OCZ Technology ( OCZ) F4Q11 Earnings Call May 3, 2011 5:00 p.m. ET Executives Bonnie Mott – IR Director Ryan Petersen – CEO Arthur Knapp - CFO Analysts Rich Kugele - Needham and Company Aaron Rakers – Stiefel Nicolaus Alex Kurtz – Sterne, Agee Christian Schwab – Craig-Hallum Capital Richard Shannon – Northland Capital Presentation Operator
Some of the factors that could cause actual results to differ are discussed in the reports filed with the SEC. These documents are available on OCZ's website, www.ocztechnology.com.With that, it is now my pleasure to turn the call over to Ryan Petersen. Ryan Petersen Thanks, and good day to all of you. We’re pleased with the results during fiscal 2011, as we have transformed this company from a simple DRAM module business to a leader in the virgining SSD market. We were able to introduce an array of leading-edge products, drive demand in new markets, and exit from our unprofitable DRAM module products ahead of plan. When looking at the core SSD business, our fourth quarter was the best quarterly performance in the history of OCZ, in terms of both revenue and profitability. And we believe that we’re well positioned to take advantage of continued secular growth in the market. The additional working capital provided through our financings in fiscal 2011, allowed us not only to increase manufacturing capacity and support increased demand for our SSD product, but to further advance our R&D and marketing efforts, positioning us well for the expected growth in the SSD market. We expect our current – our recent capital raise in April, which was completed after the end of our fiscal year, to further these efforts in fiscal 2012. As most successful companies are built on the experience, hard work, and dedication of their employees, management team, and Board of Directors, it’s worth noting that our recent success has elevated our company profile, allowing us to enhance our management team and Board of Directors. In the past 12 months, we’ve had several key additions to our management team, including Chief Sales Officer Richard Singh, who has helped drive the dramatic sales growth in quarter – in the third and fourth quarters, and the recent additions of Senior Vice President of Product Management, Steven Lee, and Indilinx’s co-founders Bumsoo Kim and Hyun Mo Chung who joined OCZ through the Indilinx acquisition.
I’ll discuss the acquisition in greater detail in just a moment.I’d also like to welcome Ralph Smith to our Board of Directors. Ralph is the CEO of PLX Technology, and shares the Global Semiconductor Alliance Emerging Company Council. His expertise in managing market-leading semiconductor companies is extremely valuable given our recent acquisition of Indilinx, and we look forward to his value contributions. In regards to our financial progress, as previously announced in the fourth quarter, net revenue totaled a record $64.4 million, of which 58.2 million or approximately 90% was generated from our SSD products, also a quarterly record. Our fourth quarter year-over-year SSD growth rate increased to 380%, even higher than the 325% year-over-year growth rate we reported in the third quarter. On a sequential basis, the 58.2 million of SSD revenue in Q4 grew 40% over third quarter’s revenue of – or our SSD revenue, 41.5 million. We achieved overall revenues of 190.1 million in fiscal 2011, of which 133.2 million were SSD revenues. Of particular importance, 100 million or 75% of SSD revenues were generated in the second half of the fiscal year. And while seasonality is always a factor, this rapid growth was facilitated by the working capital increases from our financings completed in fiscal ’11, which allowed us to better fill pre-existing demand for our SSD products. Taking a look at our SSD revenue by region, it’s important to note that regional data is based on the delivery destination. For example, large OEM clients who manufacture in Asia or Europe, and export the final product could be recognized as APAC or EU sales, based on the delivery destination specified by the client. Thus, we would expect that the majority of our revenue will continue to be shown as outside of the U.S. in line with hard drive industry trends.
The highlights, keep [inaudible] on regional growth, as SSD sales in North America, increased 160% to $19.4 million in the fourth quarter, up from just 7.5 million in the fourth quarter of last year.Read the rest of this transcript for free on seekingalpha.com