IRVINE--- MTI Technology Reports Fiscal 2006 Third Quarter Financial Results
MTI Technology Corporation (NASDAQ:MTIC) , a multi-national storage solutions and services company, today announced its financial results for the fiscal year 2006 third quarter and nine months ended December 31, 2005.
Revenue for the fiscal year 2006 third quarter was $40.2 million, a 27% sequential increase from $31.6 million reported in the prior quarter and a slight increase compared to $39.5 million reported in the comparable prior year period.
Product revenue for the third quarter grew to $30.6 million from $22.1 million in the prior quarter, a 39% increase. Year ago product revenue was $29.3 million. Service revenue for the third quarter was $9.6 million, equal to the prior quarter and a 6% decline from the same period in fiscal 2005.
The Company reported an operating loss of $1.56 million for the quarter, an improvement of $1.7 million, or 52%, year-over-year and $1.9 million, or 55%, sequentially. The improved operating results were driven by a broad reduction in spending and increased product sales.
Net loss applicable to common stockholders for the third quarter was $3.0 million or $0.08 per share compared to a net loss of $3.2 million or $0.09 per share in the same quarter of the prior fiscal year and a net loss of $4.1 million or $0.12 per share for the preceding quarter. Net loss applicable to common stockholders for the third quarter included $1.2 million of costs associated with amortization of a beneficial conversion feature and dividends payable on Series A and B securities.
SG&A expenses for the third quarter were $9.4 million compared to $11.0 million in the same quarter of the prior fiscal year and $9.7 million for the preceding quarter. The 15% year-over-year reduction in SG&A was driven by a decrease in operating expense related to the closure of our Dublin manufacturing facility at the end of fiscal 2005 and other spending reductions.
Gross margin for the third quarter was 19.6% compared to 19.7% in the prior year period and 20.2% in the prior quarter. Product gross margin for the third quarter was 18.1% compared to 20.5% in the prior year period and 20.0% in the prior quarter. Product margins continued to be negatively affected by a low level of manufacturers' rebates. Service gross margins for the third quarter were 24.7% compared to 17.3% in the prior year period and 20.7% in the prior quarter. The increase in service gross profit percentage was the result of cost reductions and continued improvement in utilization.
As of December 31, 2005, the Company had $21.2 million in cash and cash equivalents. The increase in cash and cash equivalents was due primarily to the $19.2 million net proceeds raised from the sale of Series B convertible preferred stock in November of 2005.
"Order volume recovered nicely from our summer quarter," stated Tom Raimondi, President and CEO of MTI. "Our stronger backlog of $6.8 million entering the current quarter is a positive sign for continued momentum. With improving service margins and a strong focus on keeping our spending in check, we continue to be focused on reaching profitability and revenue growth."
For the nine months ended December 31, 2005, the Company reported total revenues of $111.1 million, a 15% increase from $97.1 million in the comparable period of fiscal 2005. Product revenue was $81.8 million for the first nine months of fiscal 2006, a 19% increase from $68.8 million reported in the same period of fiscal 2005. Service revenue for the first nine months of fiscal 2006 was $29.3 million, a slight increase from $28.2 million in the same period of the prior year. Gross profit margin for the first nine-months of fiscal year 2006 was 20.1% compared to 21.7% in the same period of the prior year. Net loss applicable to common stockholders for the nine-month period of fiscal 2006 was $10.8 million or $0.31 per share compared to $8.1 million or $0.23 per share in the same period of fiscal 2005.
Investor Conference Call
Management will discuss results followed by a question and answer session today, February 9, 2006 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). The call-in number is 866-578-5784, access code 44786809; international callers should dial 617-213-8056, access code 44786809. If you are unable to participate, a replay will be available for 48 hours, beginning at 4:00 p.m. Pacific Time today, February 9, 2006. The replay call-in number is 1-888-286-8010, access code 20408891. The replay for international callers is 617-801-6888, access code 20408891. A live and archived webcast of the conference call will be available on the MTI website at www.mti.com.
About MTI Technology
MTI is a leading multi-national provider of professional services and comprehensive data storage solutions for mid to large-size organizations. With more than 20 years of expertise as a storage technology innovator, MTI is uniquely qualified to assess, design, implement and support whole-office data storage and backup initiatives. As a strategic partner of EMC (NYSE:EMC) , MTI offers the best data storage, protection and management solutions available today. By employing a strategic, consultative approach, MTI provides customers with a single point of contact that eliminates complexities while delivering operational efficiencies and competitive advantages. MTI currently serves more than 3,000 customers throughout North America and Europe. Visit www.mti.com for more information.