HAVANT, United Kingdom,
Oct. 3, 2013 /PRNewswire/
-- Xyratex Ltd (Nasdaq: XRTX), a leading provider of data
storage technology, today announced results for the third fiscal
quarter ended August 31, 2013.
Revenues for the third quarter were $217.3
million, a decrease of 21% compared to revenues of
$275.7 million for the same period in
the prior year. The decline year over year was principally related
to the continued reduction in revenue from NetApp with the current
program coming to an end in our current quarter as previously
announced.
For the third quarter, GAAP net income was $2.4 million, or $0.08 per diluted share, compared to GAAP net
income of $7.7 million, or
$0.28 per diluted share, in the same
period last year. Non-GAAP net income was $5.9 million, or $0.21 per diluted share, compared to non-GAAP net
income of $10.3 million, or
$0.37 per diluted share, in the same
quarter a year ago(1).
Gross profit margin in the third quarter was 20.9%, compared to
18.5% in the same period last year and 22.0% in the prior quarter.
The increase from last year primarily reflected a favorable
variation in customer and product mix in our Enterprise Data
Storage Solutions product segment. The decrease from the prior
quarter primarily reflected a variation in product mix in our Hard
Disk Drive (HDD) Capital Equipment segment.
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
quarter. The dividend will be payable on November 1, 2013 to shareholders of record as of
the close of business on October 17,
2013. This dividend represents a quarterly payout of
approximately $2.1 million in
aggregate, or $8.4 million on an
annualized basis.
"Our third quarter results were at the higher end of our
expectations, reflecting lower overall expenses and approximately
$5 million of revenue from the HDD
Capital Equipment business which had previously been planned for
the fourth quarter. I am encouraged by the improvements in our
customer relationships and our investments in technology,
specifically around cloud and flash, and the opportunities that I
believe will be created as a result. In our Enterprise Data Storage
Solutions business, we recently introduced our 12Gb/s SAS
technology into our Onestor line of enterprise class modular
storage enclosure. This first-to-market technology has recently
been accepted as the next generation technology by one of our
significant Tier 1 customers, which is a significant opportunity
for Xyratex," said Ernie Sampias,
CEO. "Within our Clusterstor product line, we achieved a number of
design wins during the third quarter in vertical markets including
academia, oil and gas and the financial sector. Our HDD Capital
Equipment business continues to work very closely with our HDD
partners. I am encouraged with the opportunities that are being
created as a result of these partnerships such as technologies that
support higher capacity HDDs."
Business Outlook
The following statements are based on current expectations.
These statements are forward-looking, and actual results may differ
materially.
- Revenue in the fourth fiscal quarter of 2013 is projected to be
in the range of $190 million to $220
million.
- Fully diluted earnings (loss) per share is anticipated to be
between a loss of $0.09 and earnings
of $0.15 on a GAAP basis in the
fourth quarter. On a non-GAAP basis, fully diluted earnings (loss)
per share is anticipated to be between a loss of $0.04 and earnings of $0.20. Anticipated non-GAAP earnings (loss) per
share in our fourth quarter 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
October 3, 2013.
The conference call
can be accessed online via the company's website
www.xyratex.com/investors, or by telephone as follows:
|
United
States
|
(866)
543-6403
|
Outside the United
States
|
(617)
213-8896
|
Passcode
|
90934976
|
|
A replay will be
available via the company's website www.xyratex.com/investors, or
can be accessed by telephone through October 10, 2013 as
follows:
|
United
States
|
(888)
286-8010
|
Outside the United
States
|
(617)
801-6888
|
Passcode
|
48412946
|
(1) Non-GAAP net income and diluted earnings per share exclude
(a) amortization of intangible assets, (b) equity compensation
expense, (c) the tax effects related to (a) and (b), (d) the
recognition of a Malaysia deferred
tax asset in the first quarter of fiscal 2012 and (e) the tax
expense resulting from a reduction in the deferred tax asset caused
by a fall in U.K. tax rates. Reconciliation of non-GAAP net income
and diluted earnings per share to GAAP net income and GAAP diluted
earnings per share is included in a table 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 of the change in
tax expense that would have been recorded if these items had not
been incurred; (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 and (e) the impact of the
reduction in U.K. tax rates is non-cash and not comparable across
periods or with other companies due to the existence of a
significant U.K. related deferred tax asset which is expected to
reduce over time.
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 fourth 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 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.
Website: www.xyratex.com
XYRATEX
LTD
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended,
|
|
Nine Months
Ended,
|
|
|
|
August
31,
|
|
August
31,
|
|
August
31,
|
|
August
31,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
(US dollars in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ 217,282
|
|
$ 275,670
|
|
$ 629,064
|
|
$ 893,452
|
Cost of
revenues
|
171,783
|
|
224,653
|
|
499,098
|
|
736,121
|
Gross
profit
|
|
45,499
|
|
51,017
|
|
129,966
|
|
157,331
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
23,610
|
|
25,308
|
|
73,805
|
|
77,231
|
|
Selling,
general and administrative
|
16,418
|
|
17,192
|
|
51,133
|
|
50,925
|
|
Restructuring
costs
|
1,073
|
|
-
|
|
2,815
|
|
-
|
|
Amortization of
intangible assets
|
557
|
|
617
|
|
1,605
|
|
2,537
|
|
|
Total operating
expenses
|
41,658
|
|
43,117
|
|
129,358
|
|
130,693
|
Operating
income
|
3,841
|
|
7,900
|
|
608
|
|
26,638
|
Interest income,
net
|
80
|
|
283
|
|
207
|
|
623
|
Income before income
taxes
|
3,921
|
|
8,183
|
|
815
|
|
27,261
|
Provision for income
taxes
|
1,571
|
|
437
|
|
655
|
|
1,658
|
Net income
|
|
$ 2,350
|
|
$ 7,746
|
|
$ 160
|
|
$ 25,603
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 0.09
|
|
$ 0.29
|
|
$ 0.01
|
|
$ 0.93
|
|
Diluted
|
|
$ 0.08
|
|
$ 0.28
|
|
$ 0.01
|
|
$ 0.90
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares (in thousands), used in computing net earnings per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
27,558
|
|
27,171
|
|
27,439
|
|
27,674
|
|
Diluted
|
|
27,876
|
|
27,764
|
|
27,855
|
|
28,423
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
$ 0.08
|
|
$ 0.08
|
|
$ 2.23
|
|
$ 0.22
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss):
|
|
|
|
|
|
|
|
Net income
|
|
$ 2,350
|
|
$ 7,746
|
|
$ 160
|
|
$ 25,603
|
Unrealized gain
(loss) on forward foreign currency contract
|
(259)
|
|
885
|
|
(2,308)
|
|
627
|
Reclassification of
loss into net income
|
183
|
|
374
|
|
385
|
|
710
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income (loss)
|
$ 2,274
|
|
$ 9,005
|
|
$ (1,763)
|
|
$ 26,940
|
XYRATEX
LTD
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August
31,
|
|
November
30,
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
(US dollars and
amounts in thousands)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 79,416
|
|
$ 117,174
|
|
Accounts receivable,
net
|
|
127,580
|
|
132,917
|
|
Inventories
|
|
149,525
|
|
171,605
|
|
Prepaid
expenses
|
|
5,233
|
|
3,134
|
|
Deferred income
taxes
|
|
205
|
|
228
|
|
Other current
assets
|
|
7,831
|
|
7,121
|
|
|
Total current
assets
|
|
369,790
|
|
432,179
|
|
Property, plant and
equipment, net
|
|
41,076
|
|
40,194
|
|
Intangible assets,
net
|
|
14,725
|
|
14,975
|
|
Deferred income
taxes
|
|
25,977
|
|
23,929
|
|
|
Total
assets
|
|
$
451,568
|
|
$
511,277
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$ 87,393
|
|
$ 82,125
|
|
Employee compensation
and benefits payable
|
|
16,637
|
|
17,961
|
|
Deferred
revenue
|
|
13,390
|
|
18,521
|
|
Income taxes
payable
|
|
938
|
|
369
|
|
Other accrued
liabilities
|
|
18,713
|
|
17,767
|
|
|
Total current
liabilities
|
|
137,071
|
|
136,743
|
|
Long-term
debt
|
|
-
|
|
-
|
|
|
Total
liabilities
|
|
$
137,071
|
|
$
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
|
|
$ 276
|
|
$ 270
|
|
Additional paid-in
capital
|
|
313,887
|
|
354,593
|
|
Accumulated other
comprehensive income (deficit)
|
|
(1,060)
|
|
863
|
|
Accumulated
income
|
|
1,394
|
|
18,808
|
|
|
Total
shareholders' equity
|
|
314,497
|
|
374,534
|
|
|
Total liabilities
and shareholders' equity
|
|
$
451,568
|
|
$
511,277
|
XYRATEX
LTD
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended,
|
|
|
|
|
August
31,
|
|
August
31,
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
(US dollars
in thousands)
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$ 160
|
|
$ 25,603
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
|
|
Depreciation
|
|
11,998
|
|
12,528
|
Amortization of
intangible assets
|
|
1,605
|
|
2,537
|
Non-cash equity
compensation
|
|
1,898
|
|
5,048
|
Loss on sale of
assets
|
|
-
|
|
1,183
|
Deferred income
taxes
|
|
(1,414)
|
|
171
|
Changes in assets and
liabilities, net of impact of acquisitions and
divestitures:
|
|
|
|
|
|
Accounts
receivable
|
|
5,337
|
|
57,537
|
|
Inventories
|
|
22,080
|
|
(44,928)
|
|
Prepaid expenses and
other current assets
|
|
(3,960)
|
|
2,395
|
|
Accounts
payable
|
|
5,268
|
|
(63,823)
|
|
Employee compensation
and benefits payable
|
|
(1,324)
|
|
(5,395)
|
|
Deferred
revenue
|
|
(5,131)
|
|
16,658
|
|
Income taxes
payable
|
|
569
|
|
178
|
|
Other accrued
liabilities
|
|
(437)
|
|
(3,634)
|
|
|
Net cash provided by
operating activities
|
|
36,649
|
|
6,058
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Investments in
property, plant and equipment
|
|
(12,880)
|
|
(11,568)
|
|
Payment for
acquisition of intangible assets
|
|
(1,355)
|
|
(3,500)
|
|
|
Net cash used in
investing activities
|
|
(14,235)
|
|
(15,068)
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
issuance of shares
|
|
-
|
|
661
|
|
Repurchase of
shares
|
|
-
|
|
(13,600)
|
|
Dividends to
shareholders
|
|
(60,172)
|
|
(7,504)
|
|
|
Net cash used in
financing activities
|
|
(60,172)
|
|
(20,443)
|
Change in cash and
cash equivalents
|
|
(37,758)
|
|
(29,453)
|
Cash and cash
equivalents at beginning of period
|
|
117,174
|
|
132,630
|
Cash and cash
equivalents at end of period
|
|
$ 79,416
|
|
$ 103,177
|
XYRATEX
LTD
|
|
|
|
|
SUPPLEMENTAL
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
August
31,
|
|
August
31,
|
|
August
31,
|
|
August
31,
|
Summary
Reconciliation Of GAAP Net Income To Non-GAAP Net
Income
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
(US dollars in
thousands, except per share amounts)
|
|
(US dollars in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
|
$ 2,350
|
|
$ 7,746
|
|
$ 160
|
|
$ 25,603
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
|
557
|
|
617
|
|
1,605
|
|
2,537
|
|
Equity
compensation
|
|
1,226
|
|
1,203
|
|
1,898
|
|
5,048
|
|
Tax effect of above
non-GAAP adjustments
|
|
(357)
|
|
(482)
|
|
(753)
|
|
(1,924)
|
|
Effect of changes in
tax rates
|
|
2,104
|
|
1,239
|
|
2,104
|
|
1,239
|
|
Malaysia deferred tax
asset recognized
|
|
-
|
|
-
|
|
-
|
|
(1,489)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
|
$ 5,880
|
|
$ 10,323
|
|
$ 5,014
|
|
$ 31,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary
Reconciliation Of Diluted GAAP Earnings Per Share To Diluted
Non-GAAP Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted GAAP earnings
per share
|
|
$ 0.08
|
|
$ 0.28
|
|
$ 0.01
|
|
$ 0.90
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
|
0.02
|
|
0.02
|
|
0.06
|
|
0.09
|
|
Equity
compensation
|
|
0.04
|
|
0.04
|
|
0.07
|
|
0.18
|
|
Tax effect of above
non-GAAP adjustments
|
|
(0.01)
|
|
(0.02)
|
|
(0.03)
|
|
(0.07)
|
|
Effect of changes in
tax rates
|
|
0.07
|
|
0.04
|
|
0.08
|
|
0.04
|
|
Malaysia deferred tax
asset recognized
|
|
-
|
|
-
|
|
-
|
|
(0.05)
|
|
|
|
|
|
|
|
|
|
|
Diluted non-GAAP
earnings per share
|
|
$ 0.21
|
|
$ 0.37
|
|
$ 0.18
|
|
$ 1.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Enterprise Data
Storage Solutions
|
|
$ 160,973
|
|
$ 223,380
|
|
$ 506,861
|
|
$ 773,908
|
|
HDD Capital
Equipment
|
|
56,309
|
|
52,290
|
|
122,203
|
|
119,544
|
|
Total
|
|
$ 217,282
|
|
$ 275,670
|
|
$ 629,064
|
|
$ 893,452
|
|
|
|
|
|
|
|
|
|
|
Gross
profit:
|
|
|
|
|
|
|
|
|
|
Enterprise Data
Storage Solutions
|
|
$29,323
|
|
$34,370
|
|
$92,317
|
|
$126,839
|
|
HDD Capital
Equipment
|
|
16,264
|
|
16,872
|
|
37,797
|
|
31,177
|
|
Equity
compensation
|
|
(88)
|
|
(225)
|
|
(148)
|
|
(685)
|
|
Total
|
|
$45,499
|
|
$51,017
|
|
$129,966
|
|
$157,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Of Equity
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
$ 88
|
|
$225
|
|
$148
|
|
$685
|
|
Research and
development
|
|
330
|
|
403
|
|
409
|
|
1,778
|
|
Selling, general and
administrative
|
|
808
|
|
575
|
|
1,341
|
|
2,585
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
compensation
|
|
$ 1,226
|
|
$1,203
|
|
$1,898
|
|
$5,048
|
SOURCE Xyratex Ltd