SOURCE: Lantronix, Inc.

Lantronix, Inc.

January 29, 2015 16:05 ET

Lantronix Reports Fiscal 2015 Second Quarter Financial Results

IRVINE, CA--(Marketwired - Jan 29, 2015) - Lantronix, Inc. (the "Company") (NASDAQ: LTRX) a global provider of smart IoT (Internet of Things) solutions, today reported results for its fiscal 2015 second quarter ended December 31, 2014.

Financial Highlights for the Second Quarter of Fiscal 2015:

  • Net revenue of $10.7 million
  • Gross profit margin of 48.2%
  • GAAP net loss of $632,000 or $0.04 per share
  • Non-GAAP net loss of $99,000 or $0.01 per share
  • Cash and cash equivalents of $5.4 million as of December 31, 2014

"Revenue for the second fiscal quarter was down 2% year-over-year and 7% sequentially primarily as a result of delays in closing project-based opportunities," said Kurt Busch, Lantronix president and CEO. "While we are disappointed with this quarter's results, our continued progress in growing new product sales was instrumental in delivering net revenue growth of 2% for the six month period ended December 31, 2014. We believe that our year-to-date progress combined with our expanding engagements with Tier One accounts will enable us to achieve our fiscal 2015 goals."

Operational and Product Highlights for the Second Quarter of Fiscal 2015:

  • In October 2014, the Company launched the industry's first modular console manager, the SLC™ 8000. Featuring a groundbreaking design that allows for deployment customization and scalability, the SLC 8000 is designed to help organizations reduce deployment and management costs by providing secure, centralized out-of-band management for most IT equipment.
  • In November 2014, Lantronix announced Python support for its PremierWave® family of intelligent gateways. Python is a dynamic object-oriented programming language that is rapidly becoming a standard for creating and deploying industrial IoT applications.
  • In December 2014, the Company announced that Torquing Group, a developer of autonomous intelligent nano unmanned aerial systems, had selected the Lantronix xPico® Wi-Fi module to provide secure and direct connectivity from its first consumer nano drone, the ZANO, to both iOS and Android devices.
  • In January 2015, the Company announced that Konica Minolta added Lantronix xPrintServer® Cloud Print edition mobile printing solution to its EnvisionIT portfolio of mobile solutions.

Financial Results for the Second Quarter of Fiscal Year 2015

Net revenue was $10.7 million for the second quarter of fiscal 2015, a decrease of $233,000, compared with $11.0 million for the second quarter of fiscal 2014 and a decrease of $801,000 compared with $11.5 million for the first quarter of fiscal 2015. The sequential and year-over-year decrease in net revenue was primarily due to delays in closing project-based opportunities. Year-over-year results were partially offset by growth in our new products. 

Gross profit as a percentage of net revenue was 48.2% for the second quarter of fiscal 2015, compared with 49.6% for the second quarter of fiscal 2014 and 48.5% for the first quarter of fiscal 2015. Gross profit as a percentage of revenue was lower primarily due to changes in our product mix.

Operating expenses were $5.8 million for the second quarter of fiscal 2015, compared with $5.7 million for the second quarter of fiscal 2014 and $5.8 million for the first quarter of fiscal 2015.

GAAP net loss for the second quarter of fiscal 2015 was $632,000 or $0.04 per share, compared with GAAP net loss of $323,000 or $0.02 per share, for the second quarter of fiscal 2014 and a GAAP net loss of $262,000 or $0.02 per share, for the first quarter of fiscal 2015. 

Non-GAAP net loss for the second quarter of fiscal 2015 was $99,000 or $0.01 per share, compared with non-GAAP net income of $191,000 or $0.01 per share, for the second quarter of fiscal 2014 and non-GAAP net income of $264,000 or $0.02 per share, for the first quarter of fiscal 2015. For additional information regarding our non-GAAP results, see "Discussion of Non-GAAP Financial Measures" below.

Cash and cash equivalents were $5.4 million as of December 31, 2014 compared with cash and cash equivalents of $6.3 million as of June 30, 2014.

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 2015 second quarter results. Those wishing to participate in the live conference call should dial 877-280-4958 (US) or 857-244-7315 (international) using passcode 14464214. 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 February 5, 2015 by dialing 888-286-8010 (US) or 617-801-6888 (international) and entering passcode 25853751. 

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 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 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 sales expansion efforts, our relationships with certain customers, and our projected operating and financial performance. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. 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 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.

© 2015 Lantronix, Inc. All rights reserved. Lantronix, PremierWave, xPico, and xPrintServer are registered trademarks, and SLC is a trademark, 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)  
           
  December 31,     June 30,  
  2014     2014  
Assets              
Current assets:              
  Cash and cash equivalents $ 5,407     $ 6,264  
  Accounts receivable, net   2,634       3,631  
  Contract manufacturers' receivable   393       359  
  Inventories, net   9,296       8,404  
  Prepaid expenses and other current assets   595       524  
    Total current assets   18,325       19,182  
Property and equipment, net   1,432       1,487  
Goodwill   9,488       9,488  
Deferred tax assets   400       400  
Other assets   99       125  
    Total assets $ 29,744     $ 30,682  
               
Liabilities and stockholders' equity              
Current liabilities:              
  Accounts payable $ 4,265     $ 4,547  
  Accrued payroll and related expenses   1,694       1,863  
  Warranty reserve   111       150  
  Deferred tax liabilities   400       400  
  Other current liabilities   3,302       3,418  
    Total current liabilities   9,772       10,378  
Long-term capital lease obligations   -       7  
Other non-current liabilities   75       131  
    Total liabilities   9,847       10,516  
               
Commitments and contingencies              
               
Stockholders' equity:              
  Common stock   1       1  
  Additional paid-in capital   205,638       205,013  
  Accumulated deficit   (186,113 )     (185,219 )
  Accumulated other comprehensive income   371       371  
    Total stockholders' equity   19,897       20,166  
    Total liabilities and stockholders' equity $ 29,744     $ 30,682  
               
   
   
LANTRONIX, INC.  
Unaudited Consolidated Statements of Operations  
(In thousands, except per share data)  
                             
                             
  Three Months Ended     Six Months Ended  
  December 31,     September 30,     December 31,     December 31,  
  2014     2014     2013     2014     2013  
Net revenue (1) $ 10,735     $ 11,536     $ 10,968     $ 22,271     $ 21,851  
Cost of revenue   5,565       5,937       5,531       11,502       11,024  
Gross profit   5,170       5,599       5,437       10,769       10,827  
Operating expenses:                                      
  Selling, general and administrative   3,992       4,075       4,062       8,067       8,010  
  Research and development   1,782       1,744       1,643       3,526       3,324  
Total operating expenses   5,774       5,819       5,705       11,593       11,334  
Loss from operations   (604 )     (220 )     (268 )     (824 )     (507 )
Interest expense, net   (3 )     (5 )     (7 )     (8 )     (16 )
Other income (expense), net   1       (21 )     (22 )     (20 )     (28 )
Loss before income taxes   (606 )     (246 )     (297 )     (852 )     (551 )
Provision for income taxes   26       16       26       42       39  
Net loss and comprehensive loss $ (632 )   $ (262 )   $ (323 )   $ (894 )   $ (590 )
Net loss per share (basic and diluted) $ (0.04 )   $ (0.02 )   $ (0.02 )   $ (0.06 )   $ (0.04 )
Weighted-average common shares (basic and diluted)   14,874       14,787       14,621       14,831       14,600  
Net revenue from related parties $ 112     $ 79     $ 180     $ 191     $ 373  
                                       
(1) Includes net revenue from related parties  
   
   
LANTRONIX, INC.  
Unaudited Reconciliation of Non-GAAP Adjustments  
(In thousands, except per share data)  
                             
  Three Months Ended     Six Months Ended  
  December 31,     September 30,     December 31,     December 31,  
  2014     2014     2013     2014     2013  
                                       
GAAP net loss $ (632 )   $ (262 )   $ (323 )   $ (894 )   $ (590 )
  Non-GAAP adjustments:                                      
    Cost of revenue:                                      
      Share-based compensation   16       20       11       36       24  
      Depreciation and amortization   149       139       124       288       241  
    Total adjustments to cost of revenue   165       159       135       324       265  
    Selling, general and adminstrative:                                      
      Share-based compensation   195       174       159       369       317  
      Depreciation and amortization   63       65       93       128       203  
    Total adjustments to selling, general and administrative   258       239       252       497       520  
    Research and development:                                      
      Share-based compensation   54       61       52       115       112  
      Employer portion of withholding taxes on stock grants   6       -       -       6       -  
      Depreciation and amortization   22       25       20       47       21  
    Total adjustments to research and development   82       86       72       168       133  
  Total non-GAAP adjustments to operating expenses   340       325       324       665       653  
  Interest expense, net   3       5       7       8       16  
  Other income (expense), net   (1 )     21       22       20       28  
  Provision for income taxes   26       16       26       42       39  
Total non-GAAP adjustments   533       526       514       1,059       1,001  
Non-GAAP net income (loss) $ (99 )   $ 264     $ 191     $ 165     $ 411  
                                       
Non-GAAP net income (loss) per share (diluted) $ (0.01 )   $ 0.02     $ 0.01     $ 0.01     $ 0.03  
                                       
Denominator for GAAP net income (loss) per share (diluted)   14,874       14,787       14,621       14,831       14,600  
Non-GAAP adjustment   -       396       83       485       50  
Denominator for non-GAAP net income (loss) per share (diluted)   14,874       15,183       14,704       15,316       14,650  
                                       
GAAP operating expenses $ 5,774     $ 5,819     $ 5,705     $ 11,593     $ 11,334  
Non-GAAP adjustments to operating expenses   (340 )     (325 )     (324 )     (665 )     (653 )
Non-GAAP operating expenses $ 5,434     $ 5,494     $ 5,381     $ 10,928     $ 10,681  
                                       
 
LANTRONIX, INC.
Unaudited Net Revenues by Product Line and Region
(In thousands)
                     
                     
        Three Months Ended       Six Months Ended  
    December 31,   September 30,   December 31,   December 31,
    2014   2014   2013   2014   2013
OEM Modules   $ 5,298   $ 5,628   $ 4,696   $ 10,926   $ 9,914
Enterprise Solutions     5,437     5,908     6,272     11,345     11,937
  Net revenue   $ 10,735   $ 11,536   $ 10,968   $ 22,271   $ 21,851
                               
                         
    Three Months Ended December 31,
    2014   2013
    OEM
Modules
  Enterprise
Solutions
  Total   OEM
Modules
  Enterprise
Solutions
  Total
Americas   $ 1,971   $ 3,662   $ 5,633   $ 1,732   $ 4,304   $ 6,036
EMEA     2,154     1,150     3,304     1,819     1,194     3,013
Asia Pacific     550     349     899     633     440     1,073
Japan     623     276     899     512     334     846
    $ 5,298   $ 5,437   $ 10,735   $ 4,696   $ 6,272   $ 10,968
                                     
                         
    Six Months Ended December 31,
    2014   2013
    OEM
Modules
  Enterprise
Solutions
  Total   OEM
Modules
  Enterprise
Solutions
  Total
Americas   $ 4,380   $ 7,812   $ 12,192   $ 3,596   $ 7,990   $ 11,586
EMEA     4,323     2,275     6,598     3,943     2,400     6,343
Asia Pacific     1,167     661     1,828     1,259     832     2,091
Japan     1,056     597     1,653     1,116     715     1,831
    $ 10,926   $ 11,345   $ 22,271   $ 9,914   $ 11,937   $ 21,851
                                     

Contact Information

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

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