ADIC First Quarter Revenues Climb 22% to Record $118.3 Million
Thursday February 12, 4:01 pm ET
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Net Income up 191%
Pathlight VX Ships
REDMOND, Wash.--(BUSINESS WIRE)--Feb. 12, 2004--Advanced Digital Information Corporation (Nasdaq:ADIC) today announced sales for its first quarter ended January 31, 2004, were a record for any quarter at $118.3 million, up 22 percent from the same quarter last year. Net income for the period increased 191 percent to $4.9 million, or eight cents per share, versus $1.7 million, or three cents per share, a year ago.
"We are gratified to report first quarter results showing large increases in both revenue and earnings over the same quarter last year," according to Chairman and Chief Executive Officer Peter van Oppen. "Our growth over the last few quarters has been among the best in the industry and we continue to expect acceptance of our new Intelligent Storage Solutions(TM) (ISS) and expanded sales channels in an improving economy will result in good gross margins and increasing profitability through the remainder of fiscal 2004," he said.
"The Company also began shipments of a new ISS product during the quarter with the introduction of the Pathlight VX disk-to-tape backup solution," van Oppen said. With Pathlight VX, users are able to achieve disk performance and RAID reliability using serial ATA disk for primary backup and restore while maintaining an integrated path to tape for extended data retention and disaster recovery. ADIC's own proven tape emulation, disk file system, policy based data management tools and tape library technology give Pathlight VX unique performance advantages.
On a sequential basis, sales were up slightly from $118.0 million in the preceding fourth quarter of fiscal 2003, operating profit was up four percent and pre-tax income was up 23 percent. Sequential net income was down 15 percent due to a higher effective tax rate in the first quarter of 2004.
Gross margin as a percentage of sales declined in the first quarter to 29.0 percent versus 30.7 percent during first quarter of fiscal 2003. The Company attributed this decline to a lower proportion of sales of ISS products and a moderately higher proportion of OEM sales. ISS products include elements of ADIC software and connectivity technology and are sold through both branded and OEM sales channels. ISS sales were approximately 35 percent of total sales in the first quarter, down from 41 percent of total sales in the first quarter of fiscal 2003. As previously described, the Company believes gross margin as a percentage of sales typically correlates with the proportion of ISS products sold in the period and will generally increase over time. ISS sales were 17, 30 and 37 percent of total sales in fiscal years 2001, 2002 and 2003, respectively.
OEM sales were 50 percent of total revenues for the quarter versus 48 percent during the same period last year. A higher percentage of OEM sales generally reduces overall gross margin as a percentage of sales because gross margins for OEM products are typically lower than for comparable branded products, reflecting lower required sales and product development costs.
First quarter gross margin as a percentage of sales also declined approximately 200 basis points from 31.0 percent reported in the immediately preceding fourth quarter despite a relatively equal proportion of ISS sales and only a modest increase in the proportion of OEM sales. This sequential gross margin decline is primarily attributable to a changing order mix within a particular OEM customer and a shift in the mix of business among OEM customers. Neither factor appears to reflect a fundamental change in pricing or costs on specific products.
Total operating expenses remained virtually flat compared to first quarter 2003 and declined over seven percent when compared to the preceding fourth quarter, principally due to reduced bonus plan accruals during the just completed period. Other income of $2.2 million includes foreign currency gains, gains from the sales of investments and interest income.
Cash and marketable securities, net of debt, totaled $222 million as of January 31, an increase of approximately $22 million from the end of fiscal 2003. Approximately $15.2 million of this increase reflects proceeds from the sale of inventory and fixed assets, the majority of which were leasehold improvements, related to an outsourcing agreement completed during the period.
Exchange rate fluctuations, primarily the recent appreciation of the European euro currency, accounted for approximately three percent sales growth over the same period a year ago. Using constant dollars, sales grew at a rate of approximately 19 percent between first quarter 2003 and first quarter 2004. |
