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Wednesday, October 9, 2013
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OCZ Files Financial Results
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OCZ Technology Group has finally filed its fiscal 2013 year results after having to correct the four previous years' results, a situation which nearly caused the company to collapse.
The SSD maker has been facing a Nasdaq delisting and severe financing problems as new management under CEO Ralph Schmitt is driving the company's focus on the enterprise market.
"Throughout our Fiscal Year of 2013, we focused our attention on making changes that would allow us to run a more streamlined and efficient company," said Ralph Schmitt. "While our peak revenue was close to $100 million in the third fiscal quarter, our business had negative gross margins due to the mismatch in competitive pricing and our cost structure for the client value product lines."
"In the fiscal third and fourth quarters, we also made significant adjustments to inventories held both inside the Company and in the channel. We rebalanced the inventory to focus on high growth and more attractive markets including the Enterprise SATA, SAS and PCIe markets. These actions impacted margins as revenues also declined due to rationalizing the product portfolio," added Schmitt. "All of these operational adjustments are now behind us."
Revenue for the first quarter of 2014 was $55.3 million compared to revenue of $69.7 million for the fourth quarter of 2013 and revenue of $76.5 million for the first quarter of 2013. OCZ's record revenue of more than $25 million was generated from its enterprise solutions for the first quarter. Revenue from its client SSDs were impacted due to the tight supply of NAND flash.
GAAP gross margin for the first quarter of 2014 was 14.7% compared to a GAAP gross margin of 1.7% for the fourth quarter of 2013 and a GAAP gross margin loss of (11.0%) for the first quarter of 2013.
Non-GAAP gross margin for the first quarter of 2014 was 15.5% compared to a non-GAAP gross margin of 2.4% for the fourth quarter of 2013 and a non-GAAP gross margin loss of (10.7%) for the first quarter of 2013. On a sequential basis, gross margins increased significantly due primarily to product mix shift towards enterprise solutions and inventory write-downs in the fourth quarter. OCZ expects gross margin to decline in future periods as availability of NAND flash has impacted unit shipments, and also expects a less favorable mix of higher margin enterprise products to total unit shipments.
GAAP net loss for the first quarter of 2014 was $(13.2) million, or a loss of $(0.19) per share on 68.2 million weighted average shares outstanding. This compares with a net loss of $(21.1) million, or a loss of $(0.31) per share on 68.0 million weighted average shares outstanding for the fourth quarter of 2013 and a net loss of $(24.5) million, or a loss of $(0.36) per share on 67.5 million weighted average shares outstanding for the first quarter of 2013.
Non-GAAP net loss for the first quarter of 2014 was $(9.7) million, or a loss of $(0.14) per share on 68.2 million weighted average shares outstanding compared to a non-GAAP loss of $(18.5) million, or $(0.27) per share on 68.0 million weighted average shares outstanding in the fourth quarter of 2013 and to a non-GAAP net loss of $(29.4) million, or a loss of $(0.44) per share on 67.5 million weighted average shares outstanding for the first quarter of 2013.
"Revenue generated from our enterprise solutions for the first quarter more than doubled compared to the last quarter, and drove the sequential gross margin increase. Overall revenue declined about 20% sequentially, primarily due to the lack of NAND flash supply for our client SSD products," said Ralph Schmitt.
"Over the past year we have restructured the Company, which included the appointment of new leadership, reduced operating expenses, streamlined our product offerings, realigned our engineering talent, and introduced new controller silicon and firmware, new higher-end SSDs for the client market and new storage solutions for the enterprise market," added Schmitt. "Fiscal Q1 is the first quarter in which the company operated with all these particular restructuring and restatement adjustments behind us."
OCZ also intends to file its Second Quarter results for Fiscal 2014 by the required date of October 15, 2013.
"In the first half of our fiscal year, we faced significant challenges securing flash. We believe that flash availability and pricing was impacted by our credit situation due to our restatement efforts. This especially came to light in the second quarter," explained Schmitt.
"Preliminary revenue for the second quarter of fiscal 2014 will decrease to between $30 and $35 million with a significant reduction to gross margins as compared to the first quarter. Our NAND supply constraints and costs more significantly impacted our client revenue and margins," continued Schmitt.
"Also in the second quarter, one of our major customers completed their data center installation and other large scale data center designs to offset this revenue are still in process. Our channel based Enterprise business grew but could not offset this shortfall. We continue to see robust overall demand for our products but are challenged with our credit situation to realize these revenues."
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