SIMI VALLEY, CA -- (Marketwire - February 11, 2010) - Qualstar® Corporation (NASDAQ: QBAK), a manufacturer of automated tape storage solutions and high efficiency power supplies, today reported financial results for the second quarter of fiscal 2010 ended December 31, 2009.
Fiscal 2010 Second Quarter Financial Results
Revenues for the second quarter of fiscal 2010 were $3.6 million, compared to $4.6 million for the same quarter of fiscal 2009, a decrease of $1.0 million or 22.2 percent. Loss from operations was $0.9 million compared to $0.8 in fiscal 2009. Net loss was $0.8 million or $(0.07) per basic and diluted share, compared to a net loss of $0.6 million or $(0.05) per basic and diluted share for the second quarter of fiscal 2009.
Tape library segment revenues were $2.6 million for the quarter, compared to $3.1 million for the same quarter of the prior year, a decrease of $0.5 million, or 16.5 percent. Power supply segment revenues of $1.0 million for the quarter decreased by $0.5 million, or 34.3 percent, compared to $1.5 million in the same quarter of the prior year.
Gross profit decreased to $1.2 million, or 33.2 percent of net revenues, for the three months ended December 31, 2009, from $1.5 million, or 31.9 percent of net revenues, for the three months ended December 31, 2008. The increase in gross profit percentage was due to a change in product mix, partially offset by lower absorption of labor and overhead and an increase in inventory reserves.
Research and development expenses for the second quarter of fiscal 2010 were comparable at $0.8 million to the second quarter of fiscal 2009. Sales and marketing expenses were $0.6 million, or 17.3 percent of revenues, compared to $0.8 million, or 16.3 percent of revenues, in the corresponding period last year. The decrease in sales and marketing expense was due to a decrease in compensation related to reductions in personnel and a decrease in sales consulting expenses. General and administrative expenses in the second quarter of fiscal 2010 were $0.6 million, or 17.9 percent of revenues, compared to $0.8 million, or 17.3 percent of revenues, for the same period last year. The decrease in general and administrative expense was primarily due to a decrease in compensation related to reductions in personnel and bad debt expenses.
Commenting on the second quarter results, Bill Gervais, president and chief executive of Qualstar said, "Although second quarter revenues of $3.6 million were within our guidance, our XLS sales jumped to $0.8 million or 17 units versus $0.2 million or 3 units in the year ago quarter. This was the highest quarter of XLS unit shipments since the product was launched in July 2006. Despite the strong XLS sales, we continue to face declines in our legacy library products as well as in tape media. Looking ahead to the second half of fiscal 2010, we expect that the actions we have taken over the past two years to strengthen our business model, including cost reductions and continuing with new product developments, will have a positive impact on our results as the broader economic conditions turn the corner. Power supply revenues should also benefit from the worldwide focus on higher efficiency and the general movement toward 'green' products."
Fiscal 2010 Six-Month Financial Results
Qualstar reported revenues of $7.3 million for the first six months of fiscal 2010, compared with $10.0 million for the first six months of fiscal 2009. The Company's net loss for the first six months of fiscal 2010 was $1.7 million or $(0.14) per basic and diluted share, compared with a net loss of $0.6 million, or $(0.05) per basic and diluted share, in the first six months of fiscal 2009.
Cash, cash equivalents and marketable securities were $25.0 million at December 31, 2009, down from $27.7 million at June 30, 2009. Inventory at December 31, 2009 was $5.2 million, compared to $5.8 million at June 30, 2009.
Common Stock Dividend
Qualstar's Board of Directors did not declare a dividend in January as has been done in prior quarters. Ongoing dividends are evaluated on a quarter-by-quarter basis. Given the state of the economy, the Board conservatively elected in favor of preserving capital this quarter.
Qualstar Corporation Conference Call
Company management will hold a conference call to discuss its fiscal 2010 second quarter results today at 2:00 p.m. Pacific (5:00 p.m. Eastern). Investors are invited to listen to the call live via the Internet using the link under the "Investors" section at www.qualstar.com. Please go to the Website at least 15 minutes early to register, download and install any necessary audio software. A replay of the Webcast will be available for 30 days. Additionally, participants can dial into the live conference call by calling 877-941-0844 or 480-629-9645. An audio replay will be available through February 18, 2010, by calling 800-406-7325 or 303-590-3030, and entering access code 4204769.
About Qualstar Corporation
Qualstar manufactures automated tape libraries and power supplies. Its products are known throughout the world for energy efficiency and rugged, Simply Reliable designs yielding years of trouble-free operation. Qualstar tape libraries are sold and supported worldwide by a network of Value Added Resellers and OEM's to backup, archive and protect data from accidental or catastrophic losses. The Company's N2Power brand of high efficiency power supplies are sold to OEM manufacturers, where very high electrical efficiency is required. Qualstar Corporation is publicly traded on the NASDAQ National Market under the symbol QBAK. More information is available at www.qualstar.com or by phone at 805-583-7744.
Forward-Looking Statements
Statements concerning the future business, operating results and financial condition of the Company are "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations and are subject to a number of uncertainties that could cause actual performance and results to differ materially from the results discussed in the forward-looking statements. Factors that could affect the Company's actual results include the Company's ability to increase sales of its products; rescheduling or cancellation of customer orders; unexpected shortages of critical components; unexpected product design or quality problems; and, adverse changes in market demand for its products. The Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Further information on these and other potential factors that could affect the Company's financial results or condition are included in Qualstar's filings with the Securities and Exchange Commission. In particular, reference is made to the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2009, and to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of its Form 10-K and its most recent Quarterly Report on Form 10-Q.
- -Financial Tables to Follow-
QUALSTAR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2009 2008 2009 2008 -------- -------- -------- -------- Net revenues $ 3,597 $ 4,623 $ 7,276 $ 10,025 Cost of goods sold 2,403 3,149 5,119 6,668 -------- -------- -------- -------- Gross profit 1,194 1,474 2,157 3,357 -------- -------- -------- -------- Operating expenses: Research and development 809 765 1,611 1,508 Sales and marketing 624 753 1,168 1,448 General and administrative 645 802 1,316 1,568 -------- -------- -------- -------- Total operating expenses 2,078 2,320 4,095 4,524 -------- -------- -------- -------- Loss from operations (884) (846) (1,938) (1,167) Investment Income 86 291 189 571 -------- -------- -------- -------- Loss before income taxes (798) (555) (1,749) (596) Benefit for income taxes - - - (2) -------- -------- -------- -------- Net loss $ (798) $ (555) $ (1,749) $ (594) ======== ======== ======== ======== Loss per share: -------- -------- -------- -------- Basic and Diluted $ (0.07) $ (0.05) $ (0.14) $ (0.05) ======== ======== ======== ======== Shares used to compute loss per share: -------- -------- -------- -------- Basic and Diluted 12,253 12,253 12,253 12,253 ======== ======== ======== ======== -------- -------- -------- -------- Cash dividends declared per common share $ 0.06 $ 0.06 $ 0.12 $ 0.12 ======== ======== ======== ======== QUALSTAR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 31, June 30, 2009 2009 ASSETS (Unaudited) (Audited) ------------ ------------ Current assets: Cash and cash equivalents $ 2,463 $ 3,749 Marketable securities, short-term 13,888 16,856 Receivables, net of allowance for doubtful accounts of $55 as of December 31, 2009 and $85 as of June 30, 2009 2,109 2,305 Inventories, net 5,197 5,822 Prepaid expenses and other current assets 360 397 ------------ ------------ Total current assets 24,017 29,129 ------------ ------------ Property and equipment, net 301 361 Marketable securities, long-term 8,610 7,056 Other assets 46 46 ------------ ------------ Total assets $ 32,974 $ 36,592 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 552 $ 649 Accrued payroll and related liabilities 313 505 Other accrued liabilities 858 894 ------------ ------------ Total current liabilities 1,723 2,048 ------------ ------------ Other long-term liabilities 34 34 Commitments and contingencies Shareholders' equity: Common stock, no par value; 50,000 shares authorized, 12,253 shares issued and outstanding as of December 31, 2009 and June 30, 2009 18,813 18,798 Accumulated other comprehensive income 79 168 Retained earnings 12,325 15,544 ------------ ------------ Total shareholders' equity 31,217 34,510 ------------ ------------ Total liabilities and shareholders' equity $ 32,974 $ 36,592 ============ ============
For more information, contact: William J. Gervais President & CEO Qualstar Corporation (805) 583-7744 gervais@qualstar.com Lasse Glassen General Information Financial Relations Board (213) 486-6546 lglassen@mww.com