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Press Releases | 2008 | 2007 | 2006 | 2005 |
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Press Contact: Robin Austin, Director, Public Relations , 714-885-3462
Investor Contact: Michael J. Rockenbach, Chief Financial Officer, 714-885-3695
EMULEX REPORTS RECORD FOURTH QUARTER RESULTS
Broad Sequential Expansion Across Fibre Channel Product Lines Delivers Record Revenues and Profits as Emulex Achieves its Seventh Consecutive Year of Revenue Growth
COSTA MESA, Calif., August 11, 2005 -- Emulex Corporation (NYSE:ELX), the industry's preeminent source for a broad range of advanced storage networking infrastructure solutions, today announced results for its fourth fiscal quarter ended July 3, 2005.
Fourth Quarter Highlights
- Record revenues of $108.2 million, at the top end of April guidance of $103-$108 million, a 5% sequential increase, and a 25% increase from a year ago.
- Record unit and port shipments of host bus adapters, or HBAs, coupled with record embedded switch and I/O ASIC, or IOC, revenue. Quarterly switch port shipments rose more than 50% sequentially to over 1.5 million, setting a new record.
- Total Fibre Channel shipments of nearly 2 million switching and I/O ports for the quarter, of which over 15% were next-generation 4 gigabit per second (Gb/s) technology.
- Gross margin of 64%.
- Record non-GAAP diluted EPS of $0.30, and GAAP diluted EPS of $0.28, compared to non-GAAP guidance of $0.24-$0.25 and GAAP guidance of $0.19-$0.20. Fourth quarter earnings benefited by approximately $0.02 per share due to favorable resolutions of outstanding tax matters.
- Non-GAAP operating margin of 34% and GAAP operating margin of 28%.
- Cash and investments, net of debt, of $289 million, up $34 million sequentially from third quarter levels, and up $158 million from a year ago.
Financial Results
Fourth quarter revenues, essentially all of which were comprised of Fibre Channel products, rose 5% sequentially from the third fiscal quarter and 25% from a year ago to a record $108.2 million. Fourth quarter non-GAAP net income rose by 17% sequentially and by 67% from the comparable year-ago results, to a record $26.6 million, or $0.30 per diluted share. Fourth quarter GAAP net income increased by 42% sequentially to $25.3 million, or $0.28 per diluted share. This compares to a loss of $572.9 million, or $6.97 per share, in the comparable year-ago results. A reconciliation between GAAP and non-GAAP results is included in the accompanying financial data.
For the second consecutive quarter, Fibre Channel revenue achieved record levels. Paul Folino, Emulex Chairman and CEO, stated, "Broad strength was evident in our fourth quarter results as revenues grew sequentially and year over year across all major product categories, geographies and channels. Fibre Channel switches, IOCs, and HBAs all set new records for unit and port shipments. In the fourth quarter, InSpeed switch port shipments rose more than 50% sequentially to more than 1.5 million ports, demonstrating the success of the Vixel acquisition and our diversification strategy." Emulex's InSpeed storage switching solutions continued to gain momentum in the market as the company's installed base now exceeds 6 million ports, up from 5 million ports at the end of the third quarter, complementing its installed base of over 2 million Emulex HBAs.
Folino continued, "As part of our ongoing growth and diversification strategy, we are continuing to drive engineering, sales and marketing investments as we leverage our broad lead in 4Gb/s Fibre Channel technologies, capture new OEM accounts, and tap high growth market opportunities in Linux and blade server environments." The company has launched a full array of 4Gb/s Fibre Channel solutions spanning its HBA, switching and IOC product lines. To date, Emulex has captured 38 design wins for 4Gb/s HBAs, 20 design wins for 4Gb/s switches, and 3 design wins for 4Gb/s IOCs. In the fourth quarter, Emulex recorded its first shipments into the blade server market, successfully launching its LP1005DC HBA designed for the IBM eServer BladeCenter, the market's leading blade server system. In July, Emulex announced its first-ever OEM agreement with Sun Microsystems for Emulex HBAs, opening up the HBA market for Sun servers that are SAN attached to Sun storage. Folino concluded, "With our customer and product diversification strategy now taking hold, we believe we are well positioned for continued growth and expansion in fiscal 2006."
For the fiscal year ended July 3, 2005, revenues grew 3% from the prior year to a record $375.7 million, representing Emulex's seventh consecutive year of revenue growth. Fiscal 2005 non-GAAP net income was $77.7 million, or $0.86 per diluted share, compared to fiscal 2004 non-GAAP net income of $77.5 million, or $0.87 per diluted share. On a GAAP basis, fiscal 2005 net income was $71.6 million, or $0.80 per diluted share, compared to a net loss of $532.3 million, or $6.47 per share, in fiscal 2004.
Business Outlook
Although actual results may vary depending on a variety of factors, many of which are outside Emulex's control, Emulex is providing guidance for its first fiscal quarter ending October 2, 2005. While the summer quarter is typically seasonally soft, Emulex believes that with revenue contribution from new customers and 4Gb/s programs, it will have the opportunity to grow revenue up to 2% sequentially. As a result, Emulex is budgeting for first quarter revenue in a range of $106-$110 million. Emulex expects that gross margins will likely remain near fourth quarter levels of 64%, and as its tax rate rises from the fourth quarter level of 33% to the long-term expected rate of 37%, non-GAAP earnings per share could amount to $0.26-$0.28. On a GAAP basis, Emulex expects diluted first quarter EPS of $0.16-$0.18 per share, reflecting approximately $0.10 per share in expected GAAP charges arising primarily from amortization of intangibles and stock-based compensation, including the initiation of FAS 123(R) option expensing.
Webcast Information
Emulex will host a webcast today at 2:00 p.m. Pacific time to discuss the financial results in detail. The webcast may be accessed live via the home page of the Emulex website at www.emulex.com. During the call, Emulex will discuss details of the fourth fiscal quarter financial results. A replay of the webcast will be available in the audio archive section of the investor relations page of the Emulex website. In addition, a replay of the quarterly conference call will be available for 48 hours by calling (888) 203-1112 -- and using the passcode 3448154.
About Emulex
Emulex Corporation is the industry's preeminent source for a broad range of advanced storage networking infrastructure solutions spanning host bus adapters, embedded storage switches, I/O controllers and SAN Storage Switches. Emulex ranked number 16 in the Deloitte 2004 Technology Fast 50 and most recently received recognition as one of Forbes 200 Best Small Companies.
The world's leading server and storage providers rely on Emulex HBAs, embedded storage switching and I/O controller products to build reliable, scalable and high performance storage solutions. The Emulex award-winning product families, including its LightPulse® HBAs and InSpeed® embedded storage switching products, are based on internally developed ASIC, firmware and software technologies, and offer customers high performance, scalability, flexibility and reduced total cost of ownership. The company's products have been selected by the world's leading server and storage providers, including Dell, EMC, Fujitsu Ltd., Fujitsu Siemens, Bull, HP, Hitachi Data Systems, IBM, NEC, Network Appliance, Quantum Corp., StorageTek, Sun Microsystems, Unisys and Xyratex. In addition, Emulex includes industry leaders Brocade, Computer Associates, Intel, McDATA, Microsoft and VERITAS among its strategic partners. Corporate headquarters are located in Costa Mesa, California. News releases and other information about Emulex Corporation are available at http://www.emulex.com.
EMULEX | We network storage
Note Regarding Non-GAAP Financial Information. The non-GAAP financial information included in this press release is not prepared in accordance with GAAP as it excludes subsequent benefits related to an inventory charge, impairment charges, gains or losses on the repurchase of convertible subordinated notes and litigation settlements, as well as charges relating to stock-based compensation, in-process research and development charges, and amortization of intangibles. Management believes that the presentation of non-GAAP information may provide useful information to investors because Emulex has historically provided this information and understands that some investors consider it useful in evaluating Emulex's core business. Management also uses this non-GAAP information, along with the GAAP information, in evaluating Emulex's business for these purposes. The non-GAAP results should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP or other pro forma measures used by other companies.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the statements set forth above, including, without limitation, those contained in the discussion of "Business Outlook" above, contain forward-looking statements that involve risk and uncertainties. We expressly disclaim any obligation or undertaking to release publicly any updates or changes to these forward-looking statements that may be made to reflect any future events or circumstances. The company wishes to caution readers that a number of important factors could cause actual results to differ materially from those in the forward-looking statements. The fact that the economy generally, and the technology and storage segments specifically, have been in a state of uncertainty makes it difficult to determine if past experience is a good guide to the future and makes it impossible to determine if markets will grow or shrink in the short term. In the past, the Company's results have been significantly impacted by a widespread slowdown in technology investment that has also pressured the storage networking market that is the mainstay of the Company's business. A downturn in information technology spending could adversely affect the Company's revenues and results of operations. As a result of this uncertainty, the Company is unable to predict with any accuracy what future results might be. Other factors affecting these forward-looking statements include, but are not limited to, the following: slower than expected growth of the storage networking market or the failure of the Company's OEM customers to successfully incorporate the Company's products into their systems; the Company's dependence on a limited number of customers and the effects of the loss of, or decrease or delays in orders by, any such customers, or the failure of such customers to make payments; the emergence of new or stronger competitors as a result of consolidation movements in the market; the timing and market acceptance of the Company's or the Company's OEM customers' new or enhanced products; the variability in the level of the Company's backlog and the variable booking patterns of the Company's customers; the effects of terrorist activities, natural disasters and resulting political or economic instability; the highly competitive nature of the markets for the Company's products as well as pricing pressures that may result from such competitive conditions; the Company's ability and the ability of the Company's OEM customers to keep pace with the rapid technological changes in the Company's industry and gain market acceptance for new products and technologies; the effect of rapid migration of customers towards newer, lowest cost product platforms; possible transitions from board level to application specific computer chip solutions for selected applications; a shift in unit product mix from higher-end to lower-end products; a decrease in the average unit selling prices or an increase in the manufactured cost of the Company's products; delays in product development; the Company's reliance on third-party suppliers and subcontractors for components and assembly; any inadequacy of the Company's intellectual property protection or the potential for third-party claims of infringement; the Company's ability to attract and retain key technical personnel; the Company's dependence on foreign sales; the effect of acquisitions; impairment charges; changes in tax rates or legislation; and changes in accounting standards, including changes in the accounting treatment of employee stock options and contingent convertible debt. These and other factors which could cause actual results to differ materially from those in the forward-looking statements are discussed in the company's filings with the Securities and Exchange Commission, including its recent filings on Forms 8-K, 10-K and 10-Q, under the caption "Risk Factors."
This news release refers to various products and companies by their trade names. In most, if not all, cases these designations are claimed as trademarks or registered trademarks by their respective companies.
