Qualstar: Fiscal 2Q14 Financial Results

(in $ million)	2Q13	2Q14	6 mo. 13	6 mo. 14
Revenues	3.4	3.4	6.8	5.6
*Growth*		-3%		*-17%*
Net income (loss)	(1.7)	(0.3)	(3.6)	(2.8)

Qualstar Corporation reported financial results for its second fiscal quarter ended December 31, 2013.

Substantial improvement on a sequential basis

Revenue increased 57% to $3.4 million from $2.2 million in the first quarter 2014
Storage revenues increased 29% to $1.6 million from $1.2 million and Power Supply revenues increased 93% to $1.8 million from $953,000
Gross margin increased 22.9% to 43.9% from 21.0%
Total operating expenses decreased $1.2 million or 41% to $1.8 million from $3.0 million
Restructuring expenses increased to $26,000 from $0.
Net loss was $251,000 or ($.02) per basic and diluted share compared to net loss of $2.5 million or ($.21) per basic and diluted share, a 91% decrease

Results for three months ended December 31, 2013 vs 2012

Revenue remained comparable at $3.4 million
Gross margin increased 6.1% to 43.9% from 37.8%
Total operating expenses decreased 29.5% to $1.7 million from $2.5 million, excluding restructuring expenses
Restructuring expenses decreased 95% to $26,000 from $511,000
Net loss was $251,000 or ($.02) per basic and diluted share vs $1.7 million or ($.14) per basic and diluted share, an 85% decrease

Results for six months Ended December 31, 2013 vs 2012

Revenues decreased 17.3% to $5.6 million from $6.8 million, for the first six months 2014
Gross margin increased 2.5% to 35.0% from 32.5%
Total operating expenses increased 7.7% to $4.7 million from $4.4 million, excluding restructuring expenses
Restructuring expenses decreased 98% to $26,000 from $1.4 million Net loss was $2.8 million or ($.23) per basic and diluted share vs $3.6 million or ($.30) per basic and diluted share, a 23% decrease
Cash, cash equivalents and marketable securities were $10.4 million at December 31, 2013, down $3.4 million from $13.8 million at June 30, 2013. The decrease in cash is primarily from bringing inventory back in-house from our outsourced manufacturing contractor, severance as we reduce headcount and operating losses.

Commenting on the company’s business results, Steven N. Bronson, CEO and president, Qualstar, said: “I am extremely pleased with the progress we made in less than six months. Fiscal second quarter bottom line was the best in over two years (since quarter ending September 30, 2011). We still have substantial work ahead of us but I am confident that we are on the right track.”

Bronson went on to say: “We continue to be highly focused on driving revenue growth and aligning our cost structure towards profitability. We terminated our contract with Benchmark Electronics Manufacturing Solutions, Inc. (the successor to CTS Electronics Manufacturing Solutions, Inc.). This transition will assist us in managing our inventory and the product requirements of our customers in a more effective manner. We are continuing to address our sales and engineering needs to support our future growth. In the past few months, we have laid the ground work to expand our international presence in Asia and Europe for both business units.”