Xyratex: Fiscal 4Q12 Financial Results

Xyratex Ltd announced results for the fourth quarter and fiscal year ended November 30, 2012.

Revenues for the fourth quarter were $265.4 million, a decrease of 31.5% compared to revenues of $387.6 million for the same period in the prior year.

For the fourth quarter of fiscal 2012, GAAP net loss was $7.9 million, or $0.29 per share, compared to GAAP net income of $18.5 million, or $0.65 per diluted share, in the same period in the prior year. Non-GAAP net loss was $6.4 million, or $0.24 per share, compared to non-GAAP net income of $20.8 million, or $0.73 per diluted share, in the same quarter a year ago.

Gross profit margin in the fourth quarter was 14.5%, compared to 17.7% in the same period in the prior year and 18.6% in the prior quarter. The decrease from the prior year primarily reflects a decline in gross margins for the Enterprise Data Storage Solutions products due to the effect of fixed costs relative to lower revenues.

Revenues for fiscal year 2012 were $1,158.9 million, a decrease of 20% compared to revenues of $1,448.5 million for fiscal year 2011. Gross profit margin for fiscal year 2012 was 16.9% compared to 15.3% in the previous year. The increase from the prior year was primarily due to higher margins for HDD Capital Equipment products.

GAAP net income for fiscal year 2012 was $17.7 million, or $0.63 per diluted share, compared to GAAP net income of $28.3 million, or $0.92 per diluted share, for fiscal year 2011. Non-GAAP net income for fiscal year 2012 decreased to $24.6 million, or $0.87 per diluted share, compared to non-GAAP net income of $39.0 million, or $1.27 per diluted share, for fiscal year 2011.

On December 17, 2012, the company declared a one-time, special cash dividend of $2.00 per common share and an accelerated quarterly dividend of $0.075 per common share. These dividends, which totaled $56.1 million, were paid on December 31, 2012 to shareholders of record as of December 27, 2012. The company did not repurchase any of its common shares under its previously announced share repurchase plan during the fourth quarter. Repurchases in the 2012 fiscal year totaled 1,199,275 common shares at a total cost of $13.6 million. The company’s cash balance amounted to $117.2 million at the end of the fiscal year, an increase of $14 million from the end of the third quarter.

"Fiscal year 2012 was a challenging year for Xyratex. The macro-economic conditions certainly shifted midway through the year and both markets we serve experienced dynamic changes that caused our customers to be more cautious than our original expectations. Throughout the year we made adjustments to our business plan model to react to these unexpected changes in both the global economy as well as those specific to the markets in which we participate. I believe that we are executing well on the long-term strategy that we outlined in October and we have positive results with new customer wins and opportunities heading into fiscal year 2013. We have made significant progress in the HPC data storage market with partners such as Cray Computing, Dell and HP, and I believe we are well positioned with our unique IP to deliver greater value for our customers and partners," said Steve Barber, CEO of Xyratex. "Over the next 18 to 24 months, we have a number of new opportunities, particularly in the areas of HPC data storage and big data, that I believe will be positive for the company. We will continue to focus on new growth opportunities while also managing our costs and investments. I believe we are well positioned to capitalize on these opportunities."

Business Outlook

• Revenue in the first quarter of 2013 is projected to be in the range of $159 million to $189 million.
• The company anticipates recording a net loss per share of between $0.08 and $0.28 on a GAAP basis in the first quarter. On a non-GAAP basis the company anticipates recording a net loss per share of between $0.01 and $0.21 in the first quarter. Non-GAAP net loss per share excludes amortization of intangible assets, equity compensation expense, specified non-recurring items and related taxation expense.