Exhibit 99.1
Contact:
Joyce Shinn
MTI Technology Corporation
949-885-7337
jshinn@mti.com
MTI TECHNOLOGY
REPORTS FISCAL 2006 THIRD QUARTER FINANCIAL RESULTS
REVENUES REACH $40 MILLION, A SEQUENTIAL INCREASE OF 27%
Irvine, CA, February 9, 2006 - MTI Technology Corporation (Nasdaq Capital
Market: MTIC), a multi-national storage solutions and services company, today
announced its financial results for the fiscal year 2006 third quarter and nine
months ended December 31, 2005.
Revenue for the fiscal year 2006 third quarter was $40.2 million, a 27%
sequential increase from $31.6 million reported in the prior quarter and a
slight increase compared to $39.5 million reported in the comparable prior year
period.
Product revenue for the third quarter grew to $30.6 million from $22.1 million
in the prior quarter, a 39% increase. Year ago product revenue was $29.3
million. Service revenue for the third quarter was $9.6 million, equal to the
prior quarter and a 6% decline from the same period in fiscal 2005.
The Company reported an operating loss of $1.56 million for the quarter, an
improvement of $1.7 million, or 52%, year-over-year and $1.9 million, or 55%,
sequentially. The improved operating results were driven by a broad reduction in
spending and increased product sales.
Net loss applicable to common stockholders for the third quarter was $3.0
million or $0.08 per share compared to a net loss of $3.2 million or $0.09 per
share in the same quarter of the prior fiscal year and a net loss of $4.1
million or $0.12 per share for the preceding quarter. Net loss applicable to
common stockholders for the third quarter included $1.2 million of costs
associated with amortization of a beneficial conversion feature and dividends
payable on Series A and B securities.
SG&A expenses for the third quarter were $9.4 million compared to $11.0 million
in the same quarter of the prior fiscal year and $9.7 million for the preceding
quarter. The 15% year-over-year reduction in SG&A was driven by a decrease in
operating expense related to the closure of our Dublin manufacturing facility at
the end of fiscal 2005 and other spending reductions.
Gross margin for the third quarter was 19.6% compared to 19.7% in the prior year
period and 20.2% in the prior quarter. Product gross margin for the third
quarter was 18.1% compared to 20.5% in the prior year period and 20.0% in the
prior quarter. Product margins continued to be negatively affected by a low
level of manufacturers' rebates. Service gross margins for the third quarter
were 24.7% compared to 17.3% in the prior year period and 20.7% in the prior
quarter. The increase in service gross profit percentage was the result of cost
reductions and continued improvement in utilization.
As of December 31, 2005, the Company had $21.2 million in cash and cash
equivalents. The increase in cash and cash equivalents was due primarily to the
$19.2 million net proceeds raised from the sale of Series B convertible
preferred stock in November of 2005.
"Order volume recovered nicely from our summer quarter," stated Tom Raimondi,
President and CEO of MTI. "Our stronger backlog of $6.8 million entering the
current quarter is a positive sign for continued momentum. With improving
service margins and a strong focus on keeping our spending in check, we continue
to be focused on reaching profitability and revenue growth."
For the nine months ended December 31, 2005, the Company reported total revenues
of $111.1 million, a 15% increase from $97.1 million in the comparable period of
fiscal 2005. Product revenue was $81.8 million for the first nine months of
fiscal 2006, a 19% increase from $68.8 million reported in the same period of
fiscal 2005. Service revenue for the first nine months of fiscal 2006 was $29.3
million, a slight increase from $28.2 million in the same period of the prior
year. Gross profit margin for the first nine-months of fiscal year 2006 was
20.1% compared to 21.7% in the same period of the prior year. Net loss
applicable to common stockholders for the nine-month period of fiscal 2006 was
$10.8 million or $0.31 per share compared to $8.1 million or $0.23 per share in
the same period of fiscal 2005.
Investor Conference Call
Management will discuss results followed by a question and answer session today,
February 9, 2006 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). The call-in
number is 866-578-5784, access code 44786809; international callers should dial
617-213-8056, access code 44786809. If you are unable to participate, a replay
will be available for 48 hours, beginning at 4:00 p.m. Pacific Time today,
February 9, 2006. The replay call-in number is 1-888-286-8010, access code
20408891. The replay for international callers is 617-801-6888, access code
20408891. A live and archived webcast of the conference call will be available
on the MTI website at www.mti.com.
About MTI Technology
MTI is a leading multi-national provider of professional services and
comprehensive data storage solutions for mid to large-size organizations. With
more than 20 years of expertise as a storage technology innovator, MTI is
uniquely qualified to assess, design, implement and support whole- office data
storage and backup initiatives. As a strategic partner of EMC (NYSE: EMC), MTI
offers the best data storage, protection and management solutions available
today. By employing a strategic, consultative approach, MTI provides customers
with a single point of contact that eliminates complexities while delivering
operational efficiencies and competitive advantages. MTI currently serves more
than 3,000 customers throughout North America and Europe. Visit www.mti.com for
more information.
MTI is a registered trademark of MTI Technology Corporation (the "Company").
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements include information
regarding the Company's expectations, goals or intentions regarding the future,
including but not limited to statements regarding the Company's future revenue
levels, ability to convert backlog into revenue, improving margins, spending
control, ability to achieve and maintain profitability and ability to grow
revenue. The actual results may differ materially from those described in any
forward-looking statement. In particular, we cannot assure you that MTI will
improve revenues or operating results, achieve profitability or grow within the
expected time frame or at all. Important factors that may cause actual results
to differ include competition, timing of customer orders, unanticipated
expenses, achievement of volume-based rebates, currency movements, evolving
technology, and the economy and other world events. Other important factors are
set forth in the Company's periodic filings with the U.S. Securities and
Exchange Commission, including its Form 10-K, as amended, for the year ended
April 2, 2005. All forward-looking statements speak as of the date made and MTI
undertakes no obligations to update any such statement.
# # #
Financial Tables to Follow
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, APRIL 2,
2005 2005
------------ ------------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents .......................................................... $ 21,161 $ 12,191
Accounts receivable, less allowance for doubtful accounts and sales
returns of $377 and $451 at December 31, 2005 and April 2, 2005,
respectively .................................................................... 34,489 33,866
Inventories, net ................................................................... 3,676 3,723
Prepaid expenses and other receivables ............................................. 6,647 6,971
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Total current assets ..................................................... 65,973 56,751
Property, plant and equipment, net ....................................................... 487 708
Goodwill, net ............................................................................ 5,184 5,184
Other .................................................................................... 188 223
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$ 71,832 $ 62,866
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Line of credit ..................................................................... $ 5,167 $ 3,667
Current portion of capital lease obligations ....................................... -- 78
Accounts payable ................................................................... 26,850 24,474
Accrued liabilities ................................................................ 10,642 9,489
Accrued restructuring charges ...................................................... 1,253 2,767
Deferred revenue ................................................................... 8,664 14,020
------------ ------------
Total current liabilities ................................................ 52,576 54,495
Deferred revenue ......................................................................... 3,777 3,695
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Total liabilities ........................................................ 56,353 58,190
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Series A redeemable convertible preferred stock, 567 shares issued and
outstanding at December 31, 2005, net of discount of $6,950 and $7,955 at
December 31, 2005 and April 2, 2005, respectively .................................... 8,050 7,045
Series B redeemable convertible preferred stock, 1,582 shares issued and outstanding at
December 31, 2005, net of discount of $9,933 ......................................... 10,067 --
Commitments and contingencies ............................................................ -- --
Stockholders' deficit:
Preferred stock, $.001 par value; authorized 5,000 shares; issued and
outstanding 2,149 and 567 shares at December 31, 2005 and April 2,
2005, respectively, included in redeemable convertible preferred stock above.... -- --
Common stock, $.001 par value; authorized 80,000 shares; issued and
outstanding 35,632 and 35,159 shares at December 31, 2005 and April 2, 2005,
respectively ................................................................... 36 35
Additional paid-in capital ......................................................... 155,209 145,345
Accumulated deficit ................................................................ (154,528) (143,768)
Accumulated other comprehensive loss ............................................... (2,983) (3,376)
Deferred compensation .............................................................. (372) (605)
------------ ------------
Total stockholders' deficit .............................................. (2,638) (2,369)
------------ ------------
$ 71,832 $ 62,866
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MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
DECEMBER 31, JANUARY 1, DECEMBER 31, JANUARY 1,
2005 2005 2005 2005
------------ ------------ ------------ ------------
Net product revenue ................................... $ 30,583 $ 29,286 $ 81,843 $ 68,810
Service revenue ....................................... 9,579 10,229 29,285 28,241
------------ ------------ ------------ ------------
Total revenue ...................................... 40,162 39,515 111,128 97,051
------------ ------------ ------------ ------------
Product cost of revenue ............................... 25,058 23,286 66,179 53,157
Service cost of revenue ............................... 7,217 8,457 22,583 22,863
------------ ------------ ------------ ------------
Total cost of revenue .............................. 32,275 31,743 88,762 76,020
------------ ------------ ------------ ------------
Gross profit ....................................... 7,887 7,772 22,366 21,031
------------ ------------ ------------ ------------
Operating expenses:
Selling, general and administrative ................ 9,414 11,027 28,420 28,392
Restructuring charges .............................. 30 -- 1,056 --
------------ ------------ ------------ ------------
Total operating expenses ......................... 9,444 11,027 29,476 28,392
------------ ------------ ------------ ------------
Operating loss ..................................... (1,557) (3,255) (7,110) (7,361)
------------ ------------ ------------ ------------
Interest and other expense, net ....................... (6) (64) (151) (312)
Gain (loss) on foreign currency transactions .......... (207) 713 (1,015) 805
------------ ------------ ------------ ------------
Loss before income taxes .............................. (1,770) (2,606) (8,276) (6,868)
Income tax expense .................................... 17 6 27 11
------------ ------------ ------------ ------------
Net loss ........................................... (1,787) (2,612) (8,303) (6,879)
Amortization of preferred stock discount .............. (586) (293) (1,241) (573)
Dividend on preferred stock ........................... (615) (300) (1,215) (653)
------------ ------------ ------------ ------------
Net loss applicable to common stockholders ......... $ (2,988) $ (3,205) $ (10,759) $ (8,105)
============ ============ ============ ============
Net loss per share:
Basic and diluted .................................. $ (0.08) $ (0.09) $ (0.31) $ (0.23)
============ ============ ============ ============
Weighted-average shares used in per share computations:
Basic and diluted .................................. 35,598 34,723 35,045 34,639
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