HAVANT, England, March 27 /PRNewswire-FirstCall/ -- Xyratex Ltd (NASDAQ:XRTX), a leading provider of enterprise class data storage subsystems and storage process technology, today announced results for the first fiscal quarter ended February 29, 2008. Revenues for the first quarter were $217.1 million, a decrease of 8.2% compared to revenues of $236.4 million for the same period last year.
For the first quarter, GAAP net loss was $2.2 million, or $0.07 per diluted share, compared to GAAP net income of $10.1 million, or $0.34 per diluted share, in the same period last year. Non-GAAP net income decreased 94% to $0.7 million, or a diluted earnings per share of $0.03, compared to non- GAAP net income of $11.9 million, or $0.40 per diluted share, in the same quarter a year ago (1).
Gross profit margin in the first quarter was 15.1%, compared to 19.0% in the same period last year, primarily due to the decrease in Storage Infrastructure revenues.
Revenues from our Networked Storage Solutions products were $187.8 million as compared to $163.6 million in the same quarter a year ago, an increase of 14.8%. Gross profit margin in the Networked Storage Solutions business was 14.7% as compared to 13.6% a year ago. Revenues from our Storage Infrastructure products were $29.3 million as compared to $72.8 million in the same quarter a year ago, a decrease of 59.8%. Gross profit margin in the Storage Infrastructure business was 18.9% as compared to 31.6% a year ago.
"I was pleased with our first quarter results which were towards the top end of our expectations, which reflected the continued capital spending constraints in the Hard Drive Industry. As anticipated we are now seeing evidence of an increase in demand for capital equipment from our customers and I am encouraged with regard to the healthy fundamentals we see within the two markets we serve," said Steve Barber, CEO of Xyratex. "Though the global economic conditions remain uncertain, I believe the markets we serve will remain healthy and that our customers are well positioned within their respective markets. We will continue to work with our customers to make them more competitive in their respective markets and remain flexible in meeting their technology and product demands. We remain focused on executing as efficiently and effectively as possible in this uncertain economic environment." The company today also announced that, effective immediately, Adam Wray has stepped down from his role as its Executive Vice President of the Storage Infrastructure Division and that Steve Barber will take a more active role in leading this division. "I would like to personally thank Adam for his contribution to the company and in his most recent role, for his dedication and leadership in developing the Storage Infrastructure business to where it is today. I wish Adam every success as he pursues other interests," said Steve Barber.
Business Highlights
-- We announced a new High-Performance RAID Controller and Advanced Power
Management Software for our High-Density RAID System. The Xyratex
F6412E sets a new standard for performance and efficiency, delivering
up to twice the performance (IOPS) of the previous generation
controller while minimizing electronic waste through optimal battery
design. In addition, the company's new Advanced Power Management
software can save up to 40 percent in power dissipation by
automatically spinning down disk drives when not needed. -- We announced that the Xyratex F5412E RAID system is certified for
VMware ESX Server 3.5. The Xyratex F5412E 4Gb FC-SAS/SATA-II RAID
product joins the company's F5402 system as products certified for use
in VMware virtualization environments. -- We commenced installation of equipment as part of a major process
automation project within a new production facility for a current
Storage Infrastructure customer. -- We undertook significant steps to prepare our facilities in Sacramento
and Seremban, Malaysia in anticipation of volume ramps as we move
through the fiscal year. Business Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any future acquisitions or divestitures.
-- Revenue in the second quarter of 2008 is projected to be in the range
$232 to $252 million. -- Fully diluted earnings are anticipated to be between $(0.06) loss per
share and $0.06 earnings per share on a GAAP basis in the second
quarter. On a non-GAAP basis, fully diluted earnings per share are
anticipated to be between $0.03 and $0.15. Non-GAAP earnings per share
excludes non-cash equity compensation, amortization of intangible
assets, certain non-recurring items and related taxation expense. Conference Call/Webcast Information
Xyratex quarterly results conference call will be broadcast live via the internet at http://www.xyratex.com/investors on Thursday, March 27, 2008 at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time. It can also be accessed by a conference call by dialing +1 (888) 679-8018 in the United States and +1 (617) 213-4845 outside of the United States, passcode 72136533. The press release will be posted to the company web site http://www.xyratex.com/.
A replay will be available through April 3, 2008 following the live call by dialing +1 (888) 286-8010 in the United States and +1 (617) 801-6888 outside the United States, replay code 42753368.
(1) Non-GAAP net income and diluted earnings per share excludes (a)
amortization of intangible assets, (b) equity compensation expense,
(c) specified non-recurring items, such as income from sale of a
product line, (d) the related tax effects and (e) the effect of
changes in exchange rates on the income tax expense. Reconciliation
of non-GAAP net income and diluted earnings per share to GAAP net
income (loss) and GAAP diluted earnings (loss) per share is included
in a table immediately following the condensed consolidated
statements of cash flow below. The intention in providing these non-GAAP measures is to provide supplemental information regarding the company's operational performance while recognizing that they have material limitations and that they should only be referred to with reference to the corresponding GAAP measure.
The Company believes that the provision of these non-GAAP financial measures is useful to investors and investment analysts because it enables comparison to the Company's historical operating results, those of competitors and other industry participants and also provides transparency to the measures used by management in operational and financial decision making. In relation to the specific items excluded: (a) intangible assets represent costs incurred by the acquired business prior to acquisition, are not cash costs and will not be replaced when the assets are fully amortized and therefore the exclusion of these costs provides management and investors with better visibility of the costs required to generate revenue over time; (b) equity compensation expense is non-cash in nature, is outside the control of management during the period in which the expense is incurred and in addition has not been measured consistently as a result of the implementation of FAS123R; (c) the income from the sale of the product line is non-recurring and does not form part of the Company's core operations; (d) the exclusion of the related tax effects of excluding items (a) to (c) is necessary to show the effect on net income of the change in tax expense that would have been recorded if these items had not been incurred; (e) the effect of changes in exchange rates on deferred tax balances is non-cash and is not comparable across periods or with other companies.
Safe Harbor Statement This press release contains forward-looking statements. These statements relate to future events or our future financial performance, including our projected revenue and fully diluted earnings per share data (on a GAAP and non-GAAP basis) for the second quarter. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward looking statements. Factors that might cause such a difference include our inability to compete successfully in the competitive and rapidly changing marketplace in which we operate, failure to retain key employees, cancellation or delay of projects and adverse general economic conditions in the United States and internationally. These risks and other factors include those listed under "Risk Factors" and elsewhere in our Annual Report on Form 20-F as filed with the Securities and Exchange Commission (File No. 000-50799). In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
About Xyratex Xyratex is a leading provider of enterprise class data storage subsystems and storage process technology. The company designs and manufactures enabling technology that provides OEM and disk drive manufacturer customers with data storage products to support high-performance storage and data communication networks. Xyratex has over 20 years of experience in research and development relating to disk drives, storage systems and high-speed communication protocols. Founded in 1994 in an MBO from IBM, and with headquarters in the UK, Xyratex has an established global base with R&D and operational facilities in Europe, the United States and Southeast Asia. For more information, visit http://www.xyratex.com/.
XYRATEX LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended,
February 29, February 28,
2008 2007
(US dollars in thousands,
except per
share amounts) Revenues:
Networked Storage Solutions $187,776 $163,616
Storage Infrastructure 29,278 72,791
Total revenues 217,054 236,407 Cost of revenues 184,283 191,372
Gross profit:
Networked Storage Solutions 27,599 22,286
Storage Infrastructure 5,526 22,994
Equity compensation (354) (245)
Total gross profit 32,771 45,035
Operating expenses:
Research and development 19,279 18,794
Selling, general and administrative 14,979 14,800
Amortization of intangible assets 1,379 1,651
Total operating expenses 35,637 35,245
Operating income (loss) (2,866) 9,790
Other income - 890
Interest income, net 899 655
Income (loss) before income taxes (1,967) 11,335
Provision (benefit) for income taxes 252 1,221
Net income (loss) $(2,219) $10,114 Net earnings (loss) per share:
Basic $(0.08) $0.35
Diluted $(0.07) $0.34 Weighted average common shares (in
thousands), used in
computing net earnings (loss) per
share:
Basic 29,125 28,847
Diluted 29,738 29,699 XYRATEX LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS February 29, November 30,
2008 2007
(US dollars and
amounts in
thousands) ASSETS
Current assets:
Cash and cash equivalents $57,866 $70,678
Accounts receivable, net 101,544 122,327
Inventories 113,131 91,662
Prepaid expenses 3,934 2,994
Deferred income taxes 2,926 3,000
Other current assets 6,281 8,275
Total current assets 285,682 298,936
Property, plant and equipment, net 37,952 37,421
Intangible assets, net 54,282 54,175
Deferred income taxes 18,953 19,743
Total assets $396,869 $410,275 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $92,747 $96,046
Employee compensation and benefits
payable 11,385 13,280
Deferred revenue 8,194 15,212
Income taxes payable 1,537 1,165
Other accrued liabilities 12,907 11,311
Total current liabilities 126,770 137,014
Long-term debt - -
Total liabilities 126,770 137,014 Shareholders' equity
Common shares of Xyratex Ltd (in
thousands), par value $0.01 per share
70,000 authorized, 29,214 and 29,117
issued and outstanding 292 291
Additional paid-in capital 359,099 356,268
Accumulated other comprehensive
income 688 1,847
Accumulated deficit (89,980) (85,145)
Total shareholders' equity 270,099 273,261
Total liabilities and
shareholders' equity $396,869 $410,275 XYRATEX LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended
February 29, February 28,
2008 2007
(US dollars in thousands)
Cash flows from operating activities:
Net income (loss) $(2,219) $10,114
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation 3,485 3,037
Amortization of intangible assets 1,379 1,651
Non-cash equity compensation 2,200 1,660
Changes in assets and liabilities,
net of impact of acquisitions and
divestitures
Accounts receivable 20,783 (6,996)
Inventories (21,469) 6,443
Prepaid expenses and other current
assets (602) (2,995)
Accounts payable (3,299) 3,451
Employee compensation and benefits
payable (1,895) (5,306)
Deferred revenue (7,018) (3,458)
Income taxes payable 372 558
Deferred income taxes (125) 608
Other accrued liabilities 1,596 (502)
Net cash provided by/(used in)
operating activities (6,812) 8,265 Cash flows from investing activities:
Investments in property, plant and
equipment (4,016) (3,642)
Acquisition of intangible assets - (4,790)
Acquisition of business, net of
cash received - (1,661)
Net cash used in investing
activities (4,016) (10,093) Cash flows from financing activities:
Payments of long-term borrowings - (1,000)
Repurchases of common shares (2,618) -
Proceeds from issuance of shares 634 502
Net cash used in financing
activities (1,984) (498)
Change in cash and cash equivalents (12,812) (2,326)
Cash and cash equivalents at
beginning of period 70,678 56,921
Cash and cash equivalents at end of
period $57,866 $54,595 XYRATEX LTD
SUPPLEMENTAL INFORMATION Summary Reconciliation Of GAAP Net Three Months Ended
Income (Loss) To Non-GAAP Net February 29, February 28,
Income 2008 2007
(US dollars in thousands,
except per
share amounts) GAAP net income (loss) ($2,219) $10,114 Amortization of intangible assets 1,379 1,651
Equity compensation 2,200 1,660
Other income - (890)
Tax effect of non-GAAP adjustments (1,073) (674)
Effect on deferred tax of changes
to UK exchange rates 462 - Non-GAAP net income $749 $11,861
Summary Reconciliation Of Diluted
GAAP Earnings (Loss) Per Share To
Diluted Non-GAAP Earnings Per Share Diluted GAAP earnings (loss) per
share ($0.07) $0.34 Amortization of intangible assets 0.05 0.06
Equity compensation 0.07 0.05
Other income - (0.03)
Tax effect of non-GAAP adjustments (0.04) (0.02)
Effect on deferred tax of changes
to UK exchange rates 0.02 - Diluted non-GAAP earnings per share $0.03 $0.40
Summary Of Equity Compensation Cost of revenues $354 $245
Research and development 708 491
Selling, general and
administrative 1,138 924 Total equity compensation $2,200 $1,660
DATASOURCE: Xyratex Ltd CONTACT: Brad Driver of Xyratex, +1-408-325-7260, Web site: http://www.xyratex.com/
|