Quantum Postpones Release of 4FQ18 Financial Results

Quantum Corp. is postponing release of its fiscal third quarter 2018 results and its earnings conference call, which were scheduled for this afternoon.

The company is taking this action so that its audit committee, in keeping with its strong corporate governance practices, can complete an investigation into accounting matters and related internal controls that were raised in response to a recent inquiry by the SEC.

In the meantime, it provided an update on its ongoing business transformation and cost savings initiative, including the acceleration of certain cost reduction actions announced last November.

The company also announced that its senior lenders have signed a term sheet to provide additional financial flexibility under its credit facility.

Postponement of Quarterly Results and Conference Call
On January 11, 2018, Quantum received a subpoena from the SEC regarding its accounting practices and internal controls related to revenue recognition for transactions commencing April 1, 2016. Following receipt of the SEC subpoena, the company’s audit committee began an independent investigation with the assistance of independent advisors, which is currently in process. Because the audit committee’s investigation is ongoing, Quantum decided to postpone its quarterly results release and conference call, pending conclusion of the investigation. The company is cooperating with the SEC and cannot predict the timing of completion or outcome of either the audit committee’s investigation or the SEC’s inquiry at this time.

Update on Transformation and Cost Savings Initiative
In November 2017, Quantum committed to begin a cost reduction initiative that would generate up to $35 million in annualized run rate savings exiting fiscal 2019. Today the company reported that it is executing ahead of plan and now expects to enter fiscal 2019 with at least $35 million in annualized run rate savings – thereby realizing the full savings a year earlier.

“As part of our multiyear transformation work, we have now identified further eficiencies to rationalize our cost structure and improve our go-to-market strategy so that we can better capitalize on the strengths of our technology and solutions,” said Patrick Dennis, president and CEO, Quantum. “This reflects my focus since joining Quantum a few weeks ago – moving quickly to ensure that our top priority is achieving sustained profitability while continuing to deliver for our customers.“

Additional Flexibility Under Quantum’s Credit Facility
Quantum also reported that its senior lenders have signed a term sheet designed to create additional flexibility under the company’s credit facility that would address recent covenant violations and provide the time and ability for the company to fully execute its business transformation. The firm expects this flexibility would also give the company the resources it needs to meet working capital requirements for the foreseeable future. The term sheet is subject to completion of a definitive agreement on the amended credit facility, which will be filed as required.

“Our lenders have been extremely supportive of our ongoing efforts to relax covenant requirements, free restricted cash and allow retroactive application of cost savings for covenant calculations to provide additional cushion,” said Fuad Ahmad, SVP and CFO, Quantum.