Imation released financial results for the second quarter ended June 30, 2016. Revenue was $10.6 million, relatively flat from the prior quarter, down 37.3 percent from Q2 2015.
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This is due to company's strategic decision to shutter Nexsan segment's underperforming regions and exit low-margin portions of the business to focus on next-generation UNITY product.
Gross margin percentage improved by 350 basis points from 40.8 percent to 44.3 percent.
Selling, general and administrative expenses declined by $8.8 million, or 51.4 percent year over year, and the operating loss from continuing operations (excluding special charges) was reduced by $6.3 million to $6.8 million from a loss of $13.1 million in Q2, 2105.
The company's cash balance and short term investments totaled $56.2 million as of June 30, 2016.
Net revenue for Q2 2016 was $10.6 million, down 37.3 percent from Q2 2015. The decrease was due to the strategic decision to shutter underperforming regions and exit low margin portions of the business.
Gross margin for Q2 2016 was 44.3 percent, 350 basis points better than Q2 2015. The improvement was primarily driven by the supply chain improvement, eliminating low margin revenues and product mix changes.
Selling, general and administrative expenses in Q2 2016 were $8.3 million, down $8.8 million (or 51.4 percent) compared to Q2 2015 expenses of $17.1 million. The decrease stemmed primarily from corporate cost reduction and underperformed region exits.
Research and development (R&D) expenses in Q2 2016 were $3.2 million, up from $2.9 million in Q2 2015, reflecting the company's increased investment in the UNITYâ„¢ product.
Special charges were a benefit of $1.0 million in Q2 2016 compared to a charge of $0.9 million in Q2 2015. Special charges in Q2 2016 were chiefly related to the property tax refund for the former Oakdale headquarters and pension settlement costs.
Operating loss from continuing operations was $5.8 million in Q2 2016 compared to a loss of $14.0 million in Q2 2015.
Excluding the impact of special charges described above, the adjusted operating loss would have been $6.8 million in Q2 2016 compared with an adjusted operating loss on the same basis of $13.1 million in Q2 2015.
Income tax expense was a benefit of $0.5 million in Q2 2016 compared with $0.0 million income tax expense in Q2 2015. The benefit of $0.5 million was mostly offset by the tax expense related to the discontinued operations.
Discontinued operations had a gain (after-tax) in Q2 2016 of $0.6 million compared with a loss of $3.3 million (after-tax) in Q2 2015. Discontinued operations include the results of the IronKey business, which was sold, and the legacy Storage Media and Accessories businesses which Imation closed down.
Loss per share from continuing operations was $0.17 in Q2 2016 compared with a loss per share of $0.34 in Q2 2015. Excluding the impact of special items, the adjusted loss per share would have been $0.20 in Q2 2016 compared with a loss per share of $0.32 in Q2 2015.
Cash and short-term investment balance was $56.2 million as of June 30, 2016, down $6.8 million during the quarter, driven by primarily operating losses and, to a lesser extent, the remaining charges from the company's restructuring and an unrealized loss on the company's short-term investment portfolio. ■