Welcome!

News Feed Item

ModusLink Reports Financial Results for Second Quarter of Fiscal 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 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.

 
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, January 31, January 31, January 31,
  2014     2013     2014     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.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of Soli...
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
Predictive analytics tools monitor, report, and troubleshoot in order to make proactive decisions about the health, performance, and utilization of storage. Most enterprises combine cloud and on-premise storage, resulting in blended environments of physical, virtual, cloud, and other platforms, which justifies more sophisticated storage analytics. In his session at 18th Cloud Expo, Peter McCallum, Vice President of Datacenter Solutions at FalconStor, discussed using predictive analytics to mon...
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor – all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
Join Impiger for their featured webinar: ‘Cloud Computing: A Roadmap to Modern Software Delivery’ on November 10, 2016, at 12:00 pm CST. Very few companies have not experienced some impact to their IT delivery due to the evolution of cloud computing. This webinar is not about deciding whether you should entertain moving some or all of your IT to the cloud, but rather, a detailed look under the hood to help IT professionals understand how cloud adoption has evolved and what trends will impact th...
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
"ReadyTalk is an audio and web video conferencing provider. We've really come to embrace WebRTC as the platform for our future of technology," explained Dan Cunningham, CTO of ReadyTalk, in this SYS-CON.tv interview at WebRTC Summit at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, discussed why and how ReadyTalk diverted from healthy revenue and mor...
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and G...
When it comes to cloud computing, the ability to turn massive amounts of compute cores on and off on demand sounds attractive to IT staff, who need to manage peaks and valleys in user activity. With cloud bursting, the majority of the data can stay on premises while tapping into compute from public cloud providers, reducing risk and minimizing need to move large files. In his session at 18th Cloud Expo, Scott Jeschonek, Director of Product Management at Avere Systems, discussed the IT and busin...
Extracting business value from Internet of Things (IoT) data doesn’t happen overnight. There are several requirements that must be satisfied, including IoT device enablement, data analysis, real-time detection of complex events and automated orchestration of actions. Unfortunately, too many companies fall short in achieving their business goals by implementing incomplete solutions or not focusing on tangible use cases. In his general session at @ThingsExpo, Dave McCarthy, Director of Products...