Emulex: Fiscal 2Q15 Financial Results

Emulex Corporation announced earnings results for the second quarter of fiscal 2015 ending December 28, 2014.

Second Quarter Financial Highlights

• Total revenue of $111 million, above the high end of the initial guidance range, aided by strong sequential and year-on-year growth in Gen 5 (16Gb) FC products.
• Non-GAAP diluted earnings of $0.24, up 14% year-on-year, and GAAP earnings of $0.06 as compared to a prior year loss of $0.05, both above their respective initial guidance range.
• Non-GAAP operating margin of 18%, up 130 basis points year-on-year and 560 basis points sequentially, with GAAP operating income of $8 million as compared to an operating loss of $2 million in the prior year and operating income of $1 million in the prior quarter.
• Cash, cash equivalents and investments at the end of the quarter of $185 million.

“The second quarter demonstrated continued progress with initiatives put in place at Emulex over the last 18 months, including the delivery of the broadest set of new Ethernet and FC products in the company’s history, increased focus on execution, and a greater emphasis on fiscal discipline,” commented Jeff Benck, president and CEO. “Coupled with healthy demand for our FC portfolio and share gains aided by accelerating adoption of our latest Gen 5 FC products, we again exceeded the high end of our initial revenue and earnings guidance.”  
“We look forward to building on this foundation with the broad slate of OEM wins for our latest 10GbE products, designed for the new generation of x86 servers, that will ramp in the market over the next year.”

Business Outlook
Although actual results may vary depending on a variety of factors, including those listed in the Safe Harbor Statement below and our filings with the SEC, Emulex is forecasting total net revenues declining sequentially by approximately 8% to 12% to a range of $97 million to $103 million in the third quarter. The company expects third quarter non-GAAP earnings of $0.11 – $0.15 and a GAAP loss of $0.06 – $0.10 per share. GAAP estimates for the third quarter reflect approximately $0.21 per diluted share in expected charges arising primarily from amortization of intangibles, stock-based compensation, royalties, mitigation expenses and license fees associated with the Broadcom patent litigation, the accretion of debt discount on outstanding convertible senior notes, and the tax effects and the impact of our U.S. GAAP tax valuation allowance associated with these items.