Friday, February 08, 2013

Qualstar: Fiscal 2Q13 Financial Results - Storage Revenues up 35%

Qualstar Corporation reported financial results for its second fiscal quarter ended December 31, 2012 as its transformation continues under new leadership.
Fiscal 2013 Second Quarter Financial Results

Bookings for the second fiscal quarter were $4.9 million representing 39% sequential growth over the fiscal first quarter and a book to bill of 1.46:1.

The company closed the quarter with $2.9 million in backlog with the majority to be delivered in the third fiscal quarter.

Revenues for the second quarter of fiscal 2013 were $3.4 million, compared to $3.6 million for the same quarter of fiscal 2012, a decrease of $200,000 or 5.6%, and sequentially flat to the fiscal first quarter.

GAAP net loss including restructuring charges of $511,000 or $0.04 per share was $1.7 million or $0.14 per basic and diluted share. Excluding the adjustment in labor and overhead, pro forma non-GAAP net loss was $970,000 or $0.08 per share. This compares to GAAP net loss of $971,000, or $0.08 per basic and diluted share for the second quarter of fiscal 2012.

"Our fiscal second quarter represented a turning point for Qualstar as we implemented our most important and significant steps to transition from a manufacturing-based company to a more nimble, lower overhead company focused on engineering and sales," said Larry Firestone, president and CEO. "We booked business at a rate of just under $20 million annually in the second quarter and began the third quarter with very strong backlog. Combined with the work we have done to improve gross margins and lower inventories, we believe our strategy to focus Qualstar on our core markets of storage and power supply products will result in long-term growth, sustainable profitability and increasing returns for investors."

Strategic Plan Implementation
Since last June, under Firestone's leadership, Qualstar's management has taken swift and decisive action to transform Qualstar and create sustainable value for all shareholders, including:

Initiated five-year strategic plan

Restructuring the company for greater efficiency
  • Outsourced library manufacturing to CTS: Decreasing inventory and expanding gross margins
  • Exited and consolidated certain facilities: Exited Canoga Park; Shrunk Boulder; Exiting the Simi valley location and moving to smaller more suitable quarters
  • Reduced workforce: Exited legacy product lines and old drive technologies
  • Renegotiated service contract
Fully integrated N2Power into Qualstar
  • Reorganized into two engineering team
  • Re-engaging resellers
  • Initiated discussions with first tier 1 channel partner
Strengthened management team
and sales and engineering staff

  • Bill Lurie, VP of engineering
  • Steve Wagner, VP of sales for N2Power
  • James Steger, Operations leadership
Delivered bookings in the annual range of $20 million
for the second quarter; above our breakeven point

Added two experienced board members
  • Allen Alley
  • Daniel Molhoek
Introduced new products and technology
to expand addressable market potential

  • Availability of LTO-6
  • Encryption Key Management for XLS
  • Expandable Rack Mount Tape Libraries
Exited legacy products and technologies
  • TLS and RLS 8000 - Selling below cost
  • Touchless Mouse and Touchless Pointing


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