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Exhibit 99.1

News Release

MODUSLINK REPORTS FINANCIAL RESULTS FOR SECOND QUARTER OF FISCAL 2014

WALTHAM, Mass.—March 3, 2014—ModusLink Global Solutions™, Inc. (NASDAQ: MLNK) today reported financial results for its second quarter of fiscal year 2014 ended January 31, 2014. Results for that period are summarized in the following paragraphs. For a full discussion of the results, please see the Company’s quarterly report on Form 10-Q, which can be accessed through www.moduslink.com.

Second Quarter Financial Summary

 

  Net revenue of $194.0 million, a decrease of 4.6% compared to the second quarter of fiscal 2013

 

  Gross margin of 11.6%, a 1.6 percentage point improvement compared to 10.0% in the second quarter of fiscal 2013

 

  SG&A expenses of $19.6 million, a 17.5% reduction compared to the second quarter of fiscal 2013

 

  Operating income of $1.2 million compared to operating loss of $8.5 million in the second quarter of fiscal 2013

 

  Adjusted EBITDA of $8.6 million compared to $5.4 million in the second quarter of fiscal 2013

 

  Net income of $1.1 million, or $0.02 per diluted share, compared with net loss of $12.6 million, or $0.29 per share, in the second quarter of fiscal 2013

ModusLink reported net revenue of $194.0 million for the second quarter of fiscal 2014, compared to $203.4 million in the second quarter of fiscal 2013. Operating income for the second quarter of fiscal 2014 improved to $1.2 million, compared to an operating loss of $8.5 million in the second quarter of the previous year. Net income for the second quarter of fiscal 2014 improved to $1.1 million, or $0.02 per diluted share, compared to a net loss of $12.6 million, or $0.29 per share.

The decline in net revenue for the second quarter of fiscal 2014 was primarily driven by lower revenue from a software client that reorganized its supply chain and in the same period last year experienced high unit volumes due to a major product launch. The lower revenue from the software client primarily affected results in Europe, and was partially offset by significant revenue growth from a consumer electronics client, which primarily benefited results in the Americas and Europe. The improvement in gross margin, operating income and Adjusted EBITDA for the second quarter of fiscal 2014 was primarily driven by the Company’s cost reduction actions and lower professional fees.


For the second quarter of fiscal 2014, Adjusted EBITDA was $8.6 million compared to $5.4 million for the same period in fiscal 2013. EBITDA represents earnings before interest, income tax expense, depreciation and amortization, and Adjusted EBITDA represents EBITDA excluding certain items. Please refer to the non-GAAP information and table reconciling the Company’s Adjusted EBITDA to its GAAP net income/(loss) below.

About ModusLink Global Solutions

ModusLink Global Solutions, Inc. (NASDAQ: MLNK) executes comprehensive supply chain and logistics services that are designed to improve clients’ revenue, cost, sustainability and customer experience objectives. ModusLink is a trusted and integrated provider to the world’s leading companies in consumer electronics, communications, computing, medical devices, software and retail. The Company’s operations are supported by more than 25 sites across North America, Europe, and the Asia/Pacific region. For details on ModusLink’s flexible and scalable solutions visit www.moduslink.com and www.valueunchained.com, the blog for supply chain professionals.

Non-GAAP Information

In addition to the financial measures prepared in accordance with generally accepted accounting principles, the Company uses Adjusted EBITDA, a non-GAAP financial measure, to assess its performance. EBITDA represents earnings before interest, income tax expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA excluding the effects of professional fees associated with our SEC inquiry and financial restatement, strategic alternatives and other professional fees, executive severance and employee retention, restructuring, share-based compensation, impairments of goodwill and long-lived assets, unrealized foreign exchange gains or losses, net, other non-operating gains or losses, net, equity in losses of affiliates and impairments, and discontinued operations.

We believe that providing Adjusted EBITDA to investors is useful as this measure provides important supplemental information of our performance to investors and permits investors and management to evaluate the operating performance of our core supply chain business. We use Adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors, determining a component of incentive compensation for executive officers and other key employees based on operating performance and evaluating short-term and long-term operating trends in our core supply chain business. We believe that the Adjusted EBITDA financial measure assists in providing an enhanced understanding of our underlying operational measures to manage the core supply chain business, to evaluate performance compared to prior periods and the marketplace, and to establish operational goals. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision making.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in

 

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accordance with U.S. GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies.

A table reconciling the Company’s EBITDA and Adjusted EBITDA to its GAAP net income/(loss) is included in this release.

ModusLink Global Solutions is a registered trademark of ModusLink Global Solutions, Inc. All other company names and products are trademarks or registered trademarks of their respective companies.

This release contains forward-looking statements, which address a variety of subjects. All statements other than statements of historical fact, including without limitation, those with respect to the Company’s goals, plans, expectations and strategies set forth herein are forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: the Company’s ability to execute on its business strategy, including its cost reduction plans and the continued and increased demand for and market acceptance of its services, which could negatively affect the Company’s ability to meet its revenue, operating income and cost savings targets, maintain and improve its cash position, expand its operations and revenue, lower its costs, improve its gross margins, reach and sustain profitability, reach its long-term objectives and operate optimally; uncertainties and volatility relating to global economic conditions, especially in the technology sector; unanticipated declines in, or failure to achieve the anticipated levels of, the demand for our clients’ products; potential strains on managerial and operational resources resulting from expanded operations; failure to realize expected benefits of restructuring and cost-cutting actions; inability to expand operations in accordance with the Company’s business strategy; insufficient cash balances that could prevent the Company from meeting business or investment goals; difficulties integrating technologies, operations and personnel in accordance with the Company’s business strategy; customer losses; demand variability in supply chain management clients, to which the Company sells on a purchase order basis rather than pursuant to contracts with minimum purchase requirements; risks inherent with conducting international operations; changes in tax rates in jurisdictions where profits are determined to be earned and taxed; changes in estimates of tax credits, benefits and deductions; unfavorable resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties and the ability to realize deferred tax assets; adverse conditions in the mergers and acquisitions or IPO markets, which could prevent liquidity for securities in the Company’s venture capital portfolio; and increased competition and technological changes in the markets in which the Company competes. For a detailed discussion of cautionary statements that may affect the Company’s future results of operations and financial results, please refer to the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking statements represent management’s current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us.

Contact:

Robert Joyce

781-663-5120

ir@moduslink.com

 

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ModusLink Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

     January 31,      July 31,      January 31,  
     2014      2013      2013  

Assets:

        

Cash and cash equivalents

   $ 75,274       $ 77,916       $ 51,804   

Accounts receivable, net

     145,480         142,098         151,573   

Inventories

     68,890         61,322         83,053   

Prepaid and other current assets

     10,774         9,750         12,090   
  

 

 

    

 

 

    

 

 

 

Total current assets

     300,418         291,086         298,520   
  

 

 

    

 

 

    

 

 

 

Property and equipment, net

     28,911         34,290         38,193   

Investments in affiliates

     8,071         7,970         9,556   

Goodwill

     3,058         3,058         3,058   

Other intangible assets, net

     1,204         1,764         2,327   

Other assets

     5,389         5,528         6,671   
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 347,051       $ 343,696       $ 358,325   
  

 

 

    

 

 

    

 

 

 

Liabilities:

        

Accounts payable

   $ 112,236       $ 110,148       $ 125,472   

Accrued restructuring

     1,686         4,670         4,575   

Accrued expenses

     37,840         34,748         40,422   

Other current liabilities

     25,735         26,865         28,981   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     177,497         176,431         199,450   
  

 

 

    

 

 

    

 

 

 

Long-term portion of accrued restructuring

     273         494         —     

Other long-term liabilities

     9,243         9,866         11,178   
  

 

 

    

 

 

    

 

 

 

Total liabilities

     187,013         186,791         210,628   
  

 

 

    

 

 

    

 

 

 

Stockholders’ equity:

     160,038         156,905         147,697   
  

 

 

    

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 347,051       $ 343,696       $ 358,325   
  

 

 

    

 

 

    

 

 

 


ModusLink Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

     Three months ended     Six months ended  
     January 31,     January 31,  
     2014     2013     Fav (Unfav)     2014     2013     Fav (Unfav)  

Net revenue

   $ 194,011      $ 203,436        (4.6 %)    $ 385,426      $ 400,487        (3.8 %) 

Cost of revenue

     171,431        183,158        6.4     340,851        361,585        5.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     22,580        20,278        11.4     44,575        38,902        14.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     11.6     10.0     1.6     11.6     9.7     1.9

Operating expenses:

            

Selling, general and administrative

     19,572        23,721        17.5     37,687        47,862        21.3

Amortization of intangible assets

     280        285        1.8     560        569        1.6

Impairment of long-lived assets

     500        —            500        —       

Restructuring, net

     993        4,798        79.3     1,972        6,268        68.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     21,345        28,804        25.9     40,719        54,699        25.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     1,235        (8,526     114.5     3,856        (15,797     124.4

Other income (expense), net

     581        (2,491     123.3     (231     (3,832     94.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before taxes

     1,816        (11,017     116.5     3,625        (19,629     118.5

Income tax expense

     753        674        (11.7 %)      1,890        1,583        (19.4 %) 

Equity in losses of affiliates, net of tax

     —          726          134        1,036     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     1,063        (12,417     108.6     1,601        (22,248     107.2

Discontinued operations, net of income taxes:

            

Income (loss) from discontinued operations

     1        (133     100.8     80        (960     108.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 1,064      $ (12,550     108.5   $ 1,681      $ (23,208     107.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) per share:

            

Income (loss) from continuing operations

   $ 0.02      $ (0.29     107.1   $ 0.03      $ (0.51     106.1

Income (loss) from discontinued operations

     0.00        (0.00     100.6     0.00        (0.02     107.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 0.02      $ (0.29     107.1   $ 0.03      $ (0.53     106.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing basic income (loss) per share:

            

Basic

     51,498        43,654          51,467        43,629     

Diluted

     51,811        43,654          51,539        43,629     


ModusLink Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations Information by Operating Segment

(in thousands)

(unaudited)

 

     Three months ended     Six months ended  
     January 31,
2014
    January 31,
2013
    January 31,
2014
    January 31,
2013
 

Net revenue:

        

Americas

   $ 78,787      $ 67,731      $ 155,362      $ 131,641   

Asia

     47,530        60,356        92,920        116,731   

Europe

     56,751        67,818        117,367        136,748   

All other

     10,943        7,531        19,777        15,367   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenue

   $ 194,011      $ 203,436      $ 385,426      $ 400,487   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss):

        

Americas

   $ 2,080      $ (446   $ 5,568      $ (2,470

Asia

     5,808        5,585        11,659        12,754   

Europe

     (2,149     (3,900     (4,495     (7,748

All other

     (76     (955     509        (538
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment operating income (loss)

     5,663        284        13,241        1,998   

Other reconciling items

     (4,428     (8,810     (9,385     (17,795
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating income (loss)

   $ 1,235      $ (8,526   $ 3,856      $ (15,797
  

 

 

   

 

 

   

 

 

   

 

 

 


ModusLink Global Solutions, Inc. and Subsidiaries

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(in thousands)

(unaudited)

Net Income (Loss) to Adjusted EBITDA1

 

     Three months ended     Six months ended  
     January 31,     January 31,     January 31,     January 31,  
     2014     2013     2014     2013  

Net income (loss)

   $ 1,064      $ (12,550   $ 1,681      $ (23,208

Interest income

     (65     (88     (167     (166

Interest expense

     199        101        412        199   

Income tax expense

     753        674        1,890        1,583   

Depreciation

     3,097        3,239        6,571        6,849   

Amortization of intangible assets

     280        285        560        569   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     5,328        (8,339     10,947        (14,174

SEC inquiry and financial restatement costs

     1,438        2,955        3,217        6,636   

Strategic alternatives and other professional fees

     39        1,100        55        1,390   

Executive severance and employee retention

     —          437        —          1,038   

Restructuring

     993        4,798        1,972        6,268   

Share-based compensation

     638        422        1,150        915   

Impairment of goodwill and long-lived assets

     500        —          500        —     

Unrealized foreign exchange (gains) losses, net

     (626     1,683        (348     2,267   

Other non-operating (gains) losses, net

     110        (56     (361     237   

Equity in losses of affiliates and impairments

     177        2,226        311        2,536   

Discontinued operations

     (1     133        (80     960   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 8,596      $ 5,359      $ 17,363      $ 8,073   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1  The Company defines Adjusted EBITDA as net income (loss) excluding net charges related to interest income, interest expense, income tax expense, depreciation, amortization of intangible assets, SEC inquiry and restatement costs, strategic alternatives and other professional fees, executive severance and employee retention, restructuring, share-based compensation, impairment of goodwill and long-lived assets, unrealized foreign exchange (gains) losses, net, other non-operating (gains) losses, net, equity in losses of affiliates and impairments and discontinued operations.