Qualstar reports for third quarter a substantial improvement
in financial performance with an almost breakeven quarter, $53K
loss from operations versus a $1.5 M loss from operations for the
same period in the prior year
Qualstar® Corporation (Nasdaq: QBAK), a manufacturer of data
storage solutions and high-efficiency power supplies, today
announced its financial results for the third fiscal quarter ended
September 30, 2016.
Consolidated Financial
Highlights
(Amounts in thousands except per share
data and percentages)
Three Months Ended
Nine Months Ended September 30, September
30, 2016
2015 %
∆ 2016
2015 %
∆ Net revenues $ 2,666 $ 2,317 15.1 % $ 7,186 $ 8,371
(14.2 )% Gross profit $ 761 $ (35 ) 2,274.3 % $ 2,184 $ 2,011 8.6 %
Gross margin 28.5 % (1.5 )% 30.4 % 24.0 % Loss from operations $
(53 ) $ (1,457 ) 96.4 % $ (793 ) $ (2,168 ) 63.4 % Net loss $ (53 )
$ (1,456 ) 96.4 % $ (803 ) $ (2,197 ) 63.5 % Loss per share (basic
and diluted) $ (0.03 ) $ (0.71 ) $ (0.39 ) $ (1.08 ) EBITDA $ (9 )
$ (1,403 ) $ (669 ) $ (2,028 ) EBITDA margin1
(0.3 )% (60.6 )%
(9.3 )%
(24.2 )%
1 EBITDA margin is EBITDA divided
by net revenue.
- Revenue in the third quarter of 2016
increased 15.1% to $2,666 from $2,317 in the same period a year
ago. For the first nine months, revenue decreased 14.2% to $7,186
from $ 8,371 in the comparable nine-month period of 2015.
- Gross margin increased to 28.5% in the
third quarter of 2016 from (1.5)% in the same period last year. For
the first nine months, gross margin improved to 30.4%, versus 24.0%
in the first three quarters of 2015.
- In the third quarter of 2016, net loss
totaled $53 or $(0.03) per basic and diluted share, compared to net
loss of $1,456 or $(0.71) per basic and diluted share in the same
period last year. For the first nine months, net loss was $803 or
$(0.39) per basic and diluted share, compared to a net loss of
$2,197 or $(1.08) per basic and diluted share in the comparable
period in 2015.
- At September 30, 2016 the cash balance
increased to $3,651 from $3,504 at June 30, 2016, a positive cash
flow of $147 for the three months ended September 30, 2016, and the
Company had no debt.
“We are encouraged by our financial results and excited about
future prospects,” stated Steven N. Bronson, CEO and President of
Qualstar Corporation. Mr. Bronson continued, “The expansion and
revamping of our product line and investment in key aspects of the
business have allowed us to build a stronger foundation which in
turn has enabled us to be competitive. Additionally, the prudent
financial controls that have been implemented during the last few
years are delivering improved financial margins reinforcing the
success of our turnaround strategy. We are also continuing to
explore external opportunities to accelerate our top and bottom
line numbers.”
About Qualstar Corporation
Qualstar, founded in 1984, is a diversified electronics
manufacturer specializing in data storage and power supplies.
Qualstar is a leading provider of high efficiency and high density
power supplies marketed under the N2Power™ brand, and of data
storage systems marketed under the Qualstar™ brand. Our N2Power
power supply products provide compact and efficient power
conversion for a wide variety of industries and applications
including, but not limited to, telecom, networking, broadcast,
industrial, lighting, gaming and test equipment. Our Qualstar data
storage products are used to provide highly scalable and reliable
solutions to store and retrieve very large quantities of electronic
data. Qualstar’s products are known throughout the world for high
quality and Simply Reliable™ designs that provide years of
trouble-free service. More information is available at
www.qualstar.com or www.n2power.com or by phone at
805-583-7744.
Cautionary Statement Concerning Forward-Looking
Statements
Statements used in this press release that relate to future
plans, events, financial results, prospects or performance are
forward-looking statements as defined under the Private Securities
Litigation Reform Act of 1995. All statements, other than
statements of historical fact, are statements that could be deemed
forward-looking statements. These forward-looking statements are
based upon the current expectations and beliefs of Qualstar's
management and are subject to certain risks and uncertainties that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. The
information contained in this press release is as of the date of
this press release. Notwithstanding changes that may occur with
respect to matters relating to any forward-looking statements,
Qualstar does not expect to, and disclaims any obligation to,
publicly update any forward-looking statements whether as a result
of new information, future events or otherwise. Qualstar, however,
reserves the right to update such statements or any portion thereof
at any time for any reason. In particular, the following factors,
among others, could cause actual or future results to differ
materially from those suggested by the forward-looking statements:
Qualstar’s ability to successfully execute on its strategic plan
and meet its long-term financial goals; Qualstar’s ability to
successfully implement and recognize cost savings; Qualstar’s
ability to develop and commercialize new products; industry and
customer adoption and acceptance of Qualstar’s new products;
Qualstar’s ability to increase sales of its products; the
rescheduling or cancellation of customer orders; unexpected
shortages of critical components; unexpected product design or
quality problems; adverse changes in market demand for Qualstar’s
products; increased competition and pricing pressure on Qualstar’s
products; and the risks related to actions of activist
shareholders, including the amount of related costs.
For further information on these and other cautionary
statements, please refer to the risk factors discussed in
Qualstar’s filings with the U.S. Securities and Exchange Commission
including, but not limited to, Qualstar’s Transition Report on Form
10-KT for the transition period July 1, 2015 to December 31, 2015,
the “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” section of such Form 10-KT, and any
subsequently filed reports. All of Qualstar’s filings are available
without charge through the SEC’s website (www.sec.gov) or from
Qualstar’s website (www.qualstar.com).
QUALSTAR CORPORATION AND SUBSIDIARY CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands)
September 30,
December 31, 2016 2015
(Unaudited) Assets Current assets: Cash and cash
equivalents $ 3,651 $ 3,963 Accounts receivables net 1,732 1,630
Inventories, net 1,552 2,444 Prepaid expenses and other current
assets 212 219
Total current assets 7,147 8,256 Non-current assets: Property and
equipment, net 321 446 Other assets 55
25 Total assets $ 7,523
$ 8,727
Liabilities and Shareholders’
Equity Current liabilities: Accounts payable $ 705 $ 756
Accrued payroll and related liabilities 184 332 Deferred service
revenue, short term 883 994 Other accrued liabilities 332
467 Total current
liabilities 2,104 2,549
Long term liabilities: Other long term liabilities 64 27
Deferred service revenue 109
104 Total long term liabilities 173
131 Total liabilities
2,277 2,680
Commitments and contingencies
Shareholders’ equity: Preferred stock, no par value; 5,000
shares authorized; no shares issued — — Common stock, no par value;
50,000 shares authorized, 2,042 shares issued and outstanding as of
September 30, 2016 and December 31, 2015 19,063 19,061 Accumulated
deficit (13,817 ) (13,014 )
Total shareholders’ equity 5,246
6,047 Total liabilities and shareholders’ equity $
7,523 $ 8,727
QUALSTAR CORPORATION AND SUBSIDIARY CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In
thousands, except per share data)
Three Months Ended Nine Months
Ended September 30, September
30, 2016 2015
2016 2015 Net revenues $
2,666 $ 2,317 $ 7,186 $
8,371 Cost of goods sold 1,905
2,352 5,002
6,360 Gross profit 761
(35
) 2,184
2,011 Operating expenses: Engineering 232 341 850
1,007 Sales and marketing 276 413 933 1,394 General and
administrative 306 668
1,194
1,778 Total operating expenses 814
1,422
2,977 4,179
Loss from operations (53 ) (1,457 ) (793 ) (2,168 ) Other income
(expense) - 1
(10 ) (29 )
Loss before income taxes (53 ) (1,456 ) (803 ) (2,197 ) Provision
for income taxes - -
-
- Net Loss $ (53 ) $ (1,456 )
$ (803 ) $ (2,197 ) Loss
per common share: Basic and diluted $ (0.03 )
$ (0.71 ) $ (0.39 ) $
(1.08 ) Weighted average common shares outstanding: Basic and
diluted $ 2,042 $ 2,042
$ 2,042 $ 2,042
RECONCILIATION OF CONSOLIDATED NET LOSS TO
CONSOLIDATED EBITDA (Unaudited) (In thousands, except
per share data) Three Months
Ended Nine Months Ended
September 30, September 30,
2016 2015
2016 2015 Net loss $ (53 )
$ (1,456 ) $ (803 ) $
(2,197 ) Adjustments to arrive at earnings before interest,
Income taxes, depreciation and
amortization (EBITDA):
Interest expense (income), net - (1 ) (3 ) (1 ) Income tax expense
(benefit) - - - - Depreciation expense 44
54 137
170 EBITDA $ (9 )
$ (1,403 ) $ (669 )
$ (2,028 )
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version on businesswire.com: http://www.businesswire.com/news/home/20161109006235/en/
Qualstar CorporationSteven N. Bronson, 805-617-4419Chief
Executive Officer and President
Qualstar (NASDAQ:QBAK)
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