MTI Technology Reports Fiscal 2006 Third Quarter Financial Results12 February 2006
MTI Technology Corporation (Nasdaq: MTIC), a multi-national storage solutions and services company, today announced its financial results for the fiscal year 2006 third quarter and nine months ended December 31, 2005.
Revenue for the fiscal year 2006 third quarter was $40.2 million, a 27% sequential increase from $31.6 million reported in the prior quarter and a slight increase compared to $39.5 million reported in the comparable prior year period.
Product revenue for the third quarter grew to $30.6 million from $22.1 million in the prior quarter, a 39% increase. Year ago product revenue was $29.3 million. Service revenue for the third quarter was $9.6 million, equal to the prior quarter and a 6% decline from the same period in fiscal 2005.
The Company reported an operating loss of $1.56 million for the quarter, an improvement of $1.7 million, or 52%, year-over-year and $1.9 million, or 55%, sequentially. The improved operating results were driven by a broad reduction in spending and increased product sales.
Net loss applicable to common stockholders for the third quarter was $3.0 million or $0.08 per share compared to a net loss of $3.2 million or $0.09 per share in the same quarter of the prior fiscal year and a net loss of $4.1 million or $0.12 per share for the preceding quarter. Net loss applicable to common stockholders for the third quarter included $1.2 million of costs associated with amortization of a beneficial conversion feature and dividends payable on Series A and B securities.
SG&A expenses for the third quarter were $9.4 million compared to $11.0 million in the same quarter of the prior fiscal year and $9.7 million for the preceding quarter. The 15% year-over-year reduction in SG&A was driven by a decrease in operating expense related to the closure of our Dublin manufacturing facility at the end of fiscal 2005 and other spending reductions.
Gross margin for the third quarter was 19.6% compared to 19.7% in the prior year period and 20.2% in the prior quarter. Product gross margin for the third quarter was 18.1% compared to 20.5% in the prior year period and 20.0% in the prior quarter. Product margins continued to be negatively affected by a low level of manufacturers' rebates. Service gross margins for the third quarter were 24.7% compared to 17.3% in the prior year period and 20.7% in the prior quarter. The increase in service gross profit percentage was the result of cost reductions and continued improvement in utilization.
As of December 31, 2005, the Company had $21.2 million in cash and cash equivalents. The increase in cash and cash equivalents was due primarily to the $19.2 million net proceeds raised from the sale of Series B convertible preferred stock in November of 2005.
"Order volume recovered nicely from our summer quarter," stated Tom Raimondi, President and CEO of MTI. "Our stronger backlog of $6.8 million entering the current quarter is a positive sign for continued momentum. With improving service margins and a strong focus on keeping our spending in check, we continue to be focused on reaching profitability and revenue growth."
For the nine months ended December 31, 2005, the Company reported total revenues of $111.1 million, a 15% increase from $97.1 million in the comparable period of fiscal 2005. Product revenue was $81.8 million for the first nine months of fiscal 2006, a 19% increase from $68.8 million reported in the same period of fiscal 2005. Service revenue for the first nine months of fiscal 2006 was $29.3 million, a slight increase from $28.2 million in the same period of the prior year. Gross profit margin for the first nine-months of fiscal year 2006 was 20.1% compared to 21.7% in the same period of the prior year. Net loss applicable to common stockholders for the nine-month period of fiscal 2006 was $10.8 million or $0.31 per share compared to $8.1 million or $0.23 per share in the same period of fiscal 2005.
Investor Conference Call
Management will discuss results followed by a question and answer session today, February 9, 2006 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). The call-in number is 866-578-5784, access code 44786809; international callers should dial 617-213-8056, access code 44786809. If you are unable to participate, a replay will be available for 48 hours, beginning at 4:00 p.m. Pacific Time today, February 9, 2006. The replay call-in number is 1-888-286-8010, access code 20408891. The replay for international callers is 617-801-6888, access code 20408891. A live and archived webcast of the conference call will be available on the MTI website at http://www.mti.com.
About MTI Technology
MTI is a leading multi-national provider of professional services and comprehensive data storage solutions for mid to large-size organizations. With more than 20 years of expertise as a storage technology innovator, MTI is uniquely qualified to assess, design, implement and support whole-office data storage and backup initiatives. As a strategic partner of EMC (NYSE: EMC), MTI offers the best data storage, protection and management solutions available today. By employing a strategic, consultative approach, MTI provides customers with a single point of contact that eliminates complexities while delivering operational efficiencies and competitive advantages. MTI currently serves more than 3,000 customers throughout North America and Europe. Visit http://www.mti.com for more information.
MTI is a registered trademark of MTI Technology Corporation (the "Company").
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding the Company's expectations, goals or intentions regarding the future, including but not limited to statements regarding the Company's future revenue levels, ability to convert backlog into revenue, improving margins, spending control, ability to achieve and maintain profitability and ability to grow revenue. The actual results may differ materially from those described in any forward-looking statement. In particular, we cannot assure you that MTI will improve revenues or operating results, achieve profitability or grow within the expected time frame or at all. Important factors that may cause actual results to differ include competition, timing of customer orders, unanticipated expenses, achievement of volume-based rebates, currency movements, evolving technology, and the economy and other world events. Other important factors are set forth in the Company's periodic filings with the U.S. Securities and Exchange Commission, including its Form 10-K, as amended, for the year ended April 2, 2005. All forward-looking statements speak as of the date made and MTI undertakes no obligations to update any such statement.
Contact:
Joyce Shinn
MTI Technology Corporation
949-885-7337
jshinn@mti.com
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, APRIL 2,
2005 2005
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $21,161 $12,191
Accounts receivable, less allowance
for doubtful accounts and sales
returns of $377 and $451 at
December 31, 2005 and April 2, 2005,
respectively 34,489 33,866
Inventories, net 3,676 3,723
Prepaid expenses and other receivables 6,647 6,971
Total current assets 65,973 56,751
Property, plant and equipment, net 487 708
Goodwill, net 5,184 5,184
Other 188 223
$71,832 $62,866
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Line of credit $5,167 $3,667
Current portion of capital lease
obligations -- 78
Accounts payable 26,850 24,474
Accrued liabilities 10,642 9,489
Accrued restructuring charges 1,253 2,767
Deferred revenue 8,664 14,020
Total current liabilities 52,576 54,495
Deferred revenue 3,777 3,695
Total liabilities 56,353 58,190
Series A redeemable convertible preferred
stock, 567 shares issued and outstanding
at December 31, 2005, net of discount of
$6,950 and $7,955 at December 31, 2005
and April 2, 2005, respectively 8,050 7,045
Series B redeemable convertible preferred
stock, 1,582 shares issued and outstanding
at December 31, 2005, net of discount
of $9,933 10,067 --
Commitments and contingencies -- --
Stockholders' deficit:
Preferred stock, $.001 par value; authorized
5,000 shares; issued and outstanding 2,149
and 567 shares at December 31, 2005 and
April 2, 2005, respectively, included in
redeemable convertible preferred stock above -- --
Common stock, $.001 par value; authorized
80,000 shares; issued and outstanding
35,632 and 35,159 shares at
December 31, 2005 and April 2, 2005,
respectively 36 35
Additional paid-in capital 155,209 145,345
Accumulated deficit (154,528) (143,768)
Accumulated other comprehensive loss (2,983) (3,376)
Deferred compensation (372) (605)
Total stockholders' deficit (2,638) (2,369)
$71,832 $62,866
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, JANUARY 1, DECEMBER 31, JANUARY 1,
2005 2005 2005 2005
Net product revenue $30,583 $29,286 $81,843 $68,810
Service revenue 9,579 10,229 29,285 28,241
Total revenue 40,162 39,515 111,128 97,051
Product cost of
revenue 25,058 23,286 66,179 53,157
Service cost of
revenue 7,217 8,457 22,583 22,863
Total cost of
revenue 32,275 31,743 88,762 76,020
Gross profit 7,887 7,772 22,366 21,031
Operating expenses:
Selling, general
and administrative 9,414 11,027 28,420 28,392
Restructuring charges 30 -- 1,056 --
Total operating
expenses 9,444 11,027 29,476 28,392
Operating loss (1,557) (3,255) (7,110) (7,361)
Interest and other
expense, net (6) (64) (151) (312)
Gain (loss) on foreign
currency transactions (207) 713 (1,015) 805
Loss before income
taxes (1,770) (2,606) (8,276) (6,868)
Income tax expense 17 6 27 11
Net loss (1,787) (2,612) (8,303) (6,879)
Amortization of
preferred stock
discount (586) (293) (1,241) (573)
Dividend on preferred
stock (615) (300) (1,215) (653)
Net loss applicable
to common
stockholders $(2,988) $(3,205) $(10,759) $(8,105)
Net loss per share:
Basic and diluted $(0.08) $(0.09) $(0.31) $(0.23)
Weighted-average shares
used in per share
computations:
Basic and diluted 35,598 34,723 35,045 34,639
(Logo: http://www.newscom.com/cgi-bin/prnh/20051010/LAM084LOGO )
Source: prnewswire
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