Cray Inc. reports third quarter 2011 financial results

1 Nov 2011 Seattle - Cray Inc. has issued financial results for the third quarter ended September 30, 2011. Revenue for the quarter was $36.7 million compared to $42.8 million in the prior year period. The company reported a net loss for the quarter of ($12.2 million) or ($0.35) per share compared to a net loss of ($18.8 million) or ($0.55) per share in the third quarter of 2010.

Total gross profit margin for the third quarter was 44 percent, compared to 25 percent in the third quarter of 2010. Product margin in the third quarter of 2011 was 30 percent and service margin was 55 percent.

Operating expenses declined slightly in the third quarter of 2011 to $28.6 million compared to $29.2 million in the prior year period. The third quarter 2011 results included restructuring costs of $0.7 million and non-cash items of $2.1 million for depreciation and amortization and $0.6 million related to stock compensation expense.

Revenue for the nine-month period ending September 30, 2011 was $144.5 million compared with $100.0 million in the prior year period. For the first nine months of 2011, total operating expenses were $75.3 million compared to $65.1 million in the prior year period. The higher operating expenses were due primarily to less R&D co-funding credits. Net loss was ($16.7 million) or ($0.48) per share for the first nine months of 2011, compared to a net loss of ($37.0 million) or ($1.08) per share in the prior year period. The nine-month period ending September 30, 2011 results included $1.9 million in restructuring costs and non-cash items of $6.4 million for depreciation and amortization and $2.7 million related to stock compensation expense.

As of September 30, 2011, cash balances totaled $92.0 million.

"We continue to make good progress on our roadmap and are well positioned as we head into the fourth quarter", stated Peter Ungaro, president and CEO of Cray. "Our high-end supercomputer business is strong and growing. We just launched the XK6 supercomputer, which was instrumental in our huge win at Oak Ridge National Laboratory. Their new system will be nicknamed 'Titan' and with a peak performance of over 10 petaflops, is a significant step on our way to exascale computing. While we are working through some key supplier parts challenges, we have now shipped, or are in the process of shipping, the major systems considered in our 2011 outlook."

Peter Ungaro added: "We're on track to launch solutions in new growth markets over the next several months, significantly broadening our product set and leveraging our market leading position in supercomputing. With a solid pipeline of new opportunities and an expanding set of solutions, I'm excited about where we're headed. A wide range of results remains possible for 2011 and the company's results are highly dependent on completing a handful of large transactions already contracted. Our 2011 outlook considers the impact of past and currently expected delays in receiving a key component for our systems. Total revenue for 2011 is anticipated to be in the range of $290-$320 million. Annual gross margins are expected to be in the mid-30 percent range and total operating expenses for 2011 are expected to be around $100 million. Based on this outlook, we expect to be profitable for 2011."

Actual results for any future period are subject to large fluctuations given the nature of Cray's business.

Recent highlights include:

• In October, Cray was awarded a $97 million contract with the Department of Energy's Oak Ridge National Laboratory to transform the highly-regarded Cray XT5 system nicknamed "Jaguar" into "Titan", a new Cray XK6 supercomputer that will have a peak performance of over 10 petaflops. Another milestone in the company's collaborative partnership with Oak Ridge, this contract will provide the DOE's scientific community with one of the most powerful supercomputers in the world, paving the way for amazing scientific breakthroughs. The contract includes additional upgrade options that, if exercised, would increase the total value of the contract beyond $97 million.
• In September, Cray received official notification of acceptance for a 24-cabinet upgrade to the Cray XE6 supercomputer nicknamed "Cielo" used by researchers and scientists from the U.S. National Nuclear Security Administration. The 96-cabinet Cray system is located at the Los Alamos National Laboratory in partnership with Sandia National Laboratories. As a result of this upgrade its users can now apply the resources of a petascale supercomputer towards running some of the largest and most demanding workloads involving modelling and simulation.
• In August, Cray signed a contract to deliver a multi-cabinet Cray XE6 supercomputer to ExxonMobil, marking a significant return to the energy segment for Cray.
• In October, Cray completed a $12 million development milestone for its Defense Advanced Research Projects Agency (DARPA) contract related to the development of its next-generation supercomputer, known as Cascade.