Quantum Corporation has released an update to investors regarding expected revenue levels for the fourth quarter, loan agreement amendments and the status of its supply chain, the company announced on Monday.
“We remain confident we have a business model that can weather the delays and disruption of a challenging pandemic. We also believe this crisis will be a driver for significant innovation and we continue to work closely with our customers on what this means for their work environments in the months and years ahead,” said Jamie Lerner, Quantum’s chairman and CEO.
Quantum has reported the company now expects revenues of approximately $87 million for the fourth fiscal quarter ended March 31, 2020. The new level of revenue reflects the impact of the uncertainties associated with the COVID-19 pandemic and is within 8 percent of the midpoint of the previously provided guidance range of $90 to $100 million.
Based on Quantum’s preliminary results for the fourth fiscal quarter combined with the uncertainties in estimating future business levels, management proactively entered into discussions with its lenders to ensure the current credit facilities enabled the flexibility to provide financial support during this challenging period and beyond.
The company and the term loan lenders have agreed to amend the term loan agreement. Included in this amendment was a reduction in the cash interest payment to 7.5 percent from 12 percent for the fourth fiscal quarter, with the remaining portion being paid-in-kind, and a deferral of the loan amortization payment until next quarter resulting in an immediate cash savings of approximately $2.3 million.
Quantum and its lenders intend to work to further amend the credit agreements by May 15, 2020 to provide a framework that will support the company beyond the current period.
“While customer order delays resulting from the COVID-19 pandemic impacted our ability to reach our previously issued guidance, the Quantum team executed well and navigated unprecedented conditions at the end of the quarter while proactively working with our lenders to ensure our credit facilities remained aligned to the current dynamic business environment,” commented Mike Dodson, Quantum’s chief financial officer.
The reduced capacity within and across freight lanes has caused late deliveries from re-routes and mis-shipments, as well as increased expedite and other charges to deliver and receive products. Quantum has experienced minimal impact on product availability, although future capacity constraints across the network due to lost capacity from factory down time, closures, as well as reduced staff and demand signal fluctuations are expected to impact product availability in the months and possibly quarters to come.
“We continue to diligently navigate the rapidly changing economic landscape and remain well equipped to execute our long-term strategic plan. Quantum equipment is relied on in disaster and crisis situations, and our solutions are core to many of our customers’ business continuity,” added Lerner
Quantum technology and services help customers capture, create and share digital content – and preserve and protect it for decades. With solutions built for every stage of the data lifecycle, Quantum’s platforms provide the fastest performance for high-resolution video, images, and industrial IoT. That’s why the world’s leading entertainment companies, sports franchises, researchers, government agencies, enterprises, and cloud providers are making the world happier, safer, and smarter on Quantum.