Overland: Fiscal 1Q14 Financial Results
$11 million revenue, $5 million net loss, can survive with Tandberg?
This is a Press Release edited by StorageNewsletter.com on November 18, 2013 at 2:32 pm| (in $ million) | 1Q13 | 1Q14 |
| Revenue | 11.7 | 10.6 |
| Growth | -9% | |
| Net income (loss) |
(4.9) | (4.6) |
Overland Storage, Inc. reported financial results for its fiscal 2014 first quarter ended September 30, 2013.
“We are excited about our agreement to acquire Tandberg Data, which would create a company which had approximately $110 million in annual revenue in our last fiscal year and would provide substantial resources and cost synergies, enabling us to compete more effectively in the marketplace and move toward a clearer path to profitability following integration of the two companies,” said Eric Kelly, president and CEO, Overland Storage. “With this acquisition, we would have a larger sales engine and expanded market reach to realize the growth potential of the innovative and award-winning products we have developed over the last couple years.
“During the quarter, we continued to see solid growth in revenue from our SnapServer DX Series, both from the immediately preceding quarter and year-over-year, and we remain on track to begin rolling out our mobility business solution in the first quarter of calendar 2014, which is designed to enable us to deliver the full functionality of true native applications to any mobile device anywhere as a workforce productivity solution. Moving forward, we expect our products to benefit from a substantially expanded channel of 16,000 partners as a result of our acquisition of Tandberg Data.”
Recent Highlights:
- Disk product revenue for the first quarter of fiscal 2014 was up 4% compared to the preceding quarter and up 26% compared to the first quarter of fiscal 2013.
- SnapServer DX Series product revenue in the first quarter of fiscal 2014 was $1.9 million, up 19% over the preceding quarter and up 34% compared to the first quarter of fiscal 2013.
- Released SnapScale X4, a clustered NAS product that is designed to provide a high-density solution to efficiently manage growing amounts of unstructured data.
- Amended San Diego lease reducing our square footage, resulting in an annual savings of over $1.2 million after February 2014.
- Entered into a definitive agreement to acquire Tandberg Data Holdings S.à.r.l., a privately-held global leader of storage and data protection solutions. The sole consideration payablein the acquisition consists of shares of our common stock. The acquisition is currently expected to be completed by the end of December 2013, subject to customary closing conditions, shareholder and regulatory approvals.
- Following the filing of the preliminary proxy for the Tandberg Data acquisition, the holders of convertible notes converted $10.7 million of convertible notes into shares of our common stock at $1.30 per share.
- Received gross proceeds of $3.0 million from the sale of convertible notes under our amended and restated note purchase agreement entered into in November 2013 which provides for the issuance of for up to $7.0 million of convertible notes in the aggregate.
First Quarter Fiscal 2014 Financial Results
Net revenue for the first quarter of fiscal 2014 was $10.6 million, compared to $11.7 million for the first quarter of fiscal 2013 and $12.1 million in the fourth quarter of fiscal 2013.
Product revenue for the first quarter of fiscal 2014 was $6.1 million, compared to $6.6 million for the first quarter of fiscal 2013 and $7.6 million in the fourth quarter of fiscal 2013.
Gross margin for both the first quarter of fiscal 2014 and 2013 was constant at 33.7% and 36.5% in the fourth quarter of fiscal 2013.
Operating expenses for the first quarter of fiscal 2014 were $7.7 million, compared to $8.6 million in the first quarter of fiscal 2013 and $9.4 million for the fourth quarter of fiscal 2013. Stock compensation expense was $0.9 million in the first quarter of fiscal 2014, compared to $1.3 million in the first quarter of fiscal 2013 and $1.1 million in the fourth quarter of fiscal 2013. Depreciation and amortization was $0.3 million in both the first quarters of fiscal 2014 and 2013, and in the fourth quarter of fiscal 2013.
Net loss for the first quarter of fiscal 2014 was $4.6 million, or a loss of $0.15 per share, compared to a net loss of $4.9 million, or a loss of $0.17 per share, in the first quarter of fiscal 2013 and a net loss of $5.4 million, or a loss of $0.18 per share, in the fourth quarter of fiscal 2013.
Cash and short-term investments at September 30, 2013 were $5.8 million, compared to cash of $8.8 million at June 30, 2013.
At September 30, 2013, the company had $3.5 million outstanding under its credit facility and $13.25 million outstanding under its convertible notes.
Comments
Abstracts the earnings call transcript: Eric Kelly, president and CEO: "The approximate combined revenue mix (following Overland-Tandberg combination) is as follows: disk-based solutions represent 34% of total revenue; service and royalty represent 23%; and tape accessories, drives and media represent 21%. But the tape automation only representing 22% of the total revenue. Approximately 79% of the combined revenue came from channel sales and 21% from OEM sales. "From a cost synergy standpoint, we believe the savings will be between $10 million to $13 million on an annualized basis, and we expect to achieve sustainable non-GAAP EBITDA-positive results within the first 2 quarters following completion of the integration of the 2 companies. To give more detail on our fiscal expectations for the combined company, for the third and fourth quarter of calendar 2014, which is the first 6 months of our fiscal 2015 year, we would expect the combined company revenue of between $54 million to $60 million, with gross margins ranging from 34% to 38%, operating expenses between $19 million to $22 million and EBITDA from breakeven to $3 million. "For the first and second quarter of calendar 2014, we are projecting revenue of $55 million to $65 million, gross margins of 36% to 40%, operating expenses of between $20 million to $23 million and EBITDA of $2 million to $6 million." Kurt Kalbfleisch, CFO: "The decrease in revenue from the same quarter in the prior year was primarily due to decreased service revenue from our extended service contracts related to lower tape-based product sales. "Revenue from EMEA in the first quarter of fiscal 2014 decreased 11% or approximately $300,000 compared to the immediately preceding quarter. However, on a year-over-year basis, the EMEA revenue in the first quarter of fiscal 2014 was up 6% or $150,000. "Tape revenue in the first quarter of fiscal 2014 decreased 30% worldwide, approximately $1.2 million, compared to the immediately preceding quarter and was down 27% or approximately $1 million compared to the first quarter of fiscal 2013. This was primarily related to the decrease in sales of our add-on tape drive. EMEA tape revenues decreased 34% from the immediately preceding quarter and 21% year-over-year. "Americas tape revenue decreased 27% for the immediately preceding quarter and 39% year-over-year. We, however, continued to see increased traction in growth in our disk products. Total disk revenue worldwide in the first quarter of fiscal 2014 was up 4% or $100,000 sequentially and up 26% or $550,000 year-over-year compared to the first quarter of fiscal 2013. Revenue in the first quarter of fiscal 2014 from the SnapServer DX Series worldwide was $1.9 million. This was a 19% increase from the immediately preceding quarter and when compared to the first quarter of the prior year, SnapServer DX Series product was up 34%."
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