Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DOT HILL SYSTEMS CORP | a8-k2q14earningsrelease.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contacts:
Hanif Jamal
Chief Financial Officer
Tel: 303-845-3377
Email: investors@dothill.com
Jodi Bochert
Investor Relations
Tel: 303-845-3469
Email: investors@dothill.com
Kirsten Chapman
LHA Investor Relations
Tel: 415-433-3777
Email: dothill@lhai.com
Dot Hill Reports Second Quarter 2014 Results
Reiterates medium-term annual guidance over the planning horizon:
14% to 18% non-GAAP total revenue growth, 40% to 50% Vertical Markets revenue increase and 8% to 12% operating margin target
LONGMONT, Colo. -August 7, 2014 - Dot Hill Systems Corp. (NASDAQ:HILL), a trusted supplier of innovative enterprise class storage systems, reported financial results for the second quarter ended June 30, 2014.
Financial Highlights:
• | Grew trailing 12 month as of June 30, 2014 relative to trailing 12 month as of June 30, 2013 non-GAAP revenue by 10%, with Vertical Markets growing 37% over the same period |
• | Achieved non-GAAP gross margin of 33.9%, compared to 33.1% in the first quarter of 2014 and 34.7% in the second quarter of 2013 |
• | Delivered non-GAAP earnings per fully diluted share of $0.02, compared to $0.02 in the first quarter 2014 and $0.06 in the second quarter of 2013 |
“For the first half of 2014, results were within our expectations,” stated Dana Kammersgard, president and CEO, Dot Hill Systems Corp. “As previously noted, we expect that 2014 will be more back-end loaded than previous years. We remain very confident in the ramp of this revenue and the sustainability of this growth into 2015 and beyond, as we project at least three and potentially four major customer product launches scheduled between now and the end of the year.”
Second Quarter 2014 GAAP Financial Detail (including discontinued operations):
• | Net revenue was $48.2 million for the second quarter of 2014, compared to $50.7 million for the second quarter of 2013 and $48.2 million for the first quarter of 2014. |
Exhibit 99.1
• | Gross margin for the second quarter of 2014 was 33.2%, compared to 33.5% for the second quarter of 2013 and 31.7% for the first quarter of 2014. |
• | Operating expenses for the second quarter of 2014 were $16.0 million, compared to $14.9 million for the second quarter of 2013 and $15.7 million in the first quarter of 2014. |
• | Net loss for the second quarter of 2014 was $0.08 million, or ($0.00) per fully diluted share, compared to net income of $2.1 million, or $0.04 per fully diluted share, for the second quarter of 2013, and a net loss of $0.4 million, or ($0.01) per fully diluted share, for the first quarter of 2014. |
Second Quarter 2014 Non-GAAP Financial Detail:
• | Non-GAAP net revenue was $48.4 million for the second quarter of 2014, compared to $51.2 million for the second quarter of 2013 and $48.9 million for the first quarter of 2014. |
◦ | Vertical Markets non-GAAP net revenue was $20.8 million, compared to $21.3 million in the second quarter of 2013 and $22.4 million in the first quarter of 2014. |
◦ | Server OEM non-GAAP net revenue was $27.7 million, compared to $30.0 million in the second quarter of 2013 and $26.5 million in the first quarter of 2014. |
• | Non-GAAP gross margin for the second quarter of 2014 was 33.9%, compared to 34.7% in the second quarter of 2013 and 33.1% in the first quarter of 2014. |
◦ | Vertical Markets non-GAAP gross margin was 44.7%, up from 43.2% in the second quarter of 2013 and 43.4% in the first quarter of 2014. |
◦ | Server OEM non-GAAP gross margin was 25.9%, compared to 28.6% in the second quarter of 2013 and 24.4% in the first quarter of 2014. |
• | Non-GAAP operating expenses for the second quarter of 2014 were $15.1 million, compared to $14.2 million for the second quarter of 2013 and $15.1 million in the first quarter of 2014. |
• | Vertical Markets non-GAAP contribution margin was 33.0% for the second quarter of 2014, compared to 34.0% in the second quarter of 2013 and 33.6% in the first quarter of 2014. |
• | Server OEM non-GAAP contribution margin was 24.0% for the second quarter of 2014, compared to 26.7% in the second quarter of 2013 and 22.7% in the first quarter of 2014. |
• | Non-GAAP net income for the second quarter of 2014 was $1.3 million, or $0.02 per fully diluted share, compared to $3.5 million or $0.06 per share, for the second quarter of 2013, and $1.0 million, or $0.02 per fully diluted share, for the first quarter of 2014. |
Balance Sheet:
The Company exited the second quarter of 2014 with cash and cash equivalents of $42.2 million with no borrowings. This compares to $40.3 million at the end of the first quarter of 2014, with no borrowings, and $40.4 million at the end of the second quarter of 2013, with $2.1 million in borrowings.
Third Quarter 2014 Guidance:
For the third quarter of 2014, the Company expects non-GAAP revenues to be between $50 and $58 million and non-GAAP EPS to be between $0.01and $0.06.
“With respect to 2014 overall, we currently believe that our results will fall around the low end of our
Exhibit 99.1
guidance range, based on lower than expected Server OEM revenue in the first half. The precise timing of our new customer product launches, which is very hard to call, will impact revenues as well,” stated Hanif Jamal, chief financial officer, Dot Hill Systems Corp. “We remain resolute in our conviction that we are getting very close to a transformative revenue ramp, and with the operating leverage in our business model, an even stronger earnings inflection point. With respect to our medium-term planning horizon relative to 2013 as provided during our March earnings call, we remain very confident in 14-18% total non-GAAP revenue growth with 40-50% growth in Vertical Markets and plus or minus 5% in Server OEMs revenue growth with an 8-12% operating margin target.”
Conference Call Information:
The Company’s second quarter 2014 financial results conference call is scheduled to take place on Thursday, August 7, 2014 at 11:00 a.m. ET. Please join the Company for a live audio webcast at www.dothill.com in the Investor Relations section. If you prefer to join via telephone, please dial 877-303-3196 (U.S.) or 408-427-3864 (International) at least five minutes prior to the start of the call. A replay of the webcast is scheduled to be available for one week on the Dot Hill web site following the conference call. For a telephone replay, dial 855-859-2056 (U.S.) or 404-537-3406 (International) and enter conference ID# 80812230.
About Non-GAAP Financial Measures
The Company’s non-GAAP financial measures exclude the impact of stock-based compensation expense, legal settlements and associated expenses, intangible asset amortization, restructuring and severance charges, charges or credits for contingent consideration adjustments, charges for impairment of goodwill and other long-lived assets, specific and significant warranty claims arising from a supplier’s defective products, the impact of our discontinued AssuredUVS software business and the effects of foreign currency gains or losses. The non-GAAP financial measures include the recognition of revenues and directly related costs associated with long-term AssuredVRA software contracts, which were deferred and amortized in the Company’s GAAP financial statements. The Company used these non-GAAP measures when evaluating its financial results as well as for internal resource management, planning and forecasting purposes. These non-GAAP measures should not be viewed in isolation from or as a substitute for the Company’s financial results in accordance with GAAP. A reconciliation of GAAP to non-GAAP measures is attached to this press release.
About Segment Financial Reporting
The Server OEM segment consists primarily of large Original Equipment Manufacturers who purchase products from the Company to sell along with their Server products. Major Server OEM customers include Hewlett Packard, Lenovo, Stratus, Dell, and AMD. The Vertical Markets segment consists of strategically selected Vertical Markets including Media & Entertainment, Telecommunications Infrastructure, Oil and Gas, Big Data Analytics and Digital Imaging among others. These customers typically embed the Company’s products into solutions for their customers. The Company sells to these customers through both Vertical Markets OEM partners or Embedded Solutions Integrators, as well as through Channel Partners. Major Vertical Market customers include Teradata, CGG, Motorola, Tektronix, Samsung, Concurrent, Autodesk, and Nokia Siemens. The Corporate segment consists primarily of “platform costs” that support both the Server OEM and Vertical Markets segments.
Exhibit 99.1
About Dot Hill
Leveraging its proprietary Assured family of storage solutions, Dot Hill solves many of today’s most challenging storage problems - helping IT to improve performance, increase availability, simplify operations, and reduce costs. Dot Hill’s solutions combine breakthrough software with the industry’s most flexible and extensive hardware platform and automated management to deliver best-in-class solutions. Headquartered in Longmont, Colorado, Dot Hill has offices and/or representatives in China, Germany, India, Japan, Singapore, the United Kingdom, and the United States. For more information, visit www.dothill.com
Statements contained in this press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such statements include statements regarding future opportunities for additional business and the stage of such opportunities relative to a final binding agreement, prospects for Dot Hill’s continued growth, and Dot Hill’s projected financial results for the third quarter and full year of 2014. The risks that contribute to the uncertain nature of the forward-looking statements include, among other things: the risk that actual financial results for the third quarter and full year of 2014 may be different from the financial guidance provided in this press release; the risks associated with macroeconomic factors that are outside of Dot Hill’s control; the risk that projected future opportunities may never fully develop into ongoing business relationships and/or binding contractual agreements; the fact that no Dot Hill customer agreements provide for mandatory minimum purchase requirements; the risk that one or more of Dot Hill’s OEM or other customers may cancel or reduce orders, not order as forecasted or terminate their agreements with Dot Hill; the risk that Dot Hill’s new products may not prove to be popular; the risk that one or more of Dot Hill’s suppliers or subcontractors may fail to perform or may terminate their agreements with Dot Hill; the risk that vertical markets’ sales may not ramp as expected; unforeseen product quality, technological, intellectual property, personnel or engineering issues and any costs that may result from such issues; and the additional risks set forth in Dot Hill’s most recent Form 10-Q and Form10-K filings with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made. Dot Hill undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.
HILL-F
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
Net revenue | $ | 50,683 | $ | 48,207 | $ | 48,222 | $ | 95,163 | $ | 96,429 | |||||||||
Cost of goods sold | 33,676 | 32,942 | 32,199 | 63,716 | 65,141 | ||||||||||||||
Gross profit | 17,007 | 15,265 | 16,023 | 31,447 | 31,288 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 8,908 | 9,476 | 9,340 | 17,621 | 18,816 | ||||||||||||||
Sales and marketing | 3,187 | 3,294 | 3,843 | 6,295 | 7,137 | ||||||||||||||
General and administrative | 2,767 | 2,898 | 2,851 | 5,904 | 5,749 | ||||||||||||||
Total operating expenses | 14,862 | 15,668 | 16,034 | 29,820 | 31,702 | ||||||||||||||
Operating income (loss) | 2,145 | (403 | ) | (11 | ) | 1,627 | (414 | ) | |||||||||||
Other income (expense): | |||||||||||||||||||
Interest income (expense), net | (8 | ) | (18 | ) | (4 | ) | (15 | ) | (22 | ) | |||||||||
Other income (expense), net | 1 | 10 | 11 | — | 21 | ||||||||||||||
Total other income (expense), net | (7 | ) | (8 | ) | 7 | (15 | ) | (1 | ) | ||||||||||
Income (loss) before income taxes and discontinued operations | 2,138 | (411 | ) | (4 | ) | 1,612 | (415 | ) | |||||||||||
Income tax expense | 49 | 1 | 74 | 83 | 75 | ||||||||||||||
Income (loss) from continuing operations | 2,089 | (412 | ) | (78 | ) | 1,529 | (490 | ) | |||||||||||
Loss from discontinued operations | (12 | ) | — | — | (433 | ) | — | ||||||||||||
Net income (loss) | $ | 2,077 | $ | (412 | ) | $ | (78 | ) | $ | 1,096 | $ | (490 | ) | ||||||
Continuing operations: | |||||||||||||||||||
Basic and diluted income (loss) per share | $ | 0.04 | $ | (0.01 | ) | $ | (0.00 | ) | $ | 0.03 | $ | (0.01 | ) | ||||||
Discontinued operations: | |||||||||||||||||||
Basic and diluted loss per share | $ | (0.00 | ) | $ | — | $ | — | $ | (0.01 | ) | $ | — | |||||||
Net income (loss): | |||||||||||||||||||
Basic and diluted income (loss) per share* | $ | 0.04 | $ | (0.01 | ) | $ | (0.00 | ) | $ | 0.02 | $ | (0.01 | ) | ||||||
Weighted average shares used to calculate net income (loss) per share: | |||||||||||||||||||
Basic | 58,384 | 59,678 | 60,159 | 58,194 | 59,920 | ||||||||||||||
Diluted | 58,797 | 59,678 | 60,159 | 58,616 | 59,920 | ||||||||||||||
* Per share data may not always add to the total for the period because each figure is independently calculated. | |||||||||||||||||||
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except par value data) | |||||||
December 31, 2013 | June 30, 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 40,406 | $ | 42,196 | |||
Accounts receivable, net | 42,907 | 32,814 | |||||
Inventories | 6,539 | 7,532 | |||||
Prepaid expenses and other assets | 7,265 | 4,823 | |||||
Total current assets | 97,117 | 87,365 | |||||
Property and equipment, net | 7,565 | 7,577 | |||||
Other assets | 702 | 602 | |||||
Total assets | $ | 105,384 | $ | 95,544 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 33,255 | $ | 24,092 | |||
Accrued compensation | 4,922 | 3,441 | |||||
Accrued expenses | 8,935 | 7,509 | |||||
Deferred revenue | 4,211 | 5,045 | |||||
Credit facility borrowings | 2,000 | — | |||||
Total current liabilities | 53,323 | 40,087 | |||||
Other long-term liabilities | 4,414 | 4,276 | |||||
Total liabilities | 57,737 | 44,363 | |||||
Stockholders' equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 59 | 60 | |||||
Additional paid-in capital | 330,103 | 334,155 | |||||
Accumulated other comprehensive loss | (3,254 | ) | (3,283 | ) | |||
Accumulated deficit | (279,261 | ) | (279,751 | ) | |||
Total stockholders' equity | 47,647 | 51,181 | |||||
Total liabilities and stockholders' equity | $ | 105,384 | $ | 95,544 | |||
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(INCLUDES RESULTS FROM BOTH DISCONTINUED AND CONTINUING OPERATIONS) | |||||||||||
(In thousands) | |||||||||||
Three Months Ended | |||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | |||||||||
Cash Flows From Operating Activities: | |||||||||||
Net income (loss) | $ | 2,077 | $ | (412 | ) | $ | (78 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 754 | 959 | 932 | ||||||||
Stock-based compensation expense | 689 | 578 | 1,054 | ||||||||
Provision for bad debt expense | (5 | ) | — | 2 | |||||||
Write-off of fixed assets | — | — | 5 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (6,574 | ) | 9,240 | 621 | |||||||
Inventories | 748 | (1,122 | ) | 87 | |||||||
Prepaid expenses and other assets | 26 | 1,238 | 1,306 | ||||||||
Accounts payable | 1,667 | (7,112 | ) | (2,010 | ) | ||||||
Accrued compensation and other expenses | 2,238 | (2,809 | ) | (404 | ) | ||||||
Deferred revenue | 416 | 799 | 32 | ||||||||
Other long-term liabilities | 18 | (252 | ) | 109 | |||||||
Net cash provided by operating activities | 2,054 | 1,107 | 1,656 | ||||||||
Cash Flows From Investing Activities: | |||||||||||
Purchases of property and equipment | (1,132 | ) | (995 | ) | (437 | ) | |||||
Net cash used in investing activities | (1,132 | ) | (995 | ) | (437 | ) | |||||
Cash Flows From Financing Activities: | |||||||||||
Payments on bank borrowings | (2,800 | ) | (2,000 | ) | — | ||||||
Proceeds from bank borrowings | 2,100 | — | — | ||||||||
Shares withheld for tax purposes | (101 | ) | (72 | ) | (8 | ) | |||||
Proceeds from sale of stock to employees | 41 | 1,854 | 646 | ||||||||
Net cash provided by (used in) financing activities | (760 | ) | (218 | ) | 638 | ||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (57 | ) | 22 | 17 | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 105 | (84 | ) | 1,874 | |||||||
Cash and Cash Equivalents, beginning of period | 40,297 | 40,406 | 40,322 | ||||||||
Cash and Cash Equivalents, end of period | $ | 40,402 | $ | 40,322 | $ | 42,196 | |||||
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | |||||||||||
Capital assets acquired but not paid | $ | 308 | $ | 995 | $ | 345 | |||||
Supplemental Cash Flow Data: | |||||||||||
Cash paid for income taxes | $ | 67 | $ | 195 | $ | 65 | |||||
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
GAAP net revenue from continuing operations | $ | 50,683 | $ | 48,207 | $ | 48,222 | $ | 95,163 | $ | 96,429 | |||||||||
GAAP revenue from discontinued operations | 2 | — | — | 22 | — | ||||||||||||||
GAAP net revenue from continuing and discontinued operations | $ | 50,685 | $ | 48,207 | $ | 48,222 | $ | 95,185 | $ | 96,429 | |||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Non-GAAP net revenue | $ | 51,233 | $ | 48,860 | $ | 48,425 | $ | 96,114 | $ | 97,285 | |||||||||
GAAP gross profit from continuing operations | $ | 17,007 | $ | 15,265 | $ | 16,023 | $ | 31,447 | $ | 31,288 | |||||||||
GAAP gross margin % from continuing operations | 33.6 | % | 31.7 | % | 33.2 | % | 33.0 | % | 32.4 | % | |||||||||
GAAP gross profit (loss) from discontinued operations | (9 | ) | — | — | (120 | ) | — | ||||||||||||
GAAP gross profit from continuing and discontinued operations | $ | 16,998 | $ | 15,265 | $ | 16,023 | $ | 31,327 | $ | 31,288 | |||||||||
GAAP gross margin % from continuing and discontinued operations | 33.5 | % | 31.7 | % | 33.2 | % | 32.9 | % | 32.4 | % | |||||||||
Stock-based compensation | 83 | 64 | 95 | 179 | 159 | ||||||||||||||
Severance costs | — | 73 | 2 | 23 | 75 | ||||||||||||||
Power supply component failures | 32 | — | — | (776 | ) | — | |||||||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
AssuredUVS expenses | 11 | — | — | 140 | — | ||||||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Long-term software contract costs | 89 | 123 | 117 | 345 | 240 | ||||||||||||||
Non-GAAP gross profit | $ | 17,761 | $ | 16,178 | $ | 16,440 | $ | 32,167 | $ | 32,618 | |||||||||
Non-GAAP gross margin % | 34.7 | % | 33.1 | % | 33.9 | % | 33.5 | % | 33.5 | % | |||||||||
GAAP sales and marketing expenses from continuing operations | $ | 3,187 | $ | 3,294 | $ | 3,843 | $ | 6,295 | $ | 7,137 | |||||||||
GAAP contribution margin from continuing operations | $ | 13,820 | $ | 11,971 | $ | 12,180 | $ | 25,152 | $ | 24,151 | |||||||||
GAAP contribution margin % from continuing operations | 27.3 | % | 24.8 | % | 25.3 | % | 26.4 | % | 25.0 | % | |||||||||
Stock-based compensation | (72 | ) | (72 | ) | (99 | ) | (148 | ) | (171 | ) | |||||||||
Severance costs | — | (42 | ) | — | (5 | ) | (42 | ) | |||||||||||
Non-GAAP sales and marketing expenses | $ | 3,115 | $ | 3,180 | $ | 3,744 | $ | 6,142 | $ | 6,924 | |||||||||
Non-GAAP contribution margin | $ | 14,646 | $ | 12,998 | $ | 12,696 | $ | 26,025 | $ | 25,694 | |||||||||
Non-GAAP contribution margin % | 28.6 | % | 26.6 | % | 26.2 | % | 27.1 | % | 26.4 | % | |||||||||
Exhibit 99.1
GAAP operating expenses from continuing operations | $ | 14,862 | $ | 15,668 | $ | 16,034 | $ | 29,820 | $ | 31,702 | |||||||||
GAAP operating expenses from discontinued operations | 3 | — | — | 313 | — | ||||||||||||||
GAAP operating expenses from continuing and discontinued operations | $ | 14,865 | $ | 15,668 | $ | 16,034 | $ | 30,133 | $ | 31,702 | |||||||||
Currency (loss) gain | (18 | ) | 73 | 28 | (361 | ) | 101 | ||||||||||||
Stock-based compensation | (606 | ) | (514 | ) | (959 | ) | (1,178 | ) | (1,473 | ) | |||||||||
AssuredUVS expenses | (5 | ) | — | — | (358 | ) | — | ||||||||||||
Long-term software contract deferred costs | 6 | — | — | 406 | — | ||||||||||||||
Restructuring recoveries | — | — | — | 10 | — | ||||||||||||||
Legal fees related to power supply component failure | (1 | ) | — | — | (2 | ) | — | ||||||||||||
Severance costs | — | (83 | ) | — | (82 | ) | (83 | ) | |||||||||||
Non-GAAP operating expenses | $ | 14,241 | $ | 15,144 | $ | 15,103 | $ | 28,568 | $ | 30,247 | |||||||||
GAAP net income (loss) from continuing operations | $ | 2,089 | $ | (412 | ) | $ | (78 | ) | $ | 1,529 | $ | (490 | ) | ||||||
GAAP net loss from discontinued operations | (12 | ) | — | — | (433 | ) | — | ||||||||||||
GAAP net income (loss) from continuing and discontinued operations | $ | 2,077 | $ | (412 | ) | $ | (78 | ) | $ | 1,096 | $ | (490 | ) | ||||||
Currency loss (gain) | 18 | (73 | ) | (28 | ) | 361 | (101 | ) | |||||||||||
Stock-based compensation | 689 | 578 | 1,054 | 1,357 | 1,632 | ||||||||||||||
Restructuring recoveries | — | — | — | (10 | ) | — | |||||||||||||
Power supply component failures | 33 | — | — | (774 | ) | — | |||||||||||||
AssuredUVS expenses | 16 | — | — | 498 | — | ||||||||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
Other income | — | (10 | ) | (17 | ) | — | (27 | ) | |||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Long-term software contract costs | 89 | 123 | 117 | 345 | 240 | ||||||||||||||
Long-term software contract deferred costs | (6 | ) | — | — | (406 | ) | — | ||||||||||||
Severance costs | — | 156 | 2 | 105 | 158 | ||||||||||||||
Non-GAAP net income | $ | 3,464 | $ | 1,015 | $ | 1,253 | $ | 3,501 | $ | 2,268 | |||||||||
Non-GAAP net income per share | |||||||||||||||||||
Basic and diluted | $ | 0.06 | $ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.04 | |||||||||
Weighted average shares used to calculate net income per share: | |||||||||||||||||||
Basic | 58,384 | 59,678 | 60,159 | 58,194 | 59,920 | ||||||||||||||
Diluted | 58,797 | 63,912 | 63,806 | 58,616 | 63,834 | ||||||||||||||
Non-GAAP net income | $ | 3,464 | $ | 1,015 | $ | 1,253 | $ | 3,501 | $ | 2,268 | |||||||||
Interest expense less AssuredUVS | 8 | 18 | 4 | 15 | 22 | ||||||||||||||
Income tax expense | 49 | 1 | 74 | 83 | 75 | ||||||||||||||
Depreciation less AssuredUVS | 757 | 959 | 932 | 1,463 | 1,891 | ||||||||||||||
Non-GAAP EBITDA | $ | 4,278 | $ | 1,993 | $ | 2,263 | $ | 5,062 | $ | 4,256 | |||||||||
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR NET REVENUE FOR TRAILING 12 MONTHS | |||||||
(In thousands) | |||||||
Q3 12 through Q2 13 | Q3 13 through Q2 14 | ||||||
Total GAAP net revenue from continuing operations | $ | 187,405 | $ | 207,831 | |||
GAAP revenue from discontinued operations | 176 | 28 | |||||
Total GAAP net revenue, from continuing and discontinued operations | $ | 187,581 | $ | 207,859 | |||
AssuredUVS revenue | (176 | ) | (28 | ) | |||
Long-term software contract royalties | 3,092 | 2,084 | |||||
Total non-GAAP net revenue | $ | 190,497 | $ | 209,915 | |||
Server OEM GAAP net revenue from continuing operations | $ | 129,414 | $ | 128,332 | |||
Long-term software contract royalties | 3,092 | 2,084 | |||||
Server OEM non-GAAP net revenue | $ | 132,506 | $ | 130,416 | |||
Vertical Markets GAAP net revenue from continuing operations | $ | 57,991 | $ | 79,499 | |||
GAAP revenue from discontinued operations | 176 | 28 | |||||
Vertical Markets GAAP net revenue, from continuing and discontinued operations | $ | 58,167 | $ | 79,527 | |||
AssuredUVS revenue | (176 | ) | (28 | ) | |||
Vertical Markets non-GAAP net revenue | $ | 57,991 | $ | 79,499 | |||
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR SERVER OEM SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
Server OEM GAAP net revenue from continuing operations | $ | 29,400 | $ | 25,854 | $ | 27,463 | $ | 59,783 | $ | 53,317 | |||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Server OEM non-GAAP net revenue | $ | 29,950 | $ | 26,507 | $ | 27,666 | $ | 60,734 | $ | 54,173 | |||||||||
Server OEM GAAP gross profit from continuing operations | $ | 7,843 | $ | 5,604 | $ | 6,783 | $ | 16,126 | $ | 12,387 | |||||||||
Server OEM GAAP gross margin % from continuing operations | 26.7 | % | 21.7 | % | 24.7 | % | 27.0 | % | 23.2 | % | |||||||||
Stock-based compensation | 52 | 41 | 59 | 130 | 100 | ||||||||||||||
Severance costs | — | 47 | 2 | 14 | 49 | ||||||||||||||
Power supply component failures | 32 | — | — | (776 | ) | — | |||||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Long-term software contract costs | 89 | 123 | 117 | 345 | 240 | ||||||||||||||
Server OEM non-GAAP gross profit | $ | 8,566 | $ | 6,468 | $ | 7,164 | $ | 16,790 | $ | 13,632 | |||||||||
Server OEM non-GAAP gross margin % | 28.6 | % | 24.4 | % | 25.9 | % | 27.6 | % | 25.2 | % | |||||||||
Server OEM GAAP sales and marketing expenses from continuing operations | $ | 573 | $ | 482 | $ | 541 | $ | 1,008 | $ | 1,023 | |||||||||
Server OEM GAAP contribution margin from continuing operations | $ | 7,270 | $ | 5,122 | $ | 6,242 | $ | 15,118 | $ | 11,364 | |||||||||
Server OEM GAAP contribution margin % from continuing operations | 24.7 | % | 19.8 | % | 22.7 | % | 25.3 | % | 21.3 | % | |||||||||
Stock-based compensation | (15 | ) | (15 | ) | (21 | ) | (31 | ) | (36 | ) | |||||||||
Severance costs | — | (9 | ) | — | (1 | ) | (9 | ) | |||||||||||
Server OEM non-GAAP sales and marketing expenses | $ | 558 | $ | 458 | $ | 520 | $ | 976 | $ | 978 | |||||||||
Server OEM non-GAAP contribution margin | $ | 8,008 | $ | 6,010 | $ | 6,644 | $ | 15,814 | $ | 12,654 | |||||||||
Server OEM non-GAAP contribution margin % | 26.7 | % | 22.7 | % | 24.0 | % | 26.0 | % | 23.4 | % | |||||||||
Server OEM GAAP operating income for continuing operations | $ | 7,270 | $ | 5,122 | $ | 6,242 | $ | 15,118 | $ | 11,364 | |||||||||
Stock-based compensation | 67 | 56 | 80 | 161 | 136 | ||||||||||||||
Severance costs | — | 56 | 2 | 15 | 58 | ||||||||||||||
Power supply component failures | 32 | — | — | (776 | ) | — | |||||||||||||
Long-term software contract royalties | 550 | 653 | 203 | 951 | 856 | ||||||||||||||
Long-term software contract costs | 89 | 123 | 117 | 345 | 240 | ||||||||||||||
Server OEM non-GAAP operating income | $ | 8,008 | $ | 6,010 | $ | 6,644 | $ | 15,814 | $ | 12,654 | |||||||||
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR VERTICAL MARKETS SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
Vertical Markets GAAP net revenue from continuing operations | $ | 21,283 | $ | 22,353 | $ | 20,759 | $ | 35,380 | $ | 43,112 | |||||||||
GAAP revenue from discontinued operations | 2 | — | — | 22 | — | ||||||||||||||
Vertical Markets GAAP net revenue from continuing and discontinued operations | $ | 21,285 | $ | 22,353 | $ | 20,759 | $ | 35,402 | $ | 43,112 | |||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
Vertical Markets non-GAAP net revenue | $ | 21,283 | $ | 22,353 | $ | 20,759 | $ | 35,380 | $ | 43,112 | |||||||||
Vertical Markets GAAP gross profit from continuing operations | $ | 9,164 | $ | 9,661 | $ | 9,240 | $ | 15,321 | $ | 18,901 | |||||||||
Vertical Markets GAAP gross margin % from continuing operations | 43.1 | % | 43.2 | % | 44.5 | % | 43.3 | % | 43.8 | % | |||||||||
Vertical Markets GAAP gross profit (loss) from discontinued operations | (9 | ) | — | — | (120 | ) | — | ||||||||||||
Vertical Markets GAAP gross profit from continuing and discontinued operations | $ | 9,155 | $ | 9,661 | $ | 9,240 | $ | 15,201 | $ | 18,901 | |||||||||
Vertical Markets GAAP gross margin % from continuing and discontinued operations | 43.0 | % | 43.2 | % | 44.5 | % | 42.9 | % | 43.8 | % | |||||||||
Stock-based compensation | 31.0 | 23.0 | 36.0 | 49.0 | 58.0 | ||||||||||||||
Severance costs | — | 26 | — | 9 | 27 | ||||||||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
AssuredUVS expenses | 11 | — | — | 140 | — | ||||||||||||||
Vertical Markets non-GAAP gross profit | $ | 9,195 | $ | 9,710 | $ | 9,276 | $ | 15,377 | $ | 18,986 | |||||||||
Vertical Markets non-GAAP gross margin % | 43.2 | % | 43.4 | % | 44.7 | % | 43.5 | % | 44 | % | |||||||||
Vertical Markets GAAP sales and marketing expenses from continuing operations | $ | 1,996 | $ | 2,254 | $ | 2,478 | $ | 4,076 | $ | 4,732 | |||||||||
Vertical Markets GAAP contribution margin from continuing operations | $ | 7,168 | $ | 7,407 | $ | 6,762 | $ | 11,245 | $ | 14,169 | |||||||||
Vertical Markets GAAP contribution margin % from continuing operations | 33.7 | % | 33.1 | % | 32.6 | % | 31.8 | % | 32.9 | % | |||||||||
Stock-based compensation | (33 | ) | (33 | ) | (45 | ) | (68 | ) | (78 | ) | |||||||||
Severance costs | — | (19 | ) | — | (2 | ) | (19 | ) | |||||||||||
Vertical Markets non-GAAP sales and marketing expenses | $ | 1,963 | $ | 2,202 | $ | 2,433 | $ | 4,006 | $ | 4,635 | |||||||||
Vertical Markets non-GAAP contribution margin | $ | 7,232 | $ | 7,508 | $ | 6,843 | $ | 11,371 | $ | 14,351 | |||||||||
Vertical Markets non-GAAP contribution margin % | 34.0 | % | 33.6 | % | 33.0 | % | 32.1 | % | 33.3 | % | |||||||||
Exhibit 99.1
Vertical Markets GAAP operating income for continuing operations | $ | 7,168 | $ | 7,407 | $ | 6,762 | $ | 11,245 | $ | 14,169 | |||||||||
Vertical Markets GAAP operating loss for discontinued operations | (9 | ) | — | — | (120 | ) | — | ||||||||||||
Vertical Markets GAAP operating income for continuing and discontinued operations | $ | 7,159 | $ | 7,407 | $ | 6,762 | $ | 11,125 | $ | 14,169 | |||||||||
Stock-based compensation | 64 | 56 | 81 | 117 | 136 | ||||||||||||||
Severance costs | — | 45 | — | 11 | 46 | ||||||||||||||
AssuredUVS revenue | (2 | ) | — | — | (22 | ) | — | ||||||||||||
AssuredUVS expenses | 11 | — | — | 140 | — | ||||||||||||||
Vertical Markets non-GAAP operating income | $ | 7,232 | $ | 7,508 | $ | 6,843 | $ | 11,371 | $ | 14,351 | |||||||||
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES FOR CORPORATE SEGMENT | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
Corporate GAAP sales and marketing expenses from continuing operations | $ | 618 | $ | 558 | $ | 824 | $ | 1,211 | $ | 1,382 | |||||||||
Corporate GAAP contribution margin from continuing operations | $ | (618 | ) | $ | (558 | ) | $ | (824 | ) | $ | (1,211 | ) | $ | (1,382 | ) | ||||
Stock-based compensation | (24 | ) | (24 | ) | (33 | ) | (49 | ) | (57 | ) | |||||||||
Severance costs | — | (14 | ) | — | (2 | ) | (14 | ) | |||||||||||
Corporate non-GAAP sales and marketing expenses | $ | 594 | $ | 520 | $ | 791 | $ | 1,160 | $ | 1,311 | |||||||||
Corporate non-GAAP contribution margin | $ | (594 | ) | $ | (520 | ) | $ | (791 | ) | $ | (1,160 | ) | $ | (1,311 | ) | ||||
Corporate GAAP research and development expenses from continuing operations | $ | 8,908 | $ | 9,476 | $ | 9,340 | $ | 17,621 | $ | 18,816 | |||||||||
Stock-based compensation | (203 | ) | (260 | ) | (347 | ) | (577 | ) | (607 | ) | |||||||||
Long-term software contract deferred costs | 6 | — | — | 406 | — | ||||||||||||||
Severance costs | — | (40 | ) | — | (77 | ) | (40 | ) | |||||||||||
Corporate non-GAAP research and development expenses | $ | 8,711 | $ | 9,176 | $ | 8,993 | $ | 17,373 | $ | 18,169 | |||||||||
Corporate GAAP general & administrative expenses from continuing operations | $ | 2,767 | $ | 2,898 | $ | 2,851 | $ | 5,904 | $ | 5,749 | |||||||||
Corporate GAAP general & administrative expenses from discontinued operations | 3 | — | — | 313 | — | ||||||||||||||
Corporate GAAP general & administrative expenses from continuing and discontinued operations | $ | 2,770 | $ | 2,898 | $ | 2,851 | $ | 6,217 | $ | 5,749 | |||||||||
Currency loss (gain) | (18 | ) | 73 | 28 | (361 | ) | 101 | ||||||||||||
Stock-based compensation | (331 | ) | (182 | ) | (513 | ) | (453 | ) | (695 | ) | |||||||||
AssuredUVS expenses | (5 | ) | — | — | (358 | ) | — | ||||||||||||
Restructuring recoveries | — | — | — | 10 | — | ||||||||||||||
Legal fees related to power supply component failure | (1 | ) | — | — | (2 | ) | — | ||||||||||||
Severance costs | — | (1 | ) | — | — | (1 | ) | ||||||||||||
Corporate non-GAAP general & administrative expenses | $ | 2,415 | $ | 2,788 | $ | 2,366 | $ | 5,053 | $ | 5,154 | |||||||||
Exhibit 99.1
Corporate GAAP operating loss from continuing operations | $ | (12,293 | ) | $ | (12,932 | ) | $ | (13,015 | ) | $ | (24,736 | ) | $ | (25,947 | ) | ||||
Corporate GAAP operating loss from discontinued operations | (3 | ) | — | — | (313 | ) | — | ||||||||||||
Corporate GAAP operating loss from continuing and discontinued operations | $ | (12,296 | ) | $ | (12,932 | ) | $ | (13,015 | ) | $ | (25,049 | ) | $ | (25,947 | ) | ||||
Currency loss (gain) | 18 | (73 | ) | (28 | ) | 361 | (101 | ) | |||||||||||
Stock-based compensation | 558 | 466 | 893 | 1,079 | 1,359 | ||||||||||||||
AssuredUVS expenses | 5 | — | — | 358 | — | ||||||||||||||
Long-term software contract deferred costs | (6 | ) | — | — | (406 | ) | — | ||||||||||||
Restructuring recoveries | — | — | — | (10 | ) | — | |||||||||||||
Legal fees related to power supply component failure | 1 | — | — | 2 | — | ||||||||||||||
Severance costs | — | 55 | — | 79 | 55 | ||||||||||||||
Corporate non-GAAP operating loss | $ | (11,720 | ) | $ | (12,484 | ) | $ | (12,150 | ) | $ | (23,586 | ) | $ | (24,634 | ) | ||||
Exhibit 99.1
DOT HILL SYSTEMS CORP. | |||||||||||||||||||
UNAUDITED RECONCILIATION OF CONSOLIDATED NON-GAAP MEASURES | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2013 | March 31, 2014 | June 30, 2014 | June 30, 2013 | June 30, 2014 | |||||||||||||||
GAAP income (loss) per share from continuing operations | $ | 0.04 | $ | (0.01 | ) | $ | (0.00 | ) | $ | 0.03 | $ | (0.01 | ) | ||||||
GAAP loss per share from discontinued operations | (0.00 | ) | — | — | (0.01 | ) | — | ||||||||||||
GAAP income (loss) per share from continuing and discontinued operations* | $ | 0.04 | $ | (0.01 | ) | $ | (0.00 | ) | $ | 0.02 | $ | (0.01 | ) | ||||||
Currency loss | 0.00 | (0.00 | ) | (0.00 | ) | 0.01 | 0.00 | ||||||||||||
Stock-based compensation | 0.01 | 0.01 | 0.02 | 0.02 | 0.03 | ||||||||||||||
Power supply component failures | 0.00 | — | — | (0.01 | ) | — | |||||||||||||
AssuredUVS expenses | 0.00 | — | — | 0.01 | — | ||||||||||||||
Long-term software contract royalties | 0.01 | 0.01 | 0.00 | 0.02 | 0.01 | ||||||||||||||
Long-term software contract costs | 0.00 | 0.00 | 0.00 | 0.01 | 0.00 | ||||||||||||||
Long-term software contract deferred costs | (0.00 | ) | — | — | (0.01 | ) | — | ||||||||||||
Other adjustments | — | 0.01 | — | — | 0.01 | ||||||||||||||
Non-GAAP income per share* | $ | 0.06 | $ | 0.02 | $ | 0.02 | $ | 0.06 | $ | 0.04 | |||||||||
Weighted average shares used to calculate earnings per share: | |||||||||||||||||||
Basic | 58,384 | 59,678 | 60,159 | 58,194 | 59,920 | ||||||||||||||
Diluted | 58,797 | 63,912 | 63,806 | 58,616 | 63,834 | ||||||||||||||
* Per share data may not always add to the total for the period because each figure is independently calculated. | |||||||||||||||||||