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

   

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

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

 
   

March 31,

 

June 30,

 

September 30,

 

December 31,

 

March 31,

 
   

2010

 

2010

 

2010

 

2010

 

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

 
   

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,

 

June 30,

 

September 30,

 

December 31,

 

March 31,

 
   

2010

 

2010

 

2010

 

2010

 

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,

 

June 30,

 

September 30,

 

December 31,

 

March 31,

 
   

2010

 

2010

 

2010

 

2010

 

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.

 
                     

 

SOURCE Savvis, Inc.