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Imation Corp. (NYSE:IMN) today released financial results for the second quarter ended June 30, 2014 that were in line with the Company’s expectations.
For Q2 2014, Imation reported net revenue of $178.6 million, down 15.6 percent from Q2 2013. Gross margin for Q2 2014 was 19.0 percent versus 26.1 percent a year ago; Q2 2013’s results included a $13.6 million reversal of a European levy accrual, or 6.4 points of gross margin. Operating loss from continuing operations totaled $20.1 million in Q2 2014, with diluted loss per share of $0.48 from continuing operations, compared to breakeven operating results and diluted loss per share of $0.04 from continuing operations in Q2 2013. The Company had a cash balance of $114.7 million as of June 30, 2014.
On a sequential basis, net revenue and gross margin in Q2 2014 were essentially flat with Q1 2014’s performance. Within Imation’s Tiered Storage and Security Solutions (TSS) segment, the Company’s Nexsan™ and IronKey™ product portfolios reported revenue increases over Q1 2014. TSS gross margins also rose sequentially. Within Consumer Storage and Accessories (CSA), Audio and Accessories Q2 2014 revenue grew 10.4 percent from Q2 2013 and also grew sequentially from Q1 2014.
Imation’s CEO Mark Lucas commented, “We are encouraged by the progress we saw in the second quarter of 2014. Overall, our total revenue decline rate moderated, and we again showed continued improvement in Imation’s expense levels. We still have a lot of work in front of us, but our growth businesses are gaining momentum, and market share in our legacy businesses remains stable.”
Business Segment Overview
Imation’s TSS revenue decreased 11.9 percent in Q2 2014 from the prior year; gross margin was 18.9 percent compared with 21.7 percent a year ago. TSS gross margin rose sequentially to 18.9 percent in Q2 2014 from 18.3 percent in Q1 2014. Within TSS, Q2 2014 revenue for Imation’s Storage Solutions and Mobile Security totaled $29.5 million, up from $27.5 million in Q1 2014.