6,581 | ) | ||||
| Prepaid expenses and other current and non-current assets |
(1,441 | ) | (6,572 | ) | ||||
| Payables and other trade accruals |
181 | 7,455 | ||||||
| Other accrued liabilities |
(9,191 | ) | (556 | ) | ||||
| Net cash provided by operating activities |
36,669 | 38,972 | ||||||
| Cash Flows from Investing Activities: |
||||||||
| Payments for capital expenditures |
(30,951 | ) | (50,691 | ) | ||||
| Net cash used in investing activities |
(30,951 | ) | (50,691 | ) | ||||
| Cash Flows from Financing Activities: |
||||||||
| Principal payments on long-term debt |
(1,375 | ) | (1,650 | ) | ||||
| Proceeds from stock option exercises |
4,364 | 6,648 | ||||||
| Payments for employee taxes on equity-based instruments |
(5,770 | ) | (2,812 | ) | ||||
| Principal payments under capital lease obligations |
(3,980 | ) | (2,538 | ) | ||||
| Other, net |
— | (612 | ) | |||||
| Net cash provided by (used in) financing activities |
(6,761 | ) | (964 | ) | ||||
| Effect of exchange rate changes oncash and cash equivalents |
2,275 | (2,204 | ) | |||||
| Net Increase (Decrease) in Cash and Cash Equivalents |
1,232 | (14,887 | ) | |||||
| Cash and Cash Equivalents, Beginning of Period |
120,344 | 160,815 | ||||||
| Cash and Cash Equivalents, End of Period |
$ | 121,576 | $ | 145,928 | ||||
| Supplemental Disclosures of Cash Flow Information: |
||||||||
| Cash paid for interest |
$ | 16,924 | $ | 7,832 | ||||
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SAVVIS, Inc. and Subsidiaries
Unaudited Selected Condensed Consolidated Financial Information
(in thousands)
| Three Months Ended | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2011 | 2010 | 2010 | ||||||||||
| Segment Revenue: |
||||||||||||
| Hosting |
$ | 191,840 | $ | 152,751 | $ | 185,697 | ||||||
| Network |
65,201 | 63,836 | 67,043 | |||||||||
| Total Revenue |
$ | 257,041 | $ | 216,587 | $ | 252,740 | ||||||
| Segment Adjusted EBITDA: |
||||||||||||
| Hosting |
$ | 78,785 | $ | 58,960 | $ | 76,127 | ||||||
| Network |
17,779 | 16,265 | 17,142 | |||||||||
| Corporate - Other (1) |
(21,588 | ) | (21,272 | ) | (25,482 | ) | ||||||
| Total Adjusted EBITDA (2) |
$ | 74,976 | $ | 53,953 | $ | 67,787 | ||||||
| Adjusted EBITDA Reconciliation: |
||||||||||||
| Income from continuing operations |
$ | 16,520 | $ | 4,763 | $ | 14,041 | ||||||
| Depreciation, amortization and accretion |
50,562 | 40,737 | 47,390 | |||||||||
| Non-cash, equity-based compensation |
7,894 | 8,453 | 5,245 | |||||||||
| Acquisition and integration costs |
— | — | 1,111 | |||||||||
| Adjusted EBITDA |
$ | 74,976 | $ | 53,953 | $ | 67,787 | ||||||
| Reconciliation of Adjusted EBITDA to Income (Loss)from Continuing Operations before Income Taxes: |
||||||||||||
| Adjusted EBITDA |
$ | 74,976 | $ | 53,953 | $ | 67,787 | ||||||
| Depreciation, amortization and accretion |
(50,562 | ) | (40,737 | ) | (47,390 | ) | ||||||
| Non-cash, equity-based compensation |
(7,894 | ) | (8,453 | ) | (5,245 | ) | ||||||
| Acquisition and integration costs |
— | — | (1,111 | ) | ||||||||
| Interest income |
36 | 30 | 34 | |||||||||
| Interest expense |
(18,191 | ) | (15,475 | ) | (18,132 | ) | ||||||
| Other income (expense) |
271 | (312 | ) | 263 | ||||||||
| Income (Loss) from Continuing Operations before Income Taxes |
$ | (1,364 | ) | $ | (10,994 | ) | $ | (3,794 | ) | |||
| Leveraged Free Cash Flow Reconciliation: |
||||||||||||
| Adjusted EBITDA |
$ | 74,976 | $ | 53,953 | $ | 67,787 | ||||||
| Acquisition and integration costs |
— | — | (1,111 | ) | ||||||||
| Cash capital expenditures |
(30,951 | ) | (50,691 | ) | (43,811 | ) | ||||||
| Cash interest paid |
(16,924 | ) | (7,832 | ) | (10,500 | ) | ||||||
| Interest income |
36 | 30 | 34 | |||||||||
| Leveraged Free Cash Flow (3) |
$ | 27,137 | $ | (4,540 | ) | $ | 12,399 | |||||
| (1) | Corporate - Other adjusted EBITDA includes all costs not directly associated with hosting services or network services. Costs not directly associated with hosting services or network services include, but are not limited to, general and administrative costs. |
| (2) | Adjusted EBITDA represents income from continuing operations before depreciation, amortization, accretion and non-cash, equity-based compensation and excludes acquisition and integration costs. We have included information concerning adjusted EBITDA because we believe that in our industry such information is a relevant measurement of a company’s operating financial performance and liquidity. The calculation of adjusted EBITDA is not specified by United States generally accepted accounting principles. Our calculation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. |
| (3) | Leveraged Free Cash Flow represents adjusted EBITDA less cash paid acquisition and integration costs, less cash capital expenditures and less cash interest, net. We have included information concerning leveraged free cash flow because we believe that in our industry such information is a relevant measurement of a company’s operating financial performance and liquidity. |
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SAVVIS, Inc. and Subsidiaries
Unaudited Supplemental Revenue Information
(in thousands, except per square foot amounts)
| Three Months Ended | ||||||||||||||||||||||
| March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
December 31, 2010 |
March 31, 2011 |
||||||||||||||||||
| Data Center Revenue |
||||||||||||||||||||||
| Colocation |
$ | 82,467 | $ | 84,281 | $ | 95,211 | $ | 96,430 | $ | 99,577 | ||||||||||||
| Managed hosting |
70,284 | 73,898 | 81,513 | 89,267 | 92,263 | |||||||||||||||||
| Data Center Metrics (1) |
||||||||||||||||||||||
| Total raised floor |
1,477 | 1,477 | 1,564 | 1,541 | 1,541 | |||||||||||||||||
| Revenue space |
889 | 885 | 957 | 938 | 964 | |||||||||||||||||
| Billed square feet |
601 | 622 | 678 | 680 | 694 | |||||||||||||||||
| Utilization |
68 | % | 70 | % | 71 | % | 73 | % | 72 | % | ||||||||||||
| Average Billed Square Feet |
||||||||||||||||||||||
| Colocation |
572.1 | 586.6 | 623.4 | 651.2 | 658.6 | |||||||||||||||||
| Managed hosting |
23.8 | 25.1 | 26.8 | 28.1 | 28.3 | |||||||||||||||||
| Total Average Billed Square Feet |
595.9 | 611.7 | 650.3 | 679.2 | 686.9 | |||||||||||||||||
| Average Monthly Data Center Revenue Per Billed Square Foot (2) |
||||||||||||||||||||||
| Colocation |
$ | 48.1 | $ | 47.5 | $ | 50.9 | $ | 49.4 | $ | 50.4 | ||||||||||||
| Managed hosting |
984.5 | 974.4 | 1,012.7 | 1,059.5 | 1,086.9 | |||||||||||||||||
| (1) | Data center metrics are calculated as of period end for each respective quarter. |
| (2) | Average monthly data center revenue per billed square foot is calculated as the revenue per quarter divided by the average billed square feet per quarter stated on a monthly basis. |
| SAVVIS Revenue by Vertical |
||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
December 31, 2010 |
March 31, 2011 |
||||||||||||||||
| Financial vertical |
$ | 55,532 | $ | 60,417 | $ | 67,007 | $ | 69,698 | $ | 72,924 | ||||||||||
| Other |
161,055 | 161,339 | 174,894 | 183,042 | 184,117 | |||||||||||||||
| Total Revenue |
$ | 216,587 | $ | 221,756 | $ | 241,901 | $ | 252,740 | $ | 257,041 | ||||||||||
| Network Revenue Supplemental Information: | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
December 31, 2010 |
March 31, 2011 |
||||||||||||||||
| Core (1) |
$ | 31,670 | $ | 33,459 | $ | 36,339 | $ | 38,443 | $ | 38,813 | ||||||||||
| Sustaining (2) |
32,166 | 30,118 | 28,838 | 28,600 | 26,388 | |||||||||||||||
| Total Network Revenue |
$ | 63,836 | $ | 63,577 | $ | 65,177 | $ | 67,043 | $ | 65,201 | ||||||||||
| (1) | Core network includes revenue from Thomson Reuters and from other financial vertical and data center customers, who also purchase bundled network and hosting services. |
| (2) | Sustaining network includes revenue from services that are either in slower growth or declining markets or are not directly tied to the future growth of the company’s network and hosting businesses. |
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