SOURCE: Lantronix, Inc.

Lantronix, Inc.

April 30, 2014 16:05 ET

Lantronix Reports Fiscal 2014 Third Quarter Financial Results

Company Reports GAAP Net Loss of $0.01 per Share and Non-GAAP Net Income of $0.02 per Share

IRVINE, CA--(Marketwired - Apr 30, 2014) - Lantronix, Inc. (the "Company") (NASDAQ: LTRX) a leading global provider of smart IoT (Internet of Things) solutions, today reported results for its third fiscal quarter ended March 31, 2014.

Financial Highlights:

  • Net revenue of $11.6 million
  • Gross profit margin of 50.9%; third consecutive quarter of improvement
  • GAAP net loss of $(130,000), or ($0.01) per share
  • Non-GAAP net income of $331,000, or $0.02 per share; third consecutive quarter of non-GAAP net income

Operational and Product Highlights:

  • Efforts to expand sales channels contributed to a 15% increase in Enterprise Solutions sales internationally for the nine months ended March 31, 2014 as compared to the nine months ended March 31, 2013.

  • OEM Modules sales benefitted from the first major design win of new xPico® embedded device server moving to production with a Tier 1 customer in the security vertical.

  • In March 2014, the Company began shipping xPrintServer® Cloud Print Edition -- the newest addition to its award-winning mobile printing product family. Currently the only Google Cloud Print certified print server, xPrintServer Cloud Print Edition allows users to print to network and USB printers wirelessly from Chromebooks, laptops, Kindle Fire, and Android smartphone and tablets.

  • In February 2014, at the Embedded World conference in Nürnberg, Germany, the Company provided a live demonstration of Lantronix configuration firmware that enables delivery of meaningful machine data to the Google Universal Analytics service from devices using Lantronix PremierWave® and xSenso® products. At the conference, Lantronix also showcased M2M enabling solutions including an IoT-powered humanoid robot, a quad copter drone, and xPico® Wi-Fi solutions supporting Raspberry Pi and Arduino platforms.

  • In February 2014, Lantronix announced an agreement with Arrow Electronics, a leading global provider of electronic components and technology solutions. Under the agreement, Arrow Electronics is extending its sales, marketing and distribution support for Lantronix products throughout the Europe, Middle East and Africa (EMEA) region. Arrow Electronics is a long-standing distributor of Lantronix products in the North America and Asia Pacific regions. 

  • In February 2014, the Company launched Lantronix professional services to assist customers in the development and deployment of custom M2M (machine-to-machine) applications and solutions. The range of services spans from minor engineering to large, enterprise-level projects, including developing fully-customized versions and deployments of Lantronix products.

"Our on-going new product introductions and sales expansion initiatives contributed to Lantronix achieving 6% sequential revenue growth and our third consecutive quarter of non-GAAP net income during the March quarter," said Kurt Busch, Lantronix president and CEO. "We are encouraged by the progress we are making on our growth initiatives, which are creating increased revenue and opportunities from both existing and new Tier 1 customers worldwide."

Financial Results for the Third Quarter of Fiscal 2014

Net revenue was $11.6 million for the third quarter of fiscal 2014, a decrease of $571,000, compared to $12.2 million for the third quarter of fiscal 2013 and an increase of $625,000, compared to $11.0 million for the second quarter of fiscal 2014.

Gross profit margin was 50.9% for the third quarter of fiscal 2014, compared to 46.2% for the third quarter of fiscal 2013 and 49.6% for the second quarter of fiscal 2014.

Operating expenses were $6.0 million for the third quarter of fiscal 2014, a decrease of $397,000, compared to $6.4 million for the third quarter of fiscal 2013 and an increase of $300,000, compared to $5.7 million for the second quarter of fiscal 2014. 

GAAP net loss for the third quarter of fiscal 2014 was $(130,000), or ($0.01) per share, compared to a GAAP net loss of $(801,000), or ($0.05) per share, for the third quarter of fiscal 2013 and a GAAP net loss of $(323,000) or ($0.02) per share, for the second quarter of fiscal 2014.

Non-GAAP net income for the third quarter of fiscal 2014 was $331,000, or $0.02 per share compared to non-GAAP net loss of $(388,000) or $(0.03) per share for the third quarter of fiscal 2013 and non-GAAP net income of $191,000, or $0.01 per share, for the second quarter of fiscal 2014. For additional information regarding our non-GAAP results, see "Discussion of Non-GAAP Financial Measures" below.

Cash and cash equivalents were $5.9 million as of March 31, 2014, an increase of $634,000, compared with $5.2 million as of June 30, 2013.

Conference Call and Webcast

Lantronix will host an investor conference call with a simultaneous audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its fiscal 2014 third quarter results. Those wishing to participate in the live conference call should dial 877-474-9506 (US) or 857-244-7559 (international) using passcode 95797593. A webcast will be available simultaneously via the investor relations section of the Company's website at www.lantronix.com.

A telephone replay will be available through May 7, 2014 by dialing 888-286-8010 (US) or 617-801-6888 (international) and entering passcode 86190554.

About Lantronix

Lantronix, Inc. (NASDAQ: LTRX) is a global leader of secure communication technologies that simplify access and communication with and between virtually any electronic device. Our smart connectivity solutions enable sharing data between devices and applications to empower businesses to make better decisions based on real-time information, and gain a competitive advantage by generating new revenue streams, improving productivity and increasing efficiency and profitability. Easy to integrate and deploy, Lantronix products remotely and securely connect electronic equipment via networks and the Internet. Founded in 1989, Lantronix products have applications in every industry, including medical, security, industrial and building automation, transportation, retail, POS, financial, government, consumer electronics, and IT/data center. The Company's headquarters are located in Irvine, California. For more information, visit www.lantronix.com. The Lantronix blog, http://www.lantronix.com/blog, features industry discussion and updates. To follow Lantronix on Twitter, please visit http://www.twitter.com/Lantronix.

Discussion of Non-GAAP Financial Measures
Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Management believes that non-GAAP operating expenses, non-GAAP net income (loss) and non-GAAP net income (loss) per share are important measures of the Company's business. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance.

Non-GAAP operating expenses consist of operating expenses excluding (i) share-based compensation and related payroll taxes and (ii) depreciation and amortization.

Non-GAAP net income (loss) consists of net income (loss) excluding (i) non-GAAP adjustments to operating expenses, (ii) interest income (expense), (iii) other income (expense), and (iv) income tax provision (benefit).

Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP net income (loss) per share, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which for GAAP purposes is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

Forward-Looking Statements
This news release contains forward-looking statements, including statements concerning our business plans, our financial and operating results, our product development strategies, and sales and marketing strategies. We have based our forward-looking statements on our current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition, results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this news release. Some of the risks and uncertainties that may cause actual results to differ from those expressed or implied in the forward-looking statements are described in "Risk Factors" in our Annual Report on Form 10-K and our Form 10-Qs filed with the Securities and Exchange Commission, or SEC, as well as in our other filings with the SEC. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of the Nasdaq Stock Market, LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.

© 2014 Lantronix, Inc. All rights reserved. Lantronix, PremierWave, xPico, xPrintServer and xSenso are registered trademarks of Lantronix, Inc. All other trademarks and trade names are the property of their respective holders.

   
LANTRONIX, INC.  
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
             
    March 31,     June 30,  
    2014     2013  
Assets                
Current assets:                
  Cash and cash equivalents   $ 5,877     $ 5,243  
  Accounts receivable, net     3,887       2,599  
  Contract manufacturers' receivable     566       607  
  Inventories, net     7,601       8,741  
  Prepaid expenses and other current assets     470       431  
    Total current assets     18,401       17,621  
Property and equipment, net     1,411       1,687  
Goodwill     9,488       9,488  
Deferred tax assets     476       476  
Other assets     117       87  
    Total assets   $ 29,893     $ 29,359  
                 
Liabilities and stockholders' equity                
Current liabilities:                
  Accounts payable   $ 4,052     $ 2,870  
  Accrued payroll and related expenses     1,872       1,516  
  Warranty reserve     157       193  
  Short-term debt     -       167  
  Deferred tax liabilities     476       476  
  Other current liabilities     3,105       3,877  
    Total current liabilities     9,662       9,099  
Long-term capital lease obligations     17       54  
Other non-current liabilities     161       249  
    Total liabilities     9,840       9,402  
                 
Commitments and contingencies                
                 
Stockholders' equity:                
  Common stock     1       1  
  Additional paid-in capital     204,687       203,871  
  Accumulated deficit     (185,006 )     (184,286 )
  Accumulated other comprehensive income     371       371  
    Total stockholders' equity     20,053       19,957  
    Total liabilities and stockholders' equity   $ 29,893     $ 29,359  
                     
                     
   
LANTRONIX, INC.  
Unaudited Consolidated Statements of Operations  
(In thousands, except per share data)  
   
   
    Three Months Ended     Nine Months Ended  
    March 31,     December 31,     March 31,     March 31,  
    2014     2013     2013     2014     2013  
Net revenue (1)   $ 11,593     $ 10,968     $ 12,164     $ 33,444     $ 35,528  
Cost of revenue     5,694       5,531       6,547       16,718       18,407  
Gross profit     5,899       5,437       5,617       16,726       17,121  
Operating expenses:                                        
  Selling, general and administrative     4,248       4,062       4,685       12,258       13,672  
  Research and development     1,757       1,643       1,717       5,081       4,991  
Total operating expenses     6,005       5,705       6,402       17,339       18,663  
Loss from operations     (106 )     (268 )     (785 )     (613 )     (1,542 )
Interest expense, net     (6 )     (7 )     (14 )     (22 )     (45 )
Other income (expense), net     (2 )     (22 )     10       (30 )     (8 )
Loss before income taxes     (114 )     (297 )     (789 )     (665 )     (1,595 )
Provision for income taxes     16       26       12       55       48  
Net loss and comprehensive loss   $ (130 )   $ (323 )   $ (801 )   $ (720 )   $ (1,643 )
Net loss per share (basic and diluted)   $ (0.01 )   $ (0.02 )   $ (0.05 )   $ (0.05 )   $ (0.11 )
Weighted-average common shares (basic and diluted)     14,686       14,621       14,580       14,629       14,572  
Net revenue from related parties   $ 79     $ 180     $ 221     $ 452     $ 894  
                                         
(1) Includes net revenue from related parties                    
 
 
   
LANTRONIX, INC.  
Unaudited Reconciliation of Non-GAAP Adjustments  
(In thousands, except per share data)  
   
    Three Months Ended     Nine Months Ended  
    March 31,     December 31,     March 31,     March 31,  
    2014     2013     2013     2014     2013  
                                         
GAAP net loss   $ (130 )   $ (323 )   $ (801 )   $ (720 )   $ (1,643 )
  Non-GAAP adjustments:                                        
    Cost of revenue:                                        
      Share-based compensation     11       11       12       35       33  
      Depreciation and amortization     122       124       91       363       293  
    Total adjustments to cost of revenue     133       135       103       398       326  
    Selling, general and adminstrative:                                        
      Share-based compensation     144       159       138       461       425  
      Employer portion of withholding taxes on stock grants     -       -       -       -       1  
      Depreciation and amortization     83       93       100       286       326  
    Total adjustments to selling, general and administrative     227       252       238       747       752  
    Research and development:                                        
      Share-based compensation     54       52       53       166       182  
      Employer portion of withholding taxes on stock grants     -       -       -       -       2  
      Depreciation and amortization     23       20       3       44       10  
    Total adjustments to research and development     77       72       56       210       194  
  Total non-GAAP adjustments to operating expenses     304       324       294       957       946  
  Interest expense, net     6       7       14       22       45  
  Other income (expense), net     2       22       (10 )     30       8  
  Provision for income taxes     16       26       12       55       48  
Total non-GAAP adjustments     461       514       413       1,462       1,373  
Non-GAAP net income (loss)   $ 331     $ 191     $ (388 )   $ 742     $ (270 )
                                         
Non-GAAP net income (loss) per share (diluted)   $ 0.02     $ 0.01     $ (0.03 )   $ 0.05     $ (0.02 )
                                         
Denominator for GAAP net income (loss) per share (diluted)     14,686       14,621       14,580       14,629       14,572  
Non-GAAP adjustment     662       83       -       199       -  
Denominator for non-GAAP net income (loss) per share (diluted)     15,348       14,704       14,580       14,828       14,572  
                                         
GAAP operating expenses   $ 6,005     $ 5,705     $ 6,402     $ 17,339     $ 18,663  
Non-GAAP adjustments to operating expenses     (304 )     (324 )     (294 )     (957 )     (946 )
Non-GAAP operating expenses   $ 5,701     $ 5,381     $ 6,108     $ 16,382     $ 17,717  
                                         
                                         
 
LANTRONIX, INC.
Unaudited Net Revenues by Product Line and Region
(In thousands)
 
 
    Three Months Ended   Nine Months Ended    
    March 31,   December 31,   March 31,   March 31,    
    2014   2013   2013   2014   2013    
OEM Modules   $ 6,091   $ 4,696   $ 6,321   $ 16,005   $ 17,655      
Enterprise Solutions     5,502     6,272     5,843     17,439     17,873      
  Net revenue   $ 11,593   $ 10,968   $ 12,164   $ 33,444   $ 35,528      
                                     
                                     
        Three Months Ended March 31,
      2014     2013
      OEM
Modules
    Enterprise
Solutions
    Total     OEM
Modules
    Enterprise
Solutions
    Total
Americas   $ 2,409   $ 3,475   $ 5,884   $ 2,371   $ 4,130   $ 6,501
EMEA     2,241     1,455     3,696     2,376     1,230     3,606
Asia Pacific     665     319     984     646     218     864
Japan     776     253     1,029     928     265     1,193
    $ 6,091   $ 5,502   $ 11,593   $ 6,321   $ 5,843   $ 12,164
                                     
                                     
                                     
      Nine Months Ended March 31,
      2014     2013
      OEM
Modules
    Enterprise
Solutions
    Total     OEM
Modules
    Enterprise
Solutions
    Total
Americas   $ 6,005   $ 11,465   $ 17,470   $ 6,652   $ 12,657   $ 19,309
EMEA     6,184     3,855     10,039     6,668     3,590     10,258
Asia Pacific     1,924     1,151     3,075     1,844     994     2,838
Japan     1,892     968     2,860     2,491     632     3,123
    $ 16,005   $ 17,439   $ 33,444   $ 17,655   $ 17,873   $ 35,528
                                     
                                     

Contact Information

  • Investor Relations Contacts:
    Lantronix, Inc.
    Jeremy Whitaker
    Chief Financial Officer
    (949) 453-3990

    E.E. Wang
    investors@lantronix.com
    (949) 614-5879