Boston, MA 05/27/2014 (wallstreetpr) – NetApp Inc. (NASDAQ:NTAP) delivered a solid result for the fiscal 2014 ended April 25, 2014 with expansion in operating margin and strong operating cash flow.
Operating margin
During the fourth quarter (4Q2014), NetAPP’s revenues were $1.65billion, down by 4% compared to prior year period due to 34% YoY decrease in OEM revenue, but the branded revenue remained flat. Adjusted (non-GAAP) gross margin improved to 64.4% as a result of increasing product gross margin of 58.8% (+2 points) and service gross margin of 62.7% (+6 points). Higher gross margin and lower operating expenses increased the adjusted operating margin to 20.9% (+4 points) and consequently, improved the adjusted EPS to $0.84 (+22%).
In FY2014, net revenues remained flat at $6.33 billion with increasing branded revenue; however, OEM revenues were down by 26% YoY due to lower revenue from Americas resulted from the challenges in the Federal spending. But, adjusted gross margin for the period improved to 63.2% (+2.5 points) and adjusted operating margin to 18.3% (+3 points). So, the adjusted EPS for FY2014 was from $2.78, up by 22% compared to $2.28 in FY2013.
Cash distribution
During 4Q2014, NetApp generated free cash flow of $313.5 million, 19% of total revenue, reflected due to lower operating cash flow of $369.5 million and capital expenditures of $56 million. NetApp Inc. (NASDAQ:NTAP) also returned $49 million as dividend and repurchased $374 million of stocks.
In FY2014, NetApp generated free cash flow of $1.1 billion and paid a cash dividend of $2.1 billion through a combination of dividend and repurchase of shares. NetApp is financially flexible with total cash of $5 billion, shareholder’s equity of $3.8 billion and total debt of $995.5 million.
Moving forward
NetApp continues to help the global enterprises with its comprehensive range of portfolio including cloud storage and data management solutions. The Company will leverage its competitive edge over enterprise storage systems and address the impending customer needs while offering wide range of applications. NetApp Inc. (NASDAQ:NTAP) expects growth in the first quarter of 2015 with net revenues of $1.4 to $1.5 billion and adjusted EPS of $0.53 to $0.58.
