Xyratex: Fiscal 1Q10 Financial Results

Xyratex Ltd. announced final results for the first fiscal quarter ended February 28, 2010. Revenues for the first quarter were $319.0 million, an increase of 73.5% compared to revenues of $183.9 million for the same period last year.

For the first quarter, GAAP net income was $26.3 million, or $0.85 per diluted share, compared to GAAP net loss of $16.1 million, or $0.55 per share, in the same period last year. Non-GAAP net income was $29.4 million, or $0.96 per diluted share, compared to non-GAAP net loss of $10.5 million, or $0.36 per share, in the same quarter a year ago.

Gross profit margin in the first quarter increased to 18.1%, compared to 11.4% in the same period last year, primarily due to significantly increased volumes and also changes in product and segment mix.

Revenues from our Networked Storage Solutions products were $271.0 million as compared to $165.7 million in the same quarter a year ago, an increase of 63.5%. Gross profit margin in the Networked Storage Solutions business was 15.2% as compared to 11.1% a year ago. Revenues from our Storage Infrastructure products were $48.0 million as compared to $18.2 million in the same quarter a year ago, an increase of 164%. Gross profit margin in the Storage Infrastructure business was 34.7% as compared to 15.2% a year ago.

"I am very pleased with the strong results for the quarter. We increased revenues by more than 30% over the prior quarter, and the results represent a very dramatic turnaround from the position faced 12 months ago. Given the strong demand and actions needed to secure additional supply of components, I felt we did a good job of executing to our customers’ requirements," said Steve Barber, CEO of Xyratex. "I feel our continued strategic investments during 2009, a period of economic uncertainty, combined with our focus on strong execution, innovation and improved efficiencies, enabled our record revenues and profits. The fundamentals of the markets we serve continue to be very good and I believe we continue to improve on our competitive position and technology. 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."

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 quarter of 2010 is projected to be in the range $400 to $460 million.
• Fully diluted earnings per share is anticipated to be between $1.00 and $1.53 on a GAAP basis in the second quarter. On a non-GAAP basis fully diluted earnings per share is anticipated to be between $1.10 and $1.63. Non-GAAP earnings per share excludes amortization of intangible assets, equity compensation expense, specified non-recurring items and related taxation expense.