Emulex: Fiscal 1Q13 Financial Results

Emulex Corporation announced results for its first quarter of fiscal 2013, which ended on September 30, 2012.

First Quarter Financial Highlights

• Net revenues of $119.3 million
• Network Connectivity Products (NCP) net revenues of $96.7 million, or 81% of net revenues
• NCP net revenues increased 10% sequentially and 12% year-over-year
• Storage Connectivity Products (SCP) net revenues of $18.8 million, or 16% of net revenues
• SCP net revenues decreased 43% sequentially and 21% year-over-year
• Advanced Technology and Other Products (ATP) net revenues of $3.8 million, or 3% of net revenues
• ATP net revenues decreased 54% sequentially and 53% year-over-year
• GAAP gross margins of 58% and non-GAAP gross margins of 63%
• GAAP operating income of $6.7 million, or 6% of total net revenues, and non-GAAP operating income of $20.4 million, or 17% of total net revenues
• GAAP net income of $0.7 million and non-GAAP net income of $17.5 million
• GAAP diluted earnings per share of $0.01 and non-GAAP diluted earnings per share of $0.19

First Quarter Business Highlights

• Announced second generation LPe16000B series 16Gb FC HBAs supporting PCIe 3.0, delivering more than 1.2 million IOPS and accelerated data integrity for I/O intensive environments running SSD/flash storage, server virtualization and Oracle databases
• Provided in-box 16GFC HBA support for vSphere ESX 5.1 with integration and time-saving I/O management for virtualized environments
• Announced in-box I/O connectivity, integrated virtual HBA technology and performance management support for Windows Server 2012
• Announced end-to-end data integrity solution with EMC and Oracle based on the T10 Protection Information industry standard, which includes Emulex LightPulse FC HBAs and offers customers greater protection from silent data corruption in mission critical environments
• Announced availability of customized, joint fast I/O caching and connectivity SAN solutions with Fusion-io for tier 1 OEMs, accelerating the performance of databases, data warehouses, heavily virtualized environments and private/hybrid clouds with improved throughput and application response time
• Introduced OneCommand Vision 3.0 portfolio, which is designed to optimize storage I/O resources within virtualized and cloud environments, with extended operating system, iSCSI and DAS support and options to meet the diverse needs of customers of all sizes
• Expanded sales operations in China with the opening of Emulex (Beijing) Networking Technology Co. Ltd., a service oriented, wholly foreign-owned enterprise (WFOE), located in Beijing, China

Financial Results
In the first quarter, total net revenues of $119.3 million represented an increase of 1% from the comparable quarter of last year. On a GAAP basis, Emulex recorded net income of $0.7 million, or $0.01 per diluted share, compared to a GAAP net loss of $7.2 million, or $0.08 per share, in the first quarter of fiscal 2012. Non-GAAP net income for the first quarter was $17.5 million, or $0.19 per diluted share, representing a 48% increase from $11.8 million in the comparable quarter of the prior fiscal year. Cash, cash equivalents and investments at the end of the quarter totaled $186.4 million. Reconciliations between GAAP and non-GAAP results are included in the accompanying financial data.

CEO Jim McCluney commented: "I’m very pleased with our performance for the first quarter as we met our revenue target, and once again exceeded the high end of our earnings guidance. With strong growth in both FC and 10GbE solutions, Network Connectivity Products now account for more than 80% of our total revenues."

"With the time-to-market advantage of our 16Gb FC adapters, and our investments in sales targeting higher growth markets, we are well positioned for share gains in our core markets," McCluney concluded.

Business Outlook
For the second quarter of fiscal 2013, Emulex is forecasting total net revenues in the range of $120-$124 million. The company expects non-GAAP earnings per diluted share of $0.19-$0.21 in the second quarter. GAAP estimates for the second quarter reflect approximately $0.19 per diluted share in expected charges arising primarily from amortization of intangibles, stock-based compensation and the royalties, mitigation expenses and license fees associated with the Broadcom patent litigation.