Qualstar: Fiscal 4Q13 Financial Results

Qualstar Corporation reported financial results for the fourth quarter and the fiscal year ended June 30, 2013.

Fiscal 2013 Fourth Quarter Financial Results
Revenues for the fourth quarter of fiscal 2013 were $2.9 million, compared with $4.3 million for the fourth quarter of fiscal 2012, a decrease of $1.4 million or 33%. Revenue was negatively impacted by previous management’s execution and strategy, as well as the market for tape storage devices. Loss from operations was $3.5 million for the fourth quarter of fiscal 2013 compared with $2.5 million for the fourth quarter of fiscal 2012, primarily due to legal fees and inventory write downs. Loss per share was $(0.28) for the fourth quarter of fiscal 2013compared with loss per share of $(0.22) per basic and diluted share for the fourth quarter of fiscal 2012.

Tape library segment revenues were $1.1 million for the fourth quarter of 2013, compared with $1.7 million for the same period last year, a decrease of $0.6 million or 35%. Power supply segment revenues were $1.7 million for the quarter, compared with $2.5 million in the fourth quarter of 2012, a decrease of $0.8 million, or 32%.

Gross margin was 12% of revenues or $370,000, for the quarter ended June 30, 2013, an improvement over the negative gross margin of (0.9)% of revenues or $(40,000) for the three months ended June 30, 2012. The increase in gross profit was primarily attributed to lower charges to the inventory reserves. Engineering expenses for the fourth quarter of the fiscal year 2013 were $1.0 million, or 36% of revenues, compared with $663,000, or 15.4% of revenues for the fourth quarter of the fiscal year 2012. Sales and marketing expenses were $854,000 or 30% of revenues for the fourth quarter of fiscal 2013, compared with $548,000, or 12.8% of revenues in the corresponding period last year. General and administrative expenses for the fourth quarter of fiscal 2013 were $1.6 million, or 57% of revenues, compared to $1.3 million, or 29% of revenues, for the same period last year.

Fiscal 2013 Full Year Financial Results
Qualstar reported revenues of $12.6 million in the fiscal year 2013, a decrease of 27% compared with $17.1 million in the fiscal year 2012. Net loss in fiscal 2013 was $10.4 million or $(0.85) per basic and diluted share. This compares with a net loss in the fiscal year 2012 of $4.1 million, or $(0.34) per basic and diluted share.

Cash, cash equivalents and marketable securities were $13.8 million at June 30, 2013, compared with $20.9 million at June 30, 2012, down $7.1 million. Inventory, net of reserves, at June 30, 2013, was $1.6 million, compared with $4.5 million at June 30, 2012. This decrease in inventory was primarily attributable to the outsourced manufacturing contract with CTS.

“Fiscal year 2013 was a year of significant changes, culminating in a new board and CEO immediately after the year end,” said CEO and president, Steven Bronson. “The results for the fiscal year 2013 reflect the prior management’s plan to build cost structure ahead of the revenue to support it. The new management is committed to a more prudent and financially sound plan. Since taking office, we have reduced headcount, consolidated all of our activities into one location in Simi Valley, CA, and eliminated many non value-added expenditures. We believe the resulting operating expense savings will enable us to be much more competitive. We are increasing resources in sales, especially in the international arena, from which more than half of our revenues arise. We also plan on expanding our product offerings for both business segments.”