STEC 8-K 2009
STEC Announces Second Quarter 2009 Results
Revenue, Gross Profit Margin and EPS Higher On Faster-Than-Expected Adoption of Its Enterprise Class Solid State Drives
SANTA ANA, Calif., Aug. 3, 2009 STEC, Inc. (Nasdaq:STEC) announced today its financial results for the second quarter ended June 30, 2009. Revenue for the second quarter of 2009 was $86.4 million, an increase of 53.7% from $56.2 million for the second quarter of 2008, and an increase of 35.9% from $63.5 million for the first quarter of 2009. Shipments of our ZeusIOPS Solid-State drives (SSD) into the Enterprise-Storage market grew to $57.7 million for the second quarter of 2009, an increase of approximately 375% from $12.1 million for the second quarter of 2008, and an increase of approximately 125% from $25.7 million for the first quarter of 2009.
GAAP gross profit margin was 50.0% for the second quarter of 2009, compared to 32.3% for the second quarter of 2008 and 36.3% for the first quarter of 2009. GAAP diluted earnings per share from continuing operations was $0.38 for the second quarter of 2009, compared to $0.03 for the second quarter of 2008, and $0.07 for the first quarter of 2009.
Non-GAAP gross profit margin increased to 50.1% for the second quarter of 2009, compared to 35.3% for the second quarter of 2008 and 39.8% for first quarter of 2009. Non-GAAP diluted earnings per share from continuing operations was $0.42 for the second quarter of 2009, compared to $0.09 for the second quarter of 2008, and $0.17 for the first quarter of 2009. GAAP results for the second quarter of 2009 included employee stock compensation, special charges related to the implementation of our restructuring plan and grant incentive income received from the Malaysian government. Non-GAAP results are explained and reconciled to GAAP results in tables included in this release.
Additional highlights for the second quarter of 2009 include:
It is exciting to share such outstanding results today and to deliver significant revenue, gross profit margin and EPS growth for the second quarter of 2009, said Manouch Moshayedi, STECs Chairman and Chief Executive Officer. We have shown a significant improvement in our already strong balance sheet particularly in the generation of cash and effective management of inventory added four more major Enterprise-Storage OEMs to our blue chip customer list, and surpassed our stated year-end 2009 non-GAAP gross profit margin goal of 40%, expanding it to 50% in the second quarter of 2009.
In our prior quarters earnings announcement we had estimated that ZeusIOPS revenue for the first half of 2009 would surpass $53 million. I am pleased to report that we have actually achieved $83 million in ZeusIOPS revenue for this period. Although we are still early in the process of the adoption of SSDs into the Enterprise-Storage market, I believe that the $120 million supply agreement that we signed for the second half of 2009 is a further indication of future SSD growth and customers acceptance of SSDs into this growing market. I am very excited about our product road map specific to the Enterprise-Storage, Enterprise-Server and related markets.
We currently expect third quarter of 2009 revenue to range from $95 million to $97 million with diluted non-GAAP earnings per share to range from $0.45 to $0.47.
STEC will hold an open conference call to discuss results for the second quarter of 2009. The call will take place today at 2:30 p.m., Pacific/ 5:30 p.m., Eastern. The call-in numbers for the conference are (877) 419-6596 (United States and Canada) and (719) 325-4848 (International).
This call will be webcast. The webcast can be accessed by clicking on the gray Nasdaq:STEC tab at the top of the home page at www.stec-inc.com. The webcast will be archived and available for replay beginning approximately two hours after the live call concludes.
About STEC, Inc. (Nasdaq:STEC)
STEC, Inc. designs, manufactures and markets enterprise-class solid state drives, or SSDs, for use in high performance storage and server systems, and high density dynamic random access memory, or DRAM, modules for networking, communications and industrial applications.
For information about STEC and to subscribe to the Companys Email Alerts service, please visit our web site at www.stec-inc.com, click the Nasdaq:STEC tab at the top of the page and then click Email Alerts.
The STEC, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=1079.
Use of Non-GAAP Financial Information
To supplement the consolidated financial results prepared in accordance with generally accepted accounting principles in the United States (GAAP), we use non-GAAP financial measures (non-GAAP gross profit, non-GAAP income from continuing operations, non-GAAP diluted earnings per share from continuing operations and non-GAAP diluted earnings per share) that exclude start-up costs related to our Malaysia facility, employee stock compensation, global tax structuring costs, intellectual property litigation costs, Malaysian government incentive grant income, special charges related to the implementation of our restructuring plan and the short-term impact of the global tax structuring on our effective tax rate. Management excludes these items because it believes that the non-GAAP measures enhance an investors overall understanding of our financial performance and future prospects by being more reflective of our core, recurring operational activities and to be more comparable with our results over various periods. Management uses such non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. Guidance for diluted earnings per share 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 customer audit approvals for the Malaysia facility which would impact the ramp up of production, registration costs for new entities related to our global tax structuring and unexpected delays in shipping new products developed by our foreign subsidiaries in lower tax jurisdictions than the United States. These items could be materially significant in our GAAP results in any period. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the Companys 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 quarters 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 future SSD growth and customers acceptance of SSDs, and expected third quarter 2009 revenue and earnings per share. 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. The information contained in this press release is a statement of STECs 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 STECs 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.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
The items excluded from GAAP financial results in calculating non-GAAP financial results, are set forth below:
management believes excluding Malaysia start-up costs from our operations for the reporting periods through the first quarter of 2009 provides investors with a better means of evaluating our current operations. Starting in the second quarter of 2009, we no longer treat costs incurred for our Malaysia operations as a non-GAAP item since the transition of operations and integration of the Malaysia facility was substantially completed during the second quarter of 2009.
Schedule Reconciling GAAP Income From Continuing Operations to Non-GAAP Income From Continuing Operations
($ in thousands, except per share amounts)
(a) - (g) See corresponding footnotes above.
Schedule Reconciling Reported Financial Ratios
Selected Non-GAAP Financial Information
($ in thousands)
(a) - (b) Refer to the corresponding footnotes above.