Danny, MTIC Earnings - Looks good:
MTI Technology Corporation Reports Fiscal 2004 Third Quarter and Nine Months Results; MTI Delivers Second Quarter of Revenue Growth and Reports Net Income
TUSTIN, Calif.
MTI Technology Corporation
Todd Schaeffer, 714-481-7808
tschaeffer@mti.com
MTI Technology Corporation , a global provider of data storage, storage management and data protection solutions, today announced financial results for its fiscal 2004 third quarter and nine months ended January 3, 2004. For the fiscal 2004 third quarter, the Company reported net income of $1.5 million, or $0.04 per diluted share, compared to a net loss of $1.4 million, or $0.04 net loss per share, in fiscal 2003 third quarter. For the nine month period ended January 3, 2004, the net loss was $3.1 million, or $0.09 per share, compared to a net loss of $11.8 million, or $0.36, in the first nine months of fiscal 2003. The significant improvement in net income is due primarily to revenue growth and cost reductions during fiscal 2004, and the favorable resolution of income tax matters related to prior years.
Total revenues for the third quarter were $21.2 million, compared to $19.6 million in the prior year's quarter, up 8%. For the nine month period ended January 3, 2004, total revenues were $59.5 million, compared with revenues of $60.0 million for the first nine months of fiscal 2003, virtually unchanged.
Product revenue for the third quarter of fiscal 2004 was $12.3 million, compared to $9.4 million in the third quarter of fiscal 2003, an increase of almost 31%. For the nine month period ended January 3, 2004, product revenue was $31.8 million, compared to $27.7 million in the first nine months of fiscal 2003, an increase of almost 15%.
Service revenue for the third quarter of fiscal 2004 was $8.9 million, compared to $10.2 million in the third quarter of fiscal 2003, a decrease of almost 13%. For the nine month period ended January 3, 2004, service revenue was $27.7 million, compared to $32.3 million in the first nine months of fiscal 2003, a decrease of almost 15%. The decreases are attributable to a decrease in the Company's maintenance base, partially off-set by a growth in the Company's professional services business.
Gross profit margin percentage for the third quarter of fiscal 2004 was 22.0%, compared to 30.3% in the third quarter of fiscal 2003. For the nine month period ended January 3, 2004, gross profit margin percentage was 23.2%, compared to 23.4% in the first nine months of fiscal 2003, virtually unchanged.
MTI settled certain tax matters with the IRS during the third quarter. These settlements enabled us to reverse $1.5 million of previously recorded tax liabilities, and to record an income tax refund receivable of $1.7 million -- resulting in a total favorable income effect of $3.2 million. We also expect to receive interest on the refund; however, we have not recorded any such interest because the amount is not estimable. We will record the interest when it is received.
"We have continued to aggressively invest in our partnership with EMC, which I believe is enhancing and accelerating our position in the marketplace," said Tom Raimondi, President and CEO. "In Q3, we saw continued growth in our product revenue, with a 31% increase from the same quarter of last year and, more importantly, a 10% increase over our last quarter. This is a clear indication of the success and momentum that we are experiencing with our EMC partnership."
As of January 3, 2004, MTI had $3.3 million in cash and cash equivalents, $4.6 million available under a $7.0 million line of credit with Comerica Bank, $18.3 million of accounts receivable, and $12 million of deferred revenues.
Conference Call Information
MTI Technology Corporation will hold its quarterly conference call on Tuesday, February 17, 2004, at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time. The call will be accessible live by dialing toll free 800-901-5217, pass code 50918772 (international callers, call 617-786-2964, pass code 50918772), or via webcast at www.mti.com. The webcast will be available for 45 days on MTI's website at www.mti.com/company/ir_calls.asp.
A replay of the call will be available for 48 hours by dialing toll free 888-286-8010 and entering pass code 80741702 (international callers, please call 617-801-6888, pass code 80741702).
About MTI Technology Corporation
MTI's mission as a global solutions provider is to deliver superior business value to its customers in support of their data storage and enhanced data protection needs. MTI has more than 20 years of experience in delivering a full range of storage solutions -- including design, engineering, professional services and third-party maintenance -- from midrange to Global 2000 customers. MTI is a premier systems integrator focusing on providing end-to-end business solutions in the storage marketplace. Headquartered in Tustin, MTI may be reached by telephone at 800-999-9MTI (toll free) or 714-481-7800, or by fax at 714-481-4135. Web address is www.mti.com.
MTI is a registered trademark of MTI Technology Corporation.
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 strategy, capital position, anticipated cost savings, operating results, the effects of additional headcount reductions on the Company's business, as well as statements regarding the Company's line of credit and its financial resources, the potential growth of the storage industry and MTI, and the commercial relationship between MTI and EMC, and EMC's product offerings and solutions, all of which are subject to change. The actual results may differ materially from those described in any forward-looking statement. In particular, there can be no assurance that MTI will improve revenues, margins, operating efficiencies, operating results, or be successful with its new strategy. In addition, there can be no assurance that MTI will be able to borrow under the line of credit, have sufficient resources or that it or the industry will grow. Important factors that may cause actual results to differ include competition, 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 for the year ended April 5, 2003. All forward-looking statements speak as of the date made and MTI undertakes no obligation to update any such statement.
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
January 3, April 5,
2004 2003
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $3,331 $9,833
Accounts receivable, less allowance for doubtful
accounts and sales returns of $994 and $2,266
at January 3, 2004, and April 5, 2003,
respectively 18,280 13,913
Inventories 5,385 8,297
Income tax receivable 1,706 --
Prepaid expenses and other receivables 4,503 4,330
Total current assets 33,205 36,373
Property, plant and equipment, net 1,653 2,833
Goodwill, net 5,184 5,184
Other 234 166
Total assets $40,276 $ 44,556
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $2,400 $1,740
Current portion of capital lease obligations 172 161
Accounts payable 10,165 8,562
Accrued liabilities 6,372 7,321
Accrued restructuring charges 2,080 2,931
Deferred revenue 10,549 13,587
Total current liabilities 31,738 34,302
Capital lease obligations, less current portion 144 286
Other 1,445 994
Total liabilities 33,327 35,582
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.001 par value; authorized
5,000 shares; issued and outstanding, none -- --
Common stock, $.001 par value; authorized
80,000 shares; issued (including treasury
shares) and outstanding 33,839 and 32,969
shares at January 3, 2004, and April 5,
2003, respectively 34 33
Additional paid-in capital 135,861 134,931
Accumulated deficit (125,405) (122,282)
Accumulated other comprehensive loss (3,362) (3,708)
Deferred compensation (179) --
Total stockholders' equity 6,949 8,974
Total liabilities and stockholders'
equity $ 40,276 $44,556
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY JANUARY JANUARY JANUARY
3, 2004 4, 2003 3, 2004 4, 2003
Net product revenue $12,281 $9,413 $31,817 $27,687
Service revenue 8,929 10,231 27,697 32,316
Total revenue 21,210 19,644 59,514 60,003
Product cost of revenue 9,894 7,339 26,129 25,207
Service cost of revenue 6,642 6,348 19,591 20,776
Total cost of revenue 16,536 13,687 45,720 45,983
Gross profit 4,674 5,957 13,794 14,020
Operating expenses:
Selling, general and
administrative 6,531 6,444 19,402 21,348
Research and development -- 760 776 4,331
Restructuring charges -- 221 (211) 1,267
Total operating expenses 6,531 7,425 19,967 26,946
Operating loss (1,857) (1,468) (6,173) (12,926)
Interest and other income
(expense), net (40) (52) (104) 999
Gain on foreign currency
transactions 225 156 30 180
Loss before income taxes (1,672) (1,364) (6,247) (11,747)
Income tax (expense) benefit 3,130 (25) 3,123 (74)
Net income (loss) $1,458 $(1,389) $(3,124) $(11,821)
Net income (loss) per share:
Basic $0.04 $(0.04) $(0.09) $(0.36)
Diluted $0.04 $(0.04) $(0.09) $ (0.36)
Weighted average shares used in
per share computations:
Basic 33,602 32,880 33,243 32,812
Diluted 35,482 32,880 33,243 32,812
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