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Press release from PR Newswire

Xyratex Ltd Announces Results for the First Quarter Fiscal Year 2013

Thursday, April 04, 2013

Xyratex Ltd Announces Results for the First Quarter Fiscal Year 2013

16:05 EDT Thursday, April 04, 2013

HAVANT, United Kingdom, April 4, 2013 /PRNewswire/ -- Xyratex Ltd (Nasdaq: XRTX), a leading provider of data storage technology, today announced results for the first fiscal quarter ended February 28, 2013. Revenues for the first quarter were $195.6 million, a decrease of 34% compared to revenues of $295.7 million for the same period in the prior year.

For the first quarter, GAAP net loss was $5.1 million, or $0.19 per share, compared to GAAP net income of $10.9 million, or $0.38 per diluted share, in the same period last year. Non-GAAP net loss was $3.6 million, or $0.13 per share, compared to non-GAAP net income of $11.4 million, or $0.40 per diluted share, in the same quarter a year ago(1).

Gross profit margin in the first quarter was 18.9%, compared to 17.9% in the same period last year and 14.5% in the prior quarter. The increase from the prior quarter primarily reflects variation in product and customer mix in both our Enterprise Data Storage Solutions and Capital Equipment business segments.

During the first quarter, the Company declared and paid a one-time special dividend and accelerated its quarterly dividend, paying both in December 2012 at a total cost of $56.3 million. The Company's cash balance amounted to $92.8 million at the end of the first quarter compared to $117.2 million at the end of the prior quarter.

Today, the Company also announced that its Board of Directors has approved a quarterly cash dividend of $0.075 per share, unchanged from the prior quarterly dividend. The dividend will be payable on May 2, 2013 to shareholders of record as of the close of business on April 18, 2013. This dividend represents a quarterly payout of approximately $2.1 million in aggregate, or $8.4 million on an annualized basis.

"We had a solid first quarter with revenues above our expectations. We are focused on being responsive to our customers' requirements and on improving operating efficiencies in both of our business units as we go forward in 2013," said Ernie Sampias, Interim CEO of Xyratex.

Business Outlook

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. 

  • Revenue in the second fiscal quarter of 2013 is projected to be in the range of $190 million to $220 million.
  • Fully diluted earnings per share is anticipated to be between a loss of $0.21 and earnings of $0.03 on a GAAP basis in the second quarter. On a non-GAAP basis, fully diluted earnings per share is anticipated to be between a loss of $0.15 and earnings of $0.09. Non-GAAP earnings per share excludes amortization of intangible assets, equity compensation expense, specified non-recurring items and related taxation expense.

Conference Call Information

The company will host a conference call to discuss its results at 1:30 p.m. PT/4:30 p.m. ET on Thursday, April 4, 2013.

The conference call can be accessed online via the company's website www.xyratex.com/investors, or by telephone as follows:

United States

(800) 510-9691

Outside the United States

(617) 614-3453  

Passcode

76698487

A replay will be available via the company's website www.xyratex.com/investors, or can be accessed by telephone through April 11, 2013 as follows:

United States

(888) 286-8010

Outside the United States

(617) 801-6888

Passcode

21255596

(1) Non-GAAP net income (loss) and diluted earnings (loss) per share exclude (a) amortization of intangible assets, (b) equity compensation expense, (c) the tax effects related to (a) and (b) and (d) the recognition of a Malaysia deferred tax asset in the first quarter of fiscal 2012. Reconciliations of non-GAAP net income (loss) and diluted earnings (loss) per share to GAAP net income (loss) and diluted earnings (loss) per share are included in tables immediately following the condensed consolidated statements of cash flow.

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, and not considered to be a substitute for, or superior to, the corresponding GAAP measure. The financial results calculated in accordance with GAAP and reconciliations of these non-GAAP measures to the comparable GAAP measures should be carefully evaluated. The non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

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 and is outside the control of management during the period in which the expense is incurred, (c) the exclusion of the related tax effects of excluding items (a) and (b) is necessary to show the effect on net income (loss) of the change in tax expense that would have been recorded if these items had not been incurred and (d) the recognition of the Malaysia deferred tax asset relates to the non-renewal of certain tax incentive arrangements in 2012, is non-recurring and will reverse if the incentive arrangements are renewed.

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 (loss) 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 retain major customers and meet the required technical and performance specifications of our products in a timely manner or at all, the cyclical nature of the markets in which we operate, changes in our customers' volume requirements, our inability to compete successfully in the competitive and rapidly changing marketplace in which we operate, deterioration in global economic conditions, diminished growth in the volume of digital information, patent infringement claims and our inability to protect our intellectual property and the impact of natural disasters. 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. 001-35766). In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "projects," "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 data storage technology, including modular solutions for the enterprise data storage industry, and hard disk drive (HDD) capital equipment for the HDD industry. Xyratex enterprise data storage platforms provide a range of advanced, scalable data storage solutions for the Original Equipment Manufacturer and High Performance Computing communities. As the largest capital equipment supplier to the HDD industry, Xyratex enables disk drive manufacturers and their component suppliers to meet today's technology and productivity requirements. Xyratex has over 25 years of experience in research and development relating to disk drives, storage systems and manufacturing process technology.

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 North America, Asia and Europe.

 

 

XYRATEX LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended,

February 28,

February 29, 

2013

2012

(US dollars in thousands, except per share amounts)

Revenues

$ 195,597

$ 295,666

Cost of revenues 

158,663

242,627

Gross profit

36,934

53,039

Operating expenses: 

 Research and development 

24,409

24,668

 Selling, general and administrative 

17,798

16,778

 Amortization of intangible assets 

492

970

Total operating expenses 

42,699

42,416

Operating income (loss)

(5,765)

10,623

Interest income, net  

80

186

Income (loss) before income taxes 

(5,685)

10,809

Provision (benefit) for income taxes

(550)

(52)

Net income (loss)

$ (5,135)

$ 10,861

Net earnings (loss) per share:

Basic

$ (0.19)

$ 0.39

Diluted

$ (0.19)

$ 0.38

Weighted average common shares (in thousands), used in computing net earnings (loss) per share:

Basic

27,202

27,750

Diluted

27,202

28,786

Cash dividends declared per share

$ 2.08

$ 0.07

Comprehensive income (loss):

Net income (loss)

$ (5,135)

$ 10,861

Unrealized gain (loss) on forward foreign currency contract

(2,231)

1,080

Reclassification of loss (gain) into net income (loss)

(235)

422

Total comprehensive income (loss)

$ (7,601)

$ 12,363

 

 

XYRATEX LTD

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

February 28,

November 30,

2013

2012

(US dollars and amounts in thousands)

ASSETS

Current assets:

Cash and cash equivalents

$ 92,823

$ 117,174

Accounts receivable, net

98,848

132,917

Inventories

144,259

171,605

Prepaid expenses

4,158

3,134

Deferred income taxes

205

228

Other current assets

5,255

7,121

Total current assets

345,548

432,179

Property, plant and equipment, net

40,860

40,194

Intangible assets, net

15,783

14,975

Deferred income taxes

25,329

23,929

Total assets

$ 427,520

$ 511,277

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 72,068

$ 82,125

Employee compensation and benefits payable

15,316

17,961

Deferred revenue

9,227

18,521

Income taxes payable

633

369

Other accrued liabilities

18,082

17,767

Total current liabilities

115,326

136,743

Long-term debt

-

-

Total liabilities

$ 115,326

$ 136,743

Shareholders' equity

Common shares (in thousands), par value $0.01 per share

70,000 authorized, 27,558 and 27,024 issued and outstanding

$ 275

$ 270

Additional paid-in capital

356,120

354,593

Accumulated other comprehensive income (deficit)

(1,603)

863

Accumulated income (deficit)

(42,598)

18,808

Total shareholders' equity

312,194

374,534

Total liabilities and shareholders' equity

$ 427,520

$ 511,277

 

XYRATEX LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended,

February 28,

February 29, 

2013

2012

 (US dollars in thousands) 

Cash flows from operating activities: 

Net income (loss)

$ (5,135)

$ 10,861

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Depreciation

4,019

4,160

Amortization of intangible assets

492

970

Non-cash equity compensation

1,532

1,713

(Gain) loss on sale of assets

-

(50)

Deferred income taxes

(555)

(754)

Changes in assets and liabilities, net of impact of acquisitions and divestitures

Accounts receivable 

34,069

48,599

Inventories

27,346

11,728

Prepaid expenses and other current assets

(309)

865

Accounts payable 

(10,057)

(46,337)

Employee compensation and benefits payable

(2,645)

(572)

Deferred revenue

(9,294)

5,501

Income taxes payable 

264

664

Other accrued liabilities 

(1,822)

(3,123)

Net cash provided by operating activities 

37,905

34,225

Cash flows from investing activities: 

Investments in property, plant and equipment 

(4,685)

(4,168)

Payment for acquisition of intangible assets

-

(3,500)

Acquisition of business

(1,300)

-

Net cash used in investing activities 

(5,985)

(7,668)

Cash flows from financing activities: 

Proceeds from issuance of shares

-

8

Dividends to shareholders

(56,271)

(3,355)

Net cash used in financing activities 

(56,271)

(3,347)

Change in cash and cash equivalents 

(24,351)

23,210

Cash and cash equivalents at beginning of period

117,174

132,630

Cash and cash equivalents at end of period

$ 92,823

$ 155,840

 

 

XYRATEX LTD

SUPPLEMENTAL INFORMATION

Three Months Ended

February 28,

February 29, 

Summary Reconciliation Of GAAP Net Income (Loss) To Non-GAAP Net Income (Loss)

2013

2012

(US dollars in thousands, except per share amounts)

GAAP net income (loss)

$ (5,135)

$ 10,861

Amortization of intangible assets

492

970

Equity compensation

1,532

1,713

Tax effect of above non-GAAP adjustments

(466)

(671)

Malaysia deferred tax asset recognized 

-

(1,489)

Non-GAAP net income (loss)

$ (3,577)

$ 11,384

Summary Reconciliation Of Diluted GAAP Earnings (Loss) Per Share To Diluted Non-GAAP Earnings (Loss) Per Share

Diluted GAAP earnings (loss) per share

$ (0.19)

$ 0.38

Amortization of intangible assets

0.02

0.03

Equity compensation

0.06

0.06

Tax effect of above non-GAAP adjustments

(0.02)

(0.02)

Malaysia deferred tax asset recognized 

-

(0.05)

Diluted non-GAAP earnings (loss) per share

$ (0.13)

$ 0.40

Segmental Information

Revenues:

Enterprise Data Storage Solutions

$ 176,546

$ 272,069

HDD Capital Equipment

19,051

23,597

Total

$ 195,597

$ 295,666

Gross profit:

Enterprise Data Storage Solutions

$31,531

$47,113

HDD Capital Equipment

5,508

6,027

Equity compensation

(105)

(101)

Total

$36,934

$53,039

Summary Of Equity Compensation

Cost of revenues

$105

$101

Research and development

460

662

Selling, general and administrative

967

950

Total equity compensation

$1,532

$1,713

 

SOURCE Xyratex Ltd

For further information: Brad Driver, Vice President of Investor Relations, +1-510-687-5260, bdriver@xyratex.com, Website: www.xyratex.com

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