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OCZ Technology Group, Inc. (OCZ), a leading provider of
high-performance solid-state drives (SSDs) for computing devices and
systems, reports its first quarter (Q1’13) results which ended on May
31, 2012.
Financial Highlights
-- Net revenue in Q1’13 was a record $113.6 million, and increased 54%
compared with net revenue of $73.8 million reported in Q1’12.
-- Q1’13 SSD revenue reached a record $106.5 million; an increase of 54%
compared with Q1’12 SSD revenue of $69.1 million.
-- Gross margin in Q1’13 25.0% compared with 20.0% in Q1’12
-- Net loss for Q1’13 was $6.3 million or $0.09 loss per share compared
with a net loss of $9.1 million or $0.20 loss per share in Q1’12.
-- Achieved Record Bookings in Q1’13.
-- Non-GAAP gross margin was 25.2% compared with 20.0% in Q1’12.
-- Non-GAAP net loss for Q1’13 was $11.5 million or $0.17 loss per share
as compared with a non-GAAP net profit for Q1’12 of $0.5 million or
$0.01 per share.
"We are again pleased to report record revenue for the quarter as
demand for our SSDs has been fueled by new product introductions. We
continue to gain traction with our SAN replacement products and
expect these products to begin to ramp in the third quarter," said
Ryan Petersen, CEO of OCZ Technology. "During our first fiscal
quarter we successfully launched our next generation Indilinx Everest
2 controller platform and introduced the next generation of Agility
and Vertex series SSDs based on this platform."
"During the quarter, we achieved record bookings of nearly $140
million reflecting increased order activity associated with the
transition to our new generation Everest 2 based Vertex 4 and Agility
4 product lines introduced during the quarter. As a point of
reference, during the quarter we shipped over 100,000 units of these
new Everest 2 based products with gross margins of over 30%," added
Petersen. "We believe our ongoing investments in technology and sales
and marketing provide a clear strategic advantage as we bring
innovative SSD products to the market."
Recent Business Highlights
-- Z-Drive R4 PCI Express (PCIe) SSD series has achieved VMware
Ready(TM) status. This designation indicates that after a detailed
validation process, Z-Drive R4 PCIe SSDs achieved VMware’s highest
level of endorsement. This qualification signifies to customers that
the drives have met specific VMware integration and interoperability
standards and work effectively with the VMware infrastructure.
-- Following the release of Vertex 4 in April, we late in the quarter
unveiled our new Agility 4 SSD series that delivers an ideal balance
of 6Gbps SATA III interface speed, exceptional input/output operations
per second (IOPS) performance, and enterprise-grade endurance and
reliability all in SSD targeted at cost sensitive applications.
-- OCZ SAS-based Talos 2 SSDs were showcased during Microsoft’s North
American TechEd (technology education) conferences. With this
partnership, TechEd participants got a firsthand look at the upcoming
Windows Server 2012 and how it delivers the enterprise-class storage
capabilities that IT departments require. OCZ Talos 2 SSDs are also
featured in a permanent display at the Microsoft Technology Center in
New York City.
-- At Computex 2012 in Taiwan, OCZ showcased its newest PCI Express
(PCIe) SAN acceleration and replacement solutions, and unveiled the
Intrepid 3 enterprise-class SATA III SSD Series based on the Everest 2
architecture. Live demos included the current industry-leading Z-Drive
R4 CloudServ(TM) PCIe SSD that delivers over one million IOPS, and a
first look at the highly anticipated Z-Drive R5 Series based on the
co-developed OCZ-Marvell Kilimanjaro platform that raises the bar in
performance, reliability, and endurance. OCZ also showcased the VXL
Storage Accelerator software that enables large scale deployment of a
virtualized environment for businesses to eliminate the need for
costly tier-1 SANs in a wide range of enterprise IT infrastructures.
Additional Financial Information
To help investors better understand OCZ’s historical revenue trends,
including geographic revenue by delivery location and revenue by
product groups, additional revenue information is shown in the chart
below. In addition, the Company has provided an additional market
breakout to illustrate our "SAN replacement"products, which are
PCIe-based storage solutions targeted at replacing or accelerating
performance in Storage Area Networks.
Quarterly net revenue by product groups and major geographic area by
delivery location ($000)’s (Unaudited)
Product Groups 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13
--------- --------- --------- --------- ---------
HDD format $ 69,122 $ 67,243 $ 88,632 $ 95,123 $ 100,321
SAN replacement - 3,834 6,833 8,117 6,168
--------- --------- --------- --------- ---------
SSD $ 69,122 $ 71,077 $ 95,465 $ 103,240 $ 106,489
Power supplies & Other 4,672 7,377 7,619 7,202 7,131
--------- --------- --------- --------- ---------
Total $ 73,794 $ 78,454 $ 103,084 $ 110,442 $ 113,620
========= ========= ========= ========= =========
Major Geographic Areas 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13
--------- --------- --------- --------- ---------
North America $ 20,848 $ 25,895 $ 34,875 $ 42,486 $ 45,769
EMEA 40,997 41,841 54,158 51,724 51,985
ROW 11,949 10,718 14,051 16,232 15,866
--------- --------- --------- --------- ---------
Total $ 73,794 $ 78,454 $ 103,084 $ 110,442 $ 113,620
--------- --------- --------- --------- ---------
The chart below is a summary comparison of GAAP to Non-GAAP measures.
Please refer to the following sections below on the calculation and
explanation of Non-GAAP financial measures.
(In thousands, except per share amount)
GAAP Financial Comparison Non-GAAP Financial Comparison
Q1 2013 Q1 2012 Q1 2013 Q1 2012
-------- -------- -------- --------
Net revenue $113,620 $ 73,794 Net revenue $113,620 $ 73,794
Gross margin 25.0% 20.0% Gross margin 25.2% 20.0%
Net loss Net income
$ (6,254) $ (9,093) (loss) $(11,508) $ 501
Loss per share Income (loss)
$ (0.09) $ (0.20) per share $ (0.17) $ 0.01
Business Outlook and Commentary:
-- OCZ expects net revenue for its second fiscal quarter ending August
31, 2012 (Q2’13), to be in the range of $130 to $140 million.
-- OCZ expects net revenue for its fiscal year ending February 28, 2013
(FY’13) to be in the range of $630 to $700 million. This represents a
growth rate of approximately 80% at the midpoint; we expect, based on
historical trends, revenue to be weighted to the second half of the
year, with approximately 60% to 65% of revenue to occur in the second
half of the year.
-- Non-GAAP gross margins are expected to increase in Q213 and to exit
the year in excess of 30%, with typical sequential gross margin
increases of 100 to 250 basis points per quarter throughout the fiscal
year, subject to changes in product mix as the SSD landscape continues
to evolve.
-- OCZ expects non-GAAP operating expenses for Q2’13, to be in the range
of $38 to $41 million with expenses exiting the year at between $43
and $47 million per quarter, as OCZ continues to invest in its ongoing
growth objectives.
Conference Call:
OCZ will host its fiscal 2013 first quarter conference call for the
period ended May 31, 2012 at 5:00pm ET (2:00pm PT), on July 10, 2012.
Ryan Petersen, CEO, and Arthur Knapp, CFO, will discuss the Company’s
performance on the call.
A live audio webcast of the conference call will be available by
visiting the Investor Relations events conference call section of
OCZ’s website at
http://ir.stockpr.com/ocztechnology/conference-calls, which will be
archived for replay until August 15 2012.
All interested parties can join the call by dialing (253) 237-1170 or
(877) 372-0867. Please call-in 15 minutes prior to the call to secure
a line. The conference call will be archived for phone replay until
July 16, 2012. To access the archived conference call, please dial
(404) 537-3406 or (855) 859-2056 and enter replay passcode 90385535.
About OCZ Technology Group, Inc.
Founded in 2002, San Jose, CA-based OCZ Technology Group, Inc. (OCZ)
is a global leader in the design, manufacturing, and distribution of
high-performance solid-state storage solutions and premium computer
components. Offering the industry’s widest range of solid-state
drives (SSDs), OCZ features SSDs in a variety of form factors and
interfaces (i.e. PCIe, SAS and SATA) to address HDD replacement, SAN
acceleration, server and storage virtualization, cloud computing, and
virtual desktop infrastructure (VDI) opportunities. Having developed
firmware and controller platforms to virtualization and endurance
extending technologies, the company delivers vertically integrated,
customizable solutions enabling transformational approaches to how
digital data is captured, stored, accessed, analyzed and leveraged
across a wide range of client and enterprise applications. For more
information, please visit: www.ocztechnology.com.
Forward-Looking Statements
Some of the statements and assumptions included in this release are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 or Section 21E of the Securities Exchange Act
of 1934, each as amended, including, in particular, statements about
our plans, strategies and prospects and estimates for the fiscal
quarter ending August 31, 2012, fiscal year ending February 28, 2013
and beyond. These statements identify prospective information and
include words such as "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "projects" and similar expressions. These
forward-looking statements are based on information available to us
as of the date of this release. Current expectations, forecasts and
assumptions involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially from
those anticipated by these forward-looking statements. Such risks,
uncertainties and other factors may be beyond our control. Such risks
and uncertainties also include the impact of the variable demand,
particularly in view of current business and economic conditions;
dependence on our ability to successfully qualify, manufacture and
sell our SSD products in increasing volumes on a cost-effective basis
and with acceptable quality, particularly our new SSD products with
lower cost structures; product mix, particularly increased acceptance
and sales of enterprise SSDs; our ability to capitalize on our
technological leadership; the impact of competitive product
announcements; our ability to achieve projected cost savings; our
ability to rapidly increase our manufacturing capacity in pace with
our competitors if demand for SSD increases; and our maintaining
adequate working capital. We also encourage you to read our Annual
Report on Form 10-K as filed with the U.S. Securities and Exchange
Commission ("SEC") on May 14, 2012, and statements made in other
subsequent filings, as they contain information concerning risk,
uncertainties and other factors that could cause results to differ
materially from those projected in the forward-looking statements.
These forward-looking statements should not be relied upon as
representing our views as of any subsequent date and we undertake no
obligation to update forward-looking statements to reflect events or
circumstances after the date they were made.
Calculation of Non-GAAP net loss
Non-GAAP net loss is calculated as net loss excluding the impact of
special inventory charge related to acquisition, acquisition related
costs, amortization of acquisition related intangibles, 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.
Non-GAAP Financial Measures
OCZ continues to provide all information required in accordance with
GAAP, but believes evaluating its ongoing financial results may not
be as useful if an investor is limited to reviewing only GAAP
financial measures. Accordingly, OCZ uses non-GAAP financial
information to evaluate its ongoing operations and for internal
planning and forecasting purposes. OCZ’s management does not itself,
nor does it suggest that investors should, consider such non-GAAP
financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. OCZ presents
such non-GAAP financial measures in reporting its financial results
to provide investors with an additional tool to evaluate OCZ’s
financial results in a manner that focuses on what OCZ believes to be
its ongoing business operations.
OCZ’s management believes it is useful for itself and investors to
review, as applicable, both GAAP information and the non-GAAP
measures in order to assess the performance of OCZ’s business and for
planning and forecasting in subsequent periods. Whenever OCZ uses
such a non-GAAP financial measure, it provides a reconciliation of
the non-GAAP financial measure to the most closely applicable GAAP
financial measure. Investors are encouraged to review the related
GAAP financial measures and the reconciliation of these non-GAAP
financial measures to their most directly comparable GAAP financial
measure as detailed above.
OCZ Technology Group, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amount)
Three Months Ended
May 31,
------------------------
unaudited
------------------------
2012 2011
----------- -----------
Net revenue $ 113,620 $ 73,794
Cost of revenue 85,189 59,050
----------- -----------
Gross profit 28,431 14,744
----------- -----------
Research and development 19,281 4,267
Sales and marketing 13,421 4,494
General, administrative and operations 8,667 5,645
Acquisition related charges - 1,702
Special inventory charge - 2,975
----------- -----------
Total operating expenses 41,369 19,083
----------- -----------
Loss from operations (12,938) (4,339)
Other expense, net (103) (75)
Interest and financing costs (229) (438)
Revaluation to fair value of common stock warrants 7,017 (4,241)
----------- -----------
Loss before income taxes (6,253) (9,093)
Provision for income taxes 1 -
----------- -----------
Net loss $ (6,254) $ (9,093)
=========== ===========
Net loss per share:
Basic $ (0.09) $ (0.20)
=========== ===========
Diluted $ (0.09) $ (0.20)
=========== ===========
Shares used in net loss per share computation:
Basic 67,500 44,500
=========== ===========
Diluted 67,500 44,500
=========== ===========
OCZ Technology Group, Inc.
Condensed Consolidated Balance Sheets
($ In thousands, except share and per share data)
May 31, February 29,
2012 2012
----------- ------------
unaudited
ASSETS
Current Assets:
Cash and cash equivalents $ 43,232 $ 92,339
Accounts receivable, net of allowances 89,101 72,543
Inventory, net 125,792 108,664
Prepaid expenses and other current assets 12,937 10,723
----------- ------------
Total current assets 271,062 284,269
Property and equipment, net 5,878 4,998
Intangibles, net 8,511 8,380
Goodwill 60,428 60,914
Other assets 203 142
----------- ------------
Total assets $ 346,082 $ 358,703
=========== ============
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 79,688 $ 88,093
Accrued and other liabilities 11,853 12,749
----------- ------------
Total current liabilities 91,541 100,842
Common stock warrant liability 4,070 11,087
Other long-term liabilities 344 272
----------- ------------
Total liabilities 95,955 112,201
----------- ------------
Commitments and contingencies - -
Stockholders’ equity:
Preferred stock, $0.0025 par value, 20,000,000
shares authorized; no shares issued or
outstanding - -
Common stock, $0.0025 par value, 120,000,000
shares authorized; 67,647,109 and 66,581,428
shares issued and outstanding at May 31, 2012
and February 29, 2012, respectively 169 166
Additional paid-in capital 330,114 320,095
Accumulated deficit (79,411) (73,157)
Accumulated other comprehensive loss (745) (602)
----------- ------------
Total stockholders’ equity 250,127 246,502
----------- ------------
Total liabilities and stockholders’ equity $ 346,082 $ 358,703
=========== ============
OCZ Technology Group, Inc.
Consolidated Statements of Cash Flows
($ In thousands)
Three Months ended
------------------------
May 31, May 31,
2012 2011
----------- -----------
Cash flows from operating activities: (unaudited) (unaudited)
Net loss (6,254) $ (9,093)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of property and equipment 517 445
Amortization of intangibles 506 33
Accounts receivable allowances (126) 458
Stock-based compensation 1,472 676
Revaluation of common stock warrants (7,017) 4,241
Net loss on disposal of property and equipment 107 -
Inventory reserve 943 3,596
Changes in assets and liabilities, net of
effect of acquisitions:
Accounts receivable (16,432) (13,179)
Inventory (18,139) (15,408)
Prepaid expenses and other assets (2,351) (945)
Accounts payable (8,405) 5,629
Accrued and other liabilities (769) 910
----------- -----------
Net cash used in operating activities (55,948) (22,637)
----------- -----------
Cash flows from investing activities:
Property and equipment purchases (1,541) (414)
Purchased intangibles (151) -
Acquistion of Indilinx, net of cash received - 123
----------- -----------
Net cash used in investing activities (1,692) (291)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock, net 8,508 93,665
Proceeds from employee stock programs, net 42 157
Proceeds from exercise of warrants for common
stock - 8
Repayment of bank loans - (24,010)
Restricted cash for letter of credit - (62)
----------- -----------
Net cash provided by financing
activities 8,550 69,758
----------- -----------
----------- -----------
Effect of foreign exchange rate changes on cash
and cash equivalents (17) 13
----------- -----------
Net increase (decrease) in cash and cash
equivalents (49,107) 46,843
Cash and cash equivalents at beginning of period 92,339 17,514
----------- -----------
Cash and cash equivalents at end of period $ 43,232 $ 64,357
=========== ===========
Set forth below are reconciliations of the non-GAAP financial measures
to the most directly comparable GAAP financial measures. The non-GAAP
financial measures disclosed by the Company have limitations and
should not be considered a substitute for, or superior to, financial
measures prepared in accordance with GAAP, and the financial results
prepared in accordance with GAAP and reconciliations from these
results should be carefully evaluated. Please refer to "Explanation
of Non-GAAP Financial Measures" in this document for a detailed
explanation of the adjustments made to comparable GAAP measures, the
ways management uses these non-GAAP measures, and the reasons why
management believes these non-GAAP measures provide useful
information for investors.
OCZ Technology Group, Inc.
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (Unaudited)
($ in thousands, except per share data)
Three Months Ended
May 31,
------------------------
unaudited
------------------------
2012 2011
----------- -----------
GAAP GROSS PROFIT $ 28,431 $ 14,744
Amortization of acquisition related intangibles 145 -
----------- -----------
NON-GAAP GROSS PROFIT $ 28,576 $ 14,744
=========== ===========
GAAP NET LOSS $ (6,254) $ (9,093)
Adjustment for amortization of acquisition related
intangibles (gross profit) 145 -
Non-GAAP research and development adjustments:
Stock based compensation 726 277
Amortization of acquisition related
intangibles 127 -
Non-GAAP sales and marketing adjustments:
Stock based compensation 240 122
Amortization of acquisition related
intangibles 19 -
Non-GAAP general, administrative and operations:
Stock based compensation 506 277
Acquisition related charges - 1,702
Special inventory charge related to acquisition - 2,975
Non-cash charges for revaluation of common stock
warrants issued in connection with equity
financing (7,017) 4,241
----------- -----------
NON-GAAP NET INCOME (LOSS) $ (11,508) $ 501
=========== ===========
GAAP BASIC AND DILUTED NET LOSS PER SHARE $ (0.09) $ (0.20)
Adjustments for:
Stock based compensation 0.02 $ 0.01
Amortization of acquisition related
intangibles 0.00 $ -
Acquisition related charges - $ 0.04
Special inventory charge related to
acquisition - $ 0.07
Non-cash charges for revaluation of common
stock warrants issued in connection with
equity financing (0.10) $ 0.09
----------- -----------
NON-GAAP NET INCOME (LOSS) PER SHARE $ (0.17) $ 0.01
=========== ===========
OCZ Investor Relations Contact:
Bonnie Mott
Senior Manager of Investor Relations
(408) 440-3428
Email Contact
Media Contact:
Jessica Luken
Director of Global Marketing
(408) 733-8400
Email Contact
SOURCE: OCZ Technology Group, Inc.
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