Brocade's (BRCD) Q1 Results Beat as Profit More Than Doubles

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BRCD Hot Sheet

EPS Growth %: +15.4%

Financial Fact:
Sales and marketing: 152.69M

Today's EPS Names:
TARO, BRLI, TLB, More

Shares of Brocade (Nasdaq: BRCD) are rising after hours Tuesday afternoon as investors are cheering strong first-quarter 2012 results and second-quarter guidance. After closing at $5.50, Brocade shares last traded at $5.80.

Revenue during the quarter totaled $561 million, up 2.7 percent from the same quarter last year and up 2 percent from the fourth quarter of 2011. Analysts on the Street were expecting sales of $542.19 million. Sales to the company's Storage segment rose 4 percent to a record $406.4 million. Ethernet sales rose 1 percent from last year's quarter to $154.3 million. Sales to this segment fell 18 percent from the fourth quarter of 2011.

GAAP net income rose 119 percent from $27 million to $59 million, or about 12 cents per share. Pro-forma profit totaled $92.81 million, up a sharp 53 percent from the $60.48 million posted during the first quarter of 2011. Non-GAAP EPS came in at 20 cents. Excluding a 3 cent per share charged related to the closure of various tax audits in the United States during the first quarter, earnings came in at 17 cents per share. The Street was expecting EPS of 13 cents.

"Q1 was a great quarter for Brocade -- achieving record revenue, expanding gross margins, and increasing profits as we continued to see strong momentum across many areas of our business," said Michael Klayko, CEO of Brocade. "It is clear that we are executing well on our Playbook strategy of using 'innovation as a differentiator' which fueled strength in both our Storage and Service Provider businesses. We look forward to delivering on our next wave of innovation focused on the Campus LAN market and to transition these customers to our new portfolio of solutions."

GAAP gross margin totaled 61.5 percent while adjusted-gross margin during the first quarter was 64.8 percent. Brocade reported non-GAAP gross margin of 52 percent during the same quarter last year. Non-GAAP operating margin was 21.5 percent, sharply higher than the 17.1 percent reported in the first quarter of 2011.

Brocade said it is looking for second-quarter earnings of 11-12 cents per share on sales of $530-$545 million. The Street is currently expecting second-quarter earnings of 12 cents per share on sales of $536.9 million.

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