Overland: Fiscal 4Q09 Financial Results

 
Overland Storage, Inc. reported fourth quarter and full-year results for its fiscal year ended June 30, 2009.

Net revenue for the fiscal 2009 fourth quarter was $22.1 million, compared with $28.9 million for the same period a year ago. The company reported a net loss of $2.7 million, or $0.21 per share, for the fiscal 2009 fourth quarter, compared with a net loss of $16.1 million, or $1.26 per share, for the same period a year earlier.

For the twelve months ended June 30, 2009, the company reported net revenue of $105.6 million, compared with $127.7 million for the twelve-month period in the prior fiscal year. The net loss for the 2009 fiscal year was $18.0 million, or $1.41 per share, compared with a net loss of $32.0 million, or $2.51 per share, in fiscal 2008.

The company noted that compared to the fiscal 2009 third quarter, branded product sales increased 8.1 percent and service-related revenue increased 0.5 percent, while sales to OEM customers declined 15.2 percent. Net revenue declined 0.8 percent on a sequential basis from the fiscal 2009 third quarter. Compared to the prior year quarter, branded product sales declined 25.8 percent and service-related revenue increased 7.2 percent, while sales to OEM customers declined 39.7 percent. Net revenue for the fiscal 2009 fourth quarter declined 23.7 percent from the fiscal 2008 fourth quarter.

Gross profit in the fiscal 2009 fourth quarter of $6.4 million increased 4.9 percent from $6.1 million in the fiscal 2008 fourth quarter. The gross profit margin of 28.9 percent in the fiscal 2009 fourth quarter improved over the fiscal 2008 fourth quarter margin of 21.1 percent, principally due to operational efficiencies and reduced amortization of acquired technology. Gross profit and gross margin percentages in the fiscal 2009 fourth quarter were relatively unchanged compared to the fiscal 2009 third quarter.

Operating expenses decreased for the fiscal 2009 fourth quarter to $8.2 million from $21.1 million in the fiscal 2008 fourth quarter. Fiscal 2008 operating expenses included a $7.4 million charge for impairment of fixed assets. As adjusted to exclude the $7.4 million charge in the fiscal 2008 fourth quarter, operating expenses of $8.2 million in the fiscal 2009 fourth quarter decreased 40.1 percent, compared to adjusted operating expenses of $13.7 million in the fiscal 2008 fourth quarter. Adjusted operating expense is a non-GAAP measure, which management believes facilitates a better understanding of the results of Overland’s restructuring activities during the fiscal 2009 year. Operating expenses decreased 14.5 percent sequentially from $9.6 million in the fiscal 2009 third quarter. The decrease in operating expenses was primarily attributable to the company’s restructuring activities.

Cash, cash equivalents and short-term investments as of June 30, 2009 were $5.5 million, a 43.3 percent decrease from $9.7 million at the end of fiscal 2008, but a 44.7 percent increase from $3.8 million at the end of the fiscal 2009 third quarter. Current liabilities associated with the company’s non-OEM accounts receivable financing arrangements were $2.3 million at the end of the fiscal 2009 third quarter and $4.1 million as of June 30, 2009.

"For Overland, like many tech companies, year-over-year revenue comparisons are challenging," stated Eric Kelly, CEO of Overland Storage. "However, we have begun to see some positive signs. Total branded revenue in our fiscal 2009 fourth quarter rose on a sequential basis compared to the fiscal 2009 third quarter. We saw increased sales in both our branded tape and disk-based offerings, and improvements were reported in both the Americas and EMEA regions. We are managing working capital very tightly, and through a combination of reduced inventories and prudent use of our accounts receivable financing arrangements, we were able to improve our cash position for the second consecutive quarter. We brought operating expenses down another 14.5 percent this quarter compared to the preceding quarter, and expenses are now at their lowest level in more than seven years. These are all positive indicators of forward momentum."

"We remain focused on rebuilding our company and have strengthened our executive team with the addition of two industry veterans to assist in this continuing effort. I am pleased that Jillian Mansolf, who joined us recently as Overland’s vice president of worldwide sales and marketing, is rebuilding and re-energizing our global sales team while also fine-tuning and broadening our strategic marketing efforts. Also, Chris Gopal, who just joined Overland as our vice president of worldwide operations, is streamlining our supply chain and improving both our operations and manufacturing model."

"With the assistance of existing and newly identified technology partners, we are executing our product roadmap with the goal of bringing next-generation products to our customers. Additionally, we have set our sights on specific larger vertical and horizontal markets that have consistently posted, and continue to demonstrate the potential to post, the fastest growth rates in their respective sectors. A key element of Overland’s strategy is to leverage the Snap Server brand, which over the past 10 years has become one of the most recognizable names in the midrange NAS market. The midrange storage market continues to be one of the fastest growing segments of the worldwide disk storage systems market and our intent is to be well-positioned when the economic recovery gains traction."