SAVVIS INC 
By ST. LOUIS, April 27, 2011 /PRNewswire/ -- 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 ($0.21) per share.
First Quarter Financial Results
US$ in millions Three months ended
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 $67.8 million of adjusted EBITDA in the fourth quarter of 2010.
Hosting
Percent of
US$ in millions 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 $152.8
Percentage change 3% 26%
Network
Percent of
US$ in millions 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
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.
* 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.
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.
SAVVIS, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2011 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
========== ==========
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 on
cash 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
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.
SAVVIS, Inc. and Subsidiaries
Unaudited Supplemental Revenue Information
(in thousands, except per square foot amounts)
Three Months Ended
------------------
September
March 31, June 30, 30,
2010 2010 2010
---- ---- ----
Data Center Revenue
Colocation $82,467 $84,281 $95,211
Managed hosting 70,284 73,898 81,513
Data Center Metrics (1)
Total raised floor 1,477 1,477 1,564
889 885 957
Billed square feet 601 622 678
Utilization 68% 70% 71%
Average Billed Square Feet
Colocation 572.1 586.6 623.4
Managed hosting 23.8 25.1 26.8
Total Average Billed Square Feet 595.9 611.7 650.3
===== ===== =====
Average Monthly Data Center Revenue
Per Billed Square Foot (2)
Colocation $48.1 $47.5 $50.9
Managed hosting 984.5 974.4 1,012.7
Three Months Ended
------------------
December
31, March 31,
2010 2011
---- ----
Data Center Revenue
Colocation $96,430 $99,577
Managed hosting 89,267 92,263
Data Center Metrics (1)
Total raised floor 1,541 1,541
938 964
Billed square feet 680 694
Utilization 73% 72%
Average Billed Square Feet
Colocation 651.2 658.6
Managed hosting 28.1 28.3
Total Average Billed Square Feet 679.2 686.9
===== =====
Average Monthly Data Center Revenue
Per Billed Square Foot (2)
Colocation $49.4 $50.4
Managed hosting 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, June 30, September 30,
2010 2010 2010
---- ---- ----
Financial vertical $55,532 $60,417 $67,007
Other 161,055 161,339 174,894
Total Revenue $216,587 $221,756 $241,901
======== ======== ========
Three Months Ended
------------------
December 31, March 31,
2010 2011
---- ----
Financial vertical $69,698 $72,924
Other 183,042 184,117
Total Revenue $252,740 $257,041
======== ========
Network Revenue Supplemental Information:
Three Months Ended
------------------
March 31, June 30, September 30,
2010 2010 2010
---- ---- ----
Core (1) $31,670 $33,459 $36,339
Sustaining (2) 32,166 30,118 28,838
Total Network Revenue $63,836 $63,577 $65,177
======= ======= =======
Three Months Ended
------------------
December 31, March 31,
2010 2011
---- ----
Core (1) $38,443 $38,813
Sustaining (2) 28,600 26,388
Total Network Revenue $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.
SOURCE Savvis, Inc.
