Attached files
| file | filename |
|---|---|
| 8-K - ZCO LIQUIDATING Corp | v207726_8k.htm |
OCZ
Technology Group Reports Fiscal 2011 Third Quarter Results
Record
revenues with SSD revenues up 325% year over year and 105%
sequentially;
Posts
positive non-GAAP operating profit
San Jose, CA—January 10,
2011—OCZ Technology Group, Inc. (NASDAQ: OCZ), a leading provider of
high-performance solid-state drives (SSDs) and memory modules for computing
devices and systems, reports its third quarter 2011 results (Q3’11), which ended
on November 30, 2010.
Net
revenues in Q3'11 were a record $53.2 million, and increased 40% both on a
year-over-year and sequential basis, from $38.0 million reported in Q3’10 and in
Q2’11.
SSD
revenues reached a record $41.5 million in Q3’11, an increase of 325% over Q3’10
SSD revenues of $9.8 million, and a 105% increase sequentially over Q2’11 SSD
Revenues of $20.2 million.
In August
2010, the Company announced a strategic optimization of its memory products
whereby it discontinued certain unprofitable commodity memory module products
with the intent to continue only with certain high-performance memory products.
However, since that time, there has been well-chronicled, continued weakness in
the global DRAM markets.
Having
balanced this DRAM market weakness against the capital needs of the Company’s
growing SSD products, the board has determined that it is in the best interests
of the stockholders to accelerate plans to discontinue its remaining DRAM module
products by the end of its current fiscal year of February 28,
2011. Accordingly, our DRAM products are now expected to have
minimal, if any, sales in the next fiscal year and beyond.
Reporting
on a GAAP basis, which includes certain items related to the accelerated
discontinuation of the Company’s DRAM products, the acquisition of certain
intellectual property, changes in warrant derivative valuation, and other non
cash charges, GAAP net loss for Q3'11 was $8.3 million, or $0.29 loss per
diluted share. This compares to GAAP net loss of $1.0 million, or $0.05 loss per
share in Q3'10.
Non-GAAP
net loss for Q3'11 was $0.9 million, or $0.03 loss per diluted share, as
compared to non-GAAP net loss for Q3'10 of $1.6 million, or $0.07 loss per
share. A reconciliation between GAAP and non-GAAP information is contained in
the tables below.
Financial
Highlights
|
·
|
SSD
revenue increased 325% year-over-year, to $41.5 million in Q3’11,
representing 78% of net revenue
|
|
·
|
Positive
non-GAAP operating income of $0.1 million in Q3’11 compared to
a non-GAAP operating loss of $1.0 million in
Q3’10
|
|
·
|
Positive
non-GAAP Adjusted EBITDA of $0.4 million in
Q3’11
|
|
·
|
Non-GAAP
gross margin increased to 19.4% in
Q3’11
|
|
·
|
Accelerated
the discontinuation of remaining DRAM module
products
|
|
·
|
Company
raised $22 million in a private placement to several institutional
stockholders priced at a premium to the then-market
price
|
1 of
10
Recent
Business Highlights:
|
·
|
Recently
began shipping Deneva Series Enterprise SSDs in mass production quantities
to a new Tier 1 OEM client
|
|
·
|
OEM
SSD business continued to ramp, with numerous new client wins such as
BOLData and Falcon Northwest Computer Systems, while several current
clients ramped shipments of SSDs
|
|
·
|
Recently
began shipping High Speed Data Link (HSDL) enabled IBIS SSD drives in mass
production quantities to select
clients
|
|
·
|
Launched
the 2nd
generation REVO X2 PCIe based SSD with up to 150k random write
IOPS , in capacities up to 960GBs , and deployed with key high performance
workstation OEMs
|
|
·
|
Acquired
certain Fibre Channel interface and DRAM based SSD controller technology
from Solid Data Inc, in order to facilitate the companies move into Fibre
Channel and low latency enterprise SSD
Segments
|
|
·
|
Began
mass production of 2xNm based SSD for low cost applications and started
sampling 2xNm based high durability SSDs for Enterprise Server
and Storage applications
|
|
·
|
Opened
new SSD manufacturing facility in Taiwan, nearly quadrupling our
manufacturing capacity with the addition of two new SMT lines, the first
in October and the second which has just come
on-line
|
Business
Overview:
“Revenue
generated from our Solid State Drive products for the third fiscal quarter more
than doubled on a sequential basis,” said Ryan Petersen, Chief
Executive Officer of OCZ Technology. “SSD revenue accounted for 78% of our
revenue and just by itself exceeds our historical quarterly revenue totals
across all categories, thus reinforcing our decision to discontinue our
remaining DRAM products.”
Mr.
Petersen concluded, “We have focused on building the OEM and enterprise segments
of our business, and last month we announced a mass production order from a Tier
1 OEM for our enterprise class SSDs, reflecting the reliability, speed and total
cost of ownership solid state drives provide over traditional mechanical hard
drives. We believe the market opportunity for SSDs is significant, and to that
end, we will continue to invest in research and development to extend our
leadership position. We also plan to increase our sales and marketing efforts in
order to facilitate continued revenue growth and increased market share as SSDs
gain adoption in all segments.”
2 of
10
Revenue
Information:
To help
investors better understand OCZ’s historical revenue trends and its rapid
product transition from high performance memory into SSDs, a revenue chart is
shown below for the last 9 quarters:
|
Net
Revenue by product groups ($000)’s (GAAP-Unaudited)
|
|||||||||
|
Q3
'09
|
Q4
'09
|
Q1
'10
|
Q2
'10
|
Q3
'10
|
Q4
'10
|
Q1
'11
|
Q2'11
|
Q3'11
|
|
|
SSD
|
2,161
|
5,114
|
10,485
|
11,146
|
9,756
|
12,123
|
13,349
|
20,187
|
41,471
|
|
Memory
|
22,043
|
24,222
|
17,363
|
17,342
|
21,281
|
15,529
|
15,032
|
12,605
|
6,261
|
|
PSU
/ Other
|
11,025
|
11,782
|
7,923
|
9,308
|
6,987
|
4,716
|
5,906
|
5,253
|
5,490
|
|
Total
Net revenues
|
35,229
|
41,118
|
35,771
|
37,796
|
38,024
|
32,368
|
34,287
|
38,045
|
53,222
|
Guidance:
For
fiscal year 2011, ending February 28, 2011, OCZ’s revenue guidance was in
the range of $170 million to $190 million. Notwithstanding
the discontinuance of the Company's historically significant DRAM module
products, OCZ still guides to the middle of the previously provided range due to
the continuing growth in the Company's SSD products.
Conference
Call:
OCZ will
host its fiscal 2011 third quarter conference call for the period ended November
30, 2010 at 5:00pm ET (2:00pm PT), on January 10, 2011. Ryan Petersen, CEO, and
Arthur Knapp, CFO, will discuss the company’s performance on the
call.
All
interested parties can join the call by dialing (877) 372-0867 or (253)
237-1170. Please call-in 15 minutes prior to the call to secure a line. The
conference call will be archived for replay until January 24, 2011. To access
the archived conference call, please dial (800) 642-1687 or (706) 645-9291 and
enter replay passcode 34067591. A live audio webcast of the conference call will
be available by visiting the investor relations events conference call section
of the OCZ website at www.ocztechnology.com.
Please connect at least 15 minutes prior to the conference call to ensure
adequate time for connection. The webcast will be archived for replay until
January 24, 2011.
About
OCZ Technology Group, Inc.
Founded
in 2002, San Jose, CA-based OCZ Technology Group, Inc. (“OCZ”) is a leader in
the design, manufacturing, and distribution of high performance and reliable
Solid State Drives (SSDs) and premium computer components. OCZ has built on its
expertise in high-speed memory to become a leader in the SSD market, a
technology that competes with traditional rotating magnetic hard disk drives
(HDDs). SSDs are faster, more reliable, generate less heat and use significantly
less power than the HDDs used in the majority of computers today. In addition to
SSD technology, OCZ also offers high performance components for computing
devices and systems, including enterprise-class power management products as
well leading-edge computer gaming solutions. For more information, please visit:
www.ocztechnology.com.
3 of
10
Forward-Looking
Statements
Certain
statements in this release relate to future events and expectations and as such
constitute forward-looking statements involving known and unknown factors that
may cause actual results of OCZ Technology Group, Inc. to be different from
those expressed or implied in the forward-looking statements. In this context,
words such as “will,” “would,” “expect,” “anticipate,” “should” or other similar
words and phrases often identify forward-looking statements made on behalf of
OCZ. It is important to note that actual results of OCZ may differ materially
from those described or implied in such forward-looking statements based on a
number of factors and uncertainties, including, but not limited to, market
acceptance of OCZ’s products and OCZ’s ability to continually develop enhanced
products; adverse changes both in the general macro-economic environment as well
as in the industries OCZ serves, including computer manufacturing, traditional
and online retailers, information storage, internet search and content providers
and computer system integrators; OCZ’s ability to efficiently manage material
and inventory, including integrated circuit chip costs and freight costs; and
OCZ’s ability to generate cash from operations, secure external funding for its
operations and manage its liquidity needs. Other general economic, business and
financing conditions and factors are described in more detail in “Item 1A – Risk
Factors” in Part I in OCZ’s Annual Report on Form 10-K filed with the SEC on May
20, 2010 and statements made in other subsequent filings. The filings are
available both at www.sec.gov as well as via OCZ’s website at
www.ocztechnology.com. OCZ does not undertake to update its forward-looking
statements.
Non-GAAP
Financial Measure
OCZ
provides EBITDA and Adjusted EBITDA as supplemental non-GAAP financial measures
to its investors as a complement to net income/loss. An explanation and
reconciliation of EBITDA and Adjusted EBITDA to net income/loss is set forth
below. OCZ believes that providing EBITDA and Adjusted EBITDA, non-GAAP
measures, to its investors, in addition to corresponding income statement
measures, provides investors the benefit of viewing OCZ's performance using
financial metrics that the management team use in making many key decisions and
understanding how OCZ's "core operating performance" and its results of
operations may look in the future. OCZ believes that providing this information
allows OCZ's investors greater transparency and a better understanding of OCZ's
core financial performance. EBITDA and Adjusted EBITDA are not in accordance
with or an alternative for, generally accepted accounting principles in the
United States of America. Non-GAAP measures should not be considered in
isolation from or as a substitute for financial information presented in
accordance with generally accepted accounting principles, and may be different
from non-GAAP measures used by other companies.
4 of
10
Calculation
of EBITDA and Adjusted EBITDA
EBITDA is
calculated as net income/loss excluding the impact of taxes, net interest
income/expense and depreciation and amortization. Adjusted EBITDA is calculated
as net income/loss excluding the impact of taxes, net interest income/expense,
depreciation and amortization, as well as inventory adjustments for discontinued
products, severance cost, goodwill and intangible impairment,
non-cash charges related to stock options and warrants, and certain other
one-time charges and credits specifically identified in the non-GAAP
reconciliation schedules set forth below. OCZ uses EBITDA and Adjusted EBITDA in
evaluating OCZ's historical and prospective cash usage, as well as its cash
usage relative to its competitors. Specifically, management uses these non-GAAP
measures to further understand and analyze the cash used in/generated from OCZ's
core operations. OCZ believes that by excluding these non-cash and non-recurring
charges, more accurate expectations of its future cash needs can be assessed in
addition to providing a better understanding of the actual cash used in or
generated from core operations for the periods presented. OCZ further believes
that providing this information allows OCZ's investors greater transparency and
a better understanding of OCZ's core financial results.
5 of
10
|
OCZ
Technology Group, Inc.
|
||||||||||||||||||||||||||
|
Reconciliation
of Selected GAAP Measures to Non-GAAP Measures
(Unaudited)
|
||||||||||||||||||||||||||
|
($
in thousands, except per share data)
|
||||||||||||||||||||||||||
|
Three
Months Ended November 30,
|
||||||||||||||||||||||||||
|
2010
|
2009
|
|||||||||||||||||||||||||
|
GAAP
|
Adj
|
non-GAAP
|
GAAP
|
Adj
|
non-GAAP
|
|||||||||||||||||||||
|
Net
revenues
|
$ | 53,222 | $ | 1,470 |
(a)
|
$ | 54,692 | $ | 38,024 | $ | 38,024 | |||||||||||||||
|
Cost
of revenues
|
45,561 | (1,500 | ) |
(b)
|
44,061 | 31,567 | 31,567 | |||||||||||||||||||
|
Gross
profit
|
7,661 | 10,631 | 6,457 | 6,457 | ||||||||||||||||||||||
|
Gross
margin %
|
14.4 | % | 19.4 | % | 17.0 | % | 17.0 | % | ||||||||||||||||||
|
Operating
expenses
|
12,235 | (1,685 | ) |
(c)
|
10,550 | 7,507 | (103 | ) |
(e)
|
7,404 | ||||||||||||||||
|
Operating
income (loss)
|
(4,574 | ) | 81 | (1,050 | ) | (947 | ) | |||||||||||||||||||
|
Financing
costs/other
|
(952 | ) | (952 | ) | 78 | (668 | ) |
(f)
|
(590 | ) | ||||||||||||||||
|
Warrant
fair value adjustment
|
(2,788 | ) | 2,788 |
(d)
|
- | - | ||||||||||||||||||||
|
Pre-Tax
|
(8,314 | ) | (871 | ) | (972 | ) | (1,537 | ) | ||||||||||||||||||
|
Income
tax expense
|
25 | 25 | - | - | ||||||||||||||||||||||
|
Net
income (loss)
|
$ | (8,339 | ) | $ | (896 | ) | $ | (972 | ) | $ | (1,537 | ) | ||||||||||||||
|
Net
income (loss) per share:
|
$ | (0.29 | ) | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.07 | ) | ||||||||||||||
|
Weighted
Shares Outstanding
|
28,600 | 28,600 | 21,300 | 21,300 | ||||||||||||||||||||||
|
Calculation
of EBITDA and adjusted EBITDA:
|
Three
Months Ended November 30, 2010
|
Three
Months Ended November 30, 2009
|
||||||||||||||||||||||||
|
As
Adjusted
|
As
Adjusted
|
|||||||||||||||||||||||||
|
Net
income (loss)
|
$ | (8,339 | ) | $ | (896 | ) | $ | (972 | ) | $ | (1,537 | ) | ||||||||||||||
|
Income
taxes
|
25 | 25 | - | - | ||||||||||||||||||||||
|
Financing
costs/other
|
952 | 952 | (78 | ) | 590 | |||||||||||||||||||||
|
Depreciation
and amortization
|
288 | 288 | 289 | 289 | ||||||||||||||||||||||
|
EBITDA
|
$ | (7,074 | ) | $ | 369 | $ | (761 | ) | $ | (658 | ) | |||||||||||||||
|
Computational
Notes:
|
||||||||||
|
(a) Abnormal
level of rebates on liquidation sales of certain DRAM module
products
|
||||||||||
|
(b) Reserves
for discontinuance of additional DRAM module products
|
||||||||||
|
(c) Technology
acquisition ($995)+ Executive severance ($327) + other non-recurring costs
($105) + stock based compensation/intangibles ($258)
|
||||||||||
|
(d) Non-cash
costs for revaluation of warrants issued in connection with equity
financing
|
||||||||||
|
(e) Stock
based compensation and Intangible amortization
|
||||||||||
|
(f) Gain
related to sale of the NIA product line
|
||||||||||
6 of
10
|
OCZ
Technology Group, Inc.
|
||||||||||||||||
|
Consolidated
Statements of Operations
|
||||||||||||||||
|
(In
thousands, except per share amount)
|
||||||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
November
30,
|
November
30,
|
|||||||||||||||
|
unaudited
|
unaudited
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Net
revenues
|
$ | 53,222 | $ | 38,024 | $ | 125,550 | $ | 111,591 | ||||||||
|
Cost
of revenues
|
45,561 | 31,567 | 112,105 | 95,178 | ||||||||||||
|
Gross
profit
|
7,661 | 6,457 | 13,445 | 16,413 | ||||||||||||
|
Sales
and marketing
|
4,763 | 2,520 | 11,140 | 7,727 | ||||||||||||
|
Research
and development
|
1,914 | 1,328 | 5,172 | 4,023 | ||||||||||||
|
General,
administrative and operations
|
5,558 | 3,659 | 13,679 | 11,214 | ||||||||||||
|
Total
operating expenses
|
12,235 | 7,507 | 29,991 | 22,964 | ||||||||||||
|
Operating
income (loss)
|
(4,574 | ) | (1,050 | ) | (16,546 | ) | (6,551 | ) | ||||||||
|
Other
income (expense) - net
|
(101 | ) | 600 | (112 | ) | 669 | ||||||||||
|
Interest
and financing costs
|
(851 | ) | (522 | ) | (2,020 | ) | (1,148 | ) | ||||||||
|
Adjustment
to the fair value of common stock warrants
|
(2,788 | ) | - | (1,236 | ) | |||||||||||
|
Income
(loss) before income taxes
|
(8,314 | ) | (972 | ) | (19,914 | ) | (7,030 | ) | ||||||||
|
Income
tax expense (benefit)
|
25 | 861 | (1 | ) | ||||||||||||
|
Net
income (loss)
|
$ | (8,339 | ) | $ | (972 | ) | $ | (20,775 | ) | $ | (7,029 | ) | ||||
|
Net
income (loss) per share:
|
||||||||||||||||
|
Basic
|
$ | (0.29 | ) | $ | (0.05 | ) | $ | (0.78 | ) | $ | (0.33 | ) | ||||
|
Diluted
|
$ | (0.29 | ) | $ | (0.05 | ) | $ | (0.78 | ) | $ | (0.33 | ) | ||||
|
Shares
used in per share computation:
|
||||||||||||||||
|
Basic
|
28,600 | 21,300 | 26,800 | 21,300 | ||||||||||||
|
Diluted
|
28,600 | 21,300 | 26,800 | 21,300 | ||||||||||||
7 of
10
|
OCZ
Technology Group, Inc.
|
||||||||
|
Consolidated
Balance Sheets
|
||||||||
|
($
in thousands)
|
||||||||
|
November 30, 2010
|
February 28, 2010
|
|||||||
|
unaudited
|
||||||||
|
ASSETS
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 20,103 | $ | 1,224 | ||||
|
Accounts
receivable, net of allowances of $2,659 and $2,853
|
30,010 | 20,380 | ||||||
|
Inventory,
net
|
16,482 | 9,846 | ||||||
|
Note
receivable
|
375 | 375 | ||||||
|
Deferred
tax asset, net
|
- | 836 | ||||||
|
Prepaid
expenses and other current assets
|
2,756 | 1,811 | ||||||
|
Total
current assets
|
69,726 | 34,472 | ||||||
|
Property
and equipment, net
|
2,550 | 2,629 | ||||||
|
Intangible
asset
|
35 | 88 | ||||||
|
Goodwill
|
9,989 | 9,954 | ||||||
|
Investment
|
668 | 668 | ||||||
|
Other
assets
|
42 | 38 | ||||||
|
Total
assets
|
$ | 83,010 | $ | 47,849 | ||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Loans
payable
|
$ | 15,437 | $ | 10,354 | ||||
|
Note
payable
|
- | 500 | ||||||
|
Accounts
payable
|
38,350 | 26,318 | ||||||
|
Accrued
and other liabilities
|
6,560 | 4,389 | ||||||
|
Total
current liabilities
|
60,347 | 41,561 | ||||||
|
Common
stock warrant liability
|
3,317 | - | ||||||
|
Total
Liabilities
|
63,664 | 41,561 | ||||||
|
Commitments
and contingencies
|
- | - | ||||||
|
Stockholders'
equity:
|
||||||||
|
Preferred
stock, $0.0025 par value; 20,000,000 shares authorized; 0 and
60,990 shares issued and outstanding as of November 30, 2010 and February
28, 2010 respectively
|
- | - | ||||||
|
Common
stock, $0.0025 par value; 120,000,000 shares authorized; 34,165,718 and
21,278,643 shares issued and outstanding as of November 30, 2010 and
February 28, 2010 respectively
|
85 | 53 | ||||||
|
Additional
paid-in capital
|
65,707 | 31,862 | ||||||
|
Accumulated
translation adjustment
|
(208 | ) | (164 | ) | ||||
|
Accumulated
deficit
|
(46,238 | ) | (25,463 | ) | ||||
|
Total
stockholders' equity
|
19,346 | 6,288 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 83,010 | $ | 47,849 | ||||
8 of
10
|
OCZ
Technology Group, Inc.
|
||||||||
|
Consolidated
Statements of Cash Flow
|
||||||||
|
(In
thousands)
|
||||||||
|
Nine
Months Ended
|
||||||||
|
November
30,
|
||||||||
|
2010
|
2009
|
|||||||
|
unaudited
|
unaudited
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income (loss)
|
$ | (20,775 | ) | $ | (7,029 | ) | ||
|
Adjustments
to reconcile net income/(loss) to net cash provided by operating
activities:
|
||||||||
|
Depreciation
of property and equipment
|
807 | 744 | ||||||
|
Amortization
of intangibles
|
53 | 83 | ||||||
|
Bad
debt expense
|
931 | 520 | ||||||
|
Stock-based
compensation
|
624 | 465 | ||||||
|
Disposition
of product line
|
- | (668 | ) | |||||
|
Fair
value adjustment of stock warrants
|
1,236 | - | ||||||
|
Adjustment
to deferred tax asset
|
836 | - | ||||||
|
Non-cash
inventory reserve
|
3,696 | - | ||||||
|
Non-cash
business acquisition
|
644 | - | ||||||
|
Changes
in operating assets and current liabilities:
|
||||||||
|
Accounts
receivable
|
(10,561 | ) | 216 | |||||
|
Inventory
|
(10,332 | ) | 3,159 | |||||
|
Prepaid
expenses and other assets
|
(945 | ) | (137 | ) | ||||
|
Accounts
payable
|
12,032 | 934 | ||||||
|
Accrued
and other liabilities
|
2,171 | 440 | ||||||
|
Net
cash (used in) provided by operating activities
|
(19,583 | ) | (1,273 | ) | ||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of property and equipment
|
(728 | ) | (658 | ) | ||||
|
(Increase)
decrease in deposits
|
(4 | ) | 44 | |||||
|
Business
acquisition earn out payments
|
(35 | ) | (355 | ) | ||||
|
Net
cash used in investing activities
|
(767 | ) | (969 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Issuance
of common stock
|
34,287 | 8 | ||||||
|
Issuance
of preferred stock
|
- | 40 | ||||||
|
Proceeds
from employee stock programs
|
403 | - | ||||||
|
Proceeds
from bank loan, net
|
5,083 | 2,677 | ||||||
|
Increase
(repayment) of shareholder loan
|
(500 | ) | 300 | |||||
|
Net
cash provided by (used in) financing activities
|
39,273 | 3,025 | ||||||
|
Effect
of foreign exchange rate changes on cash and cash
equivalents
|
(44 | ) | (51 | ) | ||||
|
Net
increase in cash and cash equivalents
|
18,879 | 732 | ||||||
|
Cash
and cash equivalents at beginning of period
|
1,224 | 420 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 20,103 | $ | 1,152 | ||||
|
Supplemental
disclosures:
|
||||||||
|
Interest
paid
|
$ | 888 | $ | 571 | ||||
|
Income
taxes paid
|
$ | 25 | $ | - | ||||
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Contact:
OCZ
Technology Group, Inc.
Ryan
Petersen, CEO
408-733-8400
OCZ
Technology Group, Inc.
Bonnie
Mott, Investor Relations Manager
408-440-3428
bmott@ocztechnology.com
Abhi
Kanitkar
ICR
Inc.
415-671-0745
Abhi.Kanitkar@icrinc.com
www.icrinc.com
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