Qualstar: Fiscal 4Q19 Financial Results

Qualstar Corporation announced its financial results for the three and twelve-month periods ended December 31, 2019.

FY19 Financial Results
The firm reported revenues of $13.4 million, an increase of 9.9% compared with $12.2 million for FY18. This compares with a net income for FY018, of $1.5 million or $0.73 per basic and $0.72 per diluted share.

Data storage segment revenues were $8.4 million, compared with $6.3 million for FY18, an increase of $2.1 million or 33.3%, primarily due to new reseller relationships, whose customers have a high demand for tape libraries and our partnership with Sony Imaging Products & Solutions, Inc. to develop an enterprise-class optical disk archive library.

Power supply segment revenues were $5.1 million, compared with $5.9 million for FY18, a decrease of $(0.8) million, or (13.6)%, primarily due to the variable life cycles of our customers’ production.

Gross margin was 26.1% of revenues, or $3.5 million, a decrease from the gross margin of 41.3% of revenues, or $5.0 million, for FY18.

Cash, cash equivalents, and restricted cash were $4.0 million at December 31, 2019, compared to $4.9 million of cash, cash equivalents, and restricted cash at December 31, 2018.

In December 2018, the company entered into a stock buyback program permitting to repurchase shares on the open market. During FY19, the company repurchased 129,991 shares at an average share price of $5.49. The program expired December 5, 2019. The total spending on stock repurchases was $0.8 million and, since its inception, the company accumulated 148,093 shares at an average share price of $5.47.

4FQ19 Financial Results
Revenues were $3.4 million, compared with $2.9 million for 4FQ18, an increase of $0.5 million or 17.2%. Loss from operations was $0.2 million compared with income from operations of $0.02 million for 4FQ18. Basic and diluted net income per share was ($0.10) , compared to basic and diluted net income per share of $0.01 for 4FQ18.

Data Storage segment revenues were $2.5 million compared with $1.6 million for 4FQ18, an increase of $0.9 million or 56.3%, primarily due to new reseller relationships, whose customers have a high demand for tape libraries.

Power supply segment revenues were $0.9 million, compared with $1.3 million in 4FQ18, a decrease of $(0.4) million, or (30.8)%, due to the production cycles of our customers.

Gross margin was 23.5% of revenues or $0.8 million, a decrease from the gross margin of 31.0% of revenues or $0.9 million for 4FQ18.

“We experienced nearly a 35% Y/Y increase in revenue in our data storage product segment, which is a testament that our previous and current efforts are gaining traction, that despite lower margins in our power supply and ODA development project, and investments in our business, we still managed to break even for the year,” said Steven N. Bronson, CEO and president.

FY20 Outlook
The first quarter has been impacted by the extended Chinese New Year holiday and the unprecedented change in the global business environment brought on by COVID-19. At this time, in its power supply business, the company is experiencing a delay in shipping dates as its subcontract manufacturers rebuild to full capacity. Although it has experienced few cancellations at this time, it is seeing customers delay orders in both business segments.

On January 9, 2020, the firm provided notice to terminate the ODA agreement with Sony Imaging Products and Solutions, Inc. and completed its remaining obligations on February 15, 2020. In 2019, the project revenue was approximately $2.7 million and the company expects to derive a small amount of revenue for 1FQ20.