FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
David Brunton, Chief Financial Officer
SBE, Inc.
(925) 355-7700
davidb@sbei.com
SBE, INC. ANNOUNCES SECOND QUARTER 2004 RESULTS
REPORTING CONTINUED GAINS IN REVENUE AND PROFITABILITY
SAN RAMON, CA -- MAY 19, 2004--SBE, Inc. (Nasdaq:SBEI), a leading provider of
high performance OEM network connectivity solutions, today reported results for
the three-month and six-month periods ended April 30, 2004.
Net sales for the second quarter of 2004 were $3.0 million, compared with $1.8
million for the second quarter ended April 30, 2003. Net income for the second
quarter of 2004 was $54,000, or $0.01 per share, basic and diluted, compared to
net income for the second quarter of 2003 of $51,000, or $0.01 per share, basic
and diluted.
Net sales for the six months ended April 30, 2004 were $5.9 million, compared
with $3.6 million for the same period last year. Net income was $581,000, or
$0.12 and $0.09 per share, basic and diluted, respectively, for the six months
ended April 30, 2004 compared to a net income of $143,000, or $0.04 per share,
basic and diluted, for the first six months of fiscal 2003.
Gross margin for the second quarter of 2004 was 52%, compared to 62% for the
same quarter in 2003. Gross margin for the six months ended April 30, 2004 was
54%, compared to 61% reported for the same period of 2003. In both cases, the
decrease in gross profit margin in fiscal 2004 compared to fiscal 2003 was
partially due to the inclusion of $100,000 of quarterly non-cash intellectual
property amortization expense in costs of goods sold in fiscal 2004. Excluding
this non-cash amortization expense, the gross margin would have been 56% and 57%
for the three and six months ended April 30, 2004, respectively. There was some
erosion in gross margin in fiscal 2004 as compared to fiscal 2003 due to
slightly higher raw material and manufacturing costs and the inclusion of some
one-time manufacturing tooling start-up costs associated with the Antares
product lines.
Total operating expenses increased in the second quarter of 2004 to $1.5 million
compared to $1.1 million in the same quarter of 2003, primarily as a result of
increases in the staffing levels of our engineering group combined with an
increase in marketing investments. We continue to pursue a policy of aggressive
investment in new product research and development and have added engineering
staff to execute this policy. During the past six months we returned to an
active program of product advertising and industry trade show participation to
promote our new product rollout and take advantage of the economic recovery.
Total operating expenses for the six months ended April 30, 2004 were $2.6
million compared to $2.1 million in the same period one year ago.
"The momentum from the previous quarters has continued as we achieved our goals
for revenue and sales backlog for the quarter just ended. We continue to see
strength from our legacy products and customers as evidenced by the large
telecommunications order received this quarter. We are on plan for the year,"
said William B. Heye, Jr., president and CEO. "The last six months has found us
very active in expanding our market coverage and introducing new products.
During the quarter we strengthened our sales and business development team and
formed an important alliance with a proven European distributor."
"We are more convinced than ever that the TCP/IP offload engine ("TOE") will be
an effective product with wide market acceptance," continued Heye, "Our TOE
product has passed some significant test milestones and we are beginning our
field BETA test program next month. While the TOE product is targeted toward
high traffic server-to-server applications, we have also integrated our TOE
board with ISCSI software from our new partner PyX Technologies; to deliver a
competitively strong Internet based storage solution. SBE and PyX Technologies
drew the attention of numerous iSCSI users at the recent Networld+Interop show
in Las Vegas with a demonstration that used our TOE and WAN products to
facilitate the transfer of data over the Internet to a remote location. Our
solution will allow businesses, for the first time, to have a cost effective
real-time offsite data storage and disaster recover back-up system that works
over the Internet. We're pleased with the progress being made on all fronts,"
Heye concluded.
The company continues to generate adequate cash flow and liquidity to fund its
business plan. SBE closed the quarter with a sales backlog of $4.8 million, $2.4
million in cash and $5.1 million in working capital (current assets less current
liabilities), an increase from our sales backlog of $4.1 million, $1.4 million
in cash and $3.9 million in working capital at October 31, 2003.
BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are
forward-looking, and actual results may differ materially. See the cautionary
statement at the end of this press release for a summary of the risks associated
with forward-looking statements and where to find more information regarding
such risks.
"Based on our current visibility into the state of our business and the overall
marketplace, we expect revenue growth and profitability will continue during
fiscal 2004. We anticipate net sales for fiscal 2004 to range between $12.0
million and $14.0 million and diluted earnings per share for the year will range
between $0.17 and $0.23. Although we only provide guidance in terms of annual
results, we will update our performance against this annual forecast on a
quarterly basis. Based on our current sales activity, current backlog, and
forecasts we are on plan. We remain committed to our strategy of maintaining
profitability in the near term while positioning the organization for long-term
growth," said Heye.
CONFERENCE CALL INFORMATION
SBE's second quarter conference call will be held Thursday, May 20, 2004 at
11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. To access the call, please
dial 800-875-9124 and enter access code number 7350523 or go to www.sbei.com
approximately 10 minutes prior to the start of the call.
A replay of SBE's quarterly conference call will be available for 24 hours. To
access the replay, please dial 800-642-1687 and enter code number 7350523. The
replay can also be accessed for 90 days following the conference call via the
company web site at www.sbei.com.
ABOUT SBE
SBE architects and provides network communications solutions for an extensive
range of applied computing applications. SBE offers a robust portfolio of
standards-based wide area network (WAN), local area network (LAN), and storage
network interface cards (NICs), as well as communications controllers designed
to enable optimal performance and rapid deployment across a full spectrum of
next generation networking systems. Based in San Ramon, California, SBE is a
publicly traded company (NASDAQ: SBEI) with products sold worldwide through
direct sales, OEMs and system integration partners. For additional information,
please visit www.sbei.com.
- ### -
This news release contains certain forward-looking statements that involve risks
and uncertainties, including statements about management's current estimates
regarding net sales, gross margins and operating costs for the remainder of
fiscal 2004, as well as statements about new product features, market
opportunity for new products, and the demand for services that may be offered by
SBE's customers. Such statements are only predictions and the company's actual
results may differ materially from those anticipated in these forward-looking
statements. Factors that may cause such differences include, but are not limited
to, risks related to the company's reliance on a small number of OEM customers,
rapidly changing product requirements, the introduction of new products, market
acceptance of the company's products, and reliance on strategic partners. These
factors and others are more fully discussed in the documents the company files
from time to time with the Securities and Exchange Commission, particularly, the
company's most recent Form 10-K and Form 10-Q.
SBE and the SBE logo are registered trademarks of SBE, Inc. All other brand or
product names are trademarks or registered trademarks of their respective
holders.
- Tables Follow -
SBE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and six months ended April 30, 2004 and 2003
(In thousands, except per share amounts)
(Unaudited)
Three months ended Six months ended
April 30, April 30,
2004 2003 2004 2003
------- ------- ------- -------
Net sales $ 2,977 $ 1,767 $ 5,947 $ 3,628
Cost of sales 1,417 679 2,742 1,412
------- ------- ------- -------
Gross profit 1,560 1,088 3,205 2,216
Product research and development 543 294 1,048 579
Sales and marketing 564 336 1,053 643
General and administrative 400 437 764 878
Loan reserve (benefit) -- -- (239) --
------- ------- ------- -------
Total operating expenses 1,507 1,067 2,626 2,100
Operating income 53 21 579 116
Interest and other income 1 8 2 9
------- ------- ------- -------
Income before income taxes 54 29 581 125
Income tax benefit -- (22) -- (18)
------- ------- ------- -------
Net income $ 54 $ 51 $ 581 $ 143
======= ======= ======= =======
Basic income per share $ 0.01 $ 0.01 $ 0.12 $ 0.04
======= ======= ======= =======
Diluted income per share $ 0.01 $ 0.01 $ 0.09 $ 0.04
======= ======= ======= =======
Basic -- shares used in per
share computations 5,003 4,085 4,961 4,071
======= ======= ======= =======
Diluted -- shares used in per
share computations 6,030 4,085 6,134 4,072
======= ======= ======= =======
SBE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 30, October 31,
2004 2003
-------- --------
Current assets:
Cash and cash equivalents $ 2,389 $ 1,378
Trade accounts receivable, net 1,633 1,818
Inventories 1,751 1,880
Other 413 240
-------- --------
Total current assets 6,186 5,316
Property, plant and equipment, net 337 289
Capitalized software costs, net 177 120
Intellectual property, net 918 1,122
Other 28 28
-------- --------
Total assets $ 7,646 $ 6,975
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 577 $ 696
Other accrued expenses 527 675
-------- --------
Total current liabilities 1,104 1,371
Other long-term liabilities 3 217
-------- --------
Total liabilities 1,107 1,588
-------- --------
Stockholders' equity:
Common stock 15,731 15,302
Note receivable from stockholder -- (142)
Accumulated deficit (9,192) (9,773)
-------- --------
Total stockholders' equity 6,539 5,387
-------- --------
Total liabilities and stockholders' equity $ 7,646 $ 6,975
======== ========