Qualstar: Fiscal 2Q19 Financial Results

Qualstar Corporation, announced its financial results for the three and six months ended June 30, 2019.

(All amounts are in thousands, except per share data)

Results for the Three Months Ended June 30, 2019 vs. 2018

• Net revenue increased 6.4% to $3,439 from $3,231
• Total operating expenses decreased 12.2% to $832 from $948
• Net loss of $11 or $0.01 per basic and diluted share vs. net income of $474 or $0.23 per basic and diluted share

Results for the Six Months Ended June 30, 2019 vs. 2018

• Net revenue increased 2.1% to $6,295 from $6,166
• Total operating expenses decreased 9.5% to $1,616 from $1,786
• Net income of $130 compared to $1,064, for the prior year period, a decrease of 87.8%, or $0.07 per basic and diluted share vs. $0.52 per basic and $0.51 per diluted share
• Cash provided by operations of $158 vs. $820

Highlights for the Three and Six Months Ended June 30, 2019

• Strong balance sheet and no debt
• Cash, restricted cash and cash equivalents decreased by 8.3% to $4,476 from $4,881 as of December 31, 2018
• Revenue growth in the storage products segment has increased for the three months ended June 30, 2019 from the same period last year by 69% to $1,129 from $668 and for the six months ended June 30, 2019 by 61.5% to $1,912 from $1,184 for the same period last year
• Gross profit decreased for the three months ended June 30, 2019 from the same period last year by 43.4% to $805 from $1,422 and for the six months ended June 30, 2019 by 39.5% to $1,725 from $2,850 for the same period last year, with the decrease being primarily attributable to a one-time charge for the write-down of raw materials inventory purchased from a discontinued power supply contract manufacturer and a reduction of gross margin in the current phase of our Optical Drive Assembly (ODA) product development with Sony.

Under the stock repurchase program, during the three and six months ended June 30, 2019 a total of 33,972 and 92,706 shares were repurchased, respectively, and as of August 9, 2019 a total of 126,366 shares have been repurchased since the program began. The program expires December 5, 2019.

“We are pleased with our growth in the storage business; unfortunately, we are experiencing several headwinds in our power supply segment, including China tariffs, and increased competition,” said Steven N. Bronson, CEO, and president.”We are actively taking steps to address the challenges in the power supply business, including product expansion, and pursuing new strategic partnerships.”