The company reported fourth quarter earnings of $0.34 per share, excluding non-recurring items, which came in above expectations. On the top line, revenues rose 5.1% year/year to $766.3 mln, which also came in above expectations.
Revenue growth in the quarter was driven by Digital Infrastructure solutions growth of 13.5%, where increased traction for next generation software defined infrastructure with automation and analytics led to increased sales of network upgrades.
This segment is key as it provided 71% of total sales in fiscal year 2018.
Meanwhile, Cloud revenue (16% of 2017 sales) decreased 22.7% and security revenue (13% of 2017 sales) was flat in comparison with the prior year.
Geographically speaking, revenue earned by the company from customers outside of the United States is not material for any of the periods presented.
Moving further down the income statement, gross margins took a hit due to lower services margins, which resulted from a higher proportion of vendor partner engagements in the period, pushing total company gross margins down to 19.8% from 20.9%.
In other news, a Special Independent Committee of the company's Board of Directors has approved the repurchase of 10,750,000 of its shares from funds affiliated with Apollo Global Management, LLC for approximately $160 mln, including fees and transaction costs.
The company intends to finance the share repurchase through proceeds from borrowings of incremental term loans pursuant to its existing credit facility. At year end, on a pro forma basis including the share repurchase, total net debt was $809.6 mln, representing 3.6x total net leverage.
The transaction is expected to be 7% accretive to pro forma adjusted EPS on an annualized basis in its fiscal 2019 year and reduces the amount of stock held by Apollo by 18.6%.
Separately, the company initiated a quarterly cash dividend of $0.04 per share ($0.16 per share on an annualized basis) to shareholders. The first dividend will be paid on October 5, 2018, to shareholders of record on the close of business on September 26, 2018.
Looking ahead at future sales, the company expects to see fiscal year 2019 of $2.85-2.90 bln, which falls in-line with current expectations.
Pro Forma Diluted EPS: Growth in the low double-digit range excluding the accretion from the share repurchase, or growth in the mid to high teens including the impact of the share repurchase.
Following the open of the stock market, shares of PSDO is up 12%.