SOURCE: Lantronix, Inc.

Lantronix, Inc.

August 21, 2014 16:05 ET

Lantronix Reports Fourth Quarter and Fiscal 2014 Financial Results

Company Reduces Fiscal 2014 GAAP Loss by 66% to $0.06 per Share; Reports Fiscal 2014 Non-GAAP Net Income of $0.06 per Share

IRVINE, CA--(Marketwired - Aug 21, 2014) -  Lantronix, Inc. (the "Company") (NASDAQ: LTRX) a leading global provider of smart IoT (Internet of Things) solutions, today reported results for its fourth quarter and fiscal year ended June 30, 2014.

Financial Highlights for Fiscal Year 2014:

  • Net revenue of $44.5 million
  • Gross profit margin of 50.0%
  • GAAP net loss of $933,000, or $0.06 per share
  • Non-GAAP net income of $948,000, or $0.06 per share
  • Cash and cash equivalents of $6.3 million as of the end of the fiscal year
  • Cash flow positive from operations for the fiscal year

Financial Highlights for the Fourth Quarter of Fiscal 2014:

  • Net revenue of $11.1 million
  • Gross profit margin of 50.1%
  • GAAP net loss of $213,000, or $0.01 per share
  • Non-GAAP net income of $206,000 or $0.01 per share (representing the fourth consecutive quarter of non-GAAP net income)

Operational and Product Highlights for the Fourth Quarter of Fiscal 2014:

  • The Company finalized the formation of a technology and marketing alliance with Server Technology, a leading producer of high-quality rack mount power distribution units and power monitoring solutions, which was announced in July 2014.

  • In June 2014, the Company launched its next-generation branch office manager, the SLB™ 8824 (220V). Designed specifically for the power requirements of international customers, the SLB enables IT administrators to securely manage remote servers and IT infrastructure equipment quickly and easily over the Internet. 

"We were pleased to achieve non-GAAP profitability and positive cash flow from operations for fiscal 2014. In addition, our ongoing sales expansion efforts contributed to an 11% increase in Enterprise Solutions sales internationally," said Kurt Busch, Lantronix president and CEO. "During the fourth quarter, we continued to see new product revenues grow both sequentially and year-over-year, a direct result of the growth initiatives we started in fiscal 2013 and successful sales efforts with several Tier One customers."

Busch continued: "As we move forward into fiscal 2015 we believe our pipeline of qualified opportunities and focused engagements with Tier One accounts, position us well to achieve long-term revenue growth and profitability."

Financial Results for Fiscal Year 2014

Net revenue was $44.5 million for fiscal 2014, a decrease of $2.1 million, compared to $46.7 million for fiscal 2013.

Gross profit margin was 50.0% for fiscal 2014, compared to 47.4% for fiscal 2013.

Operating expenses were $23.1 million for fiscal 2014, a decrease of $1.6 million, compared to $24.7 million for fiscal 2013. 

GAAP net loss for fiscal 2014 was $933,000, or $0.06 per share, compared to a GAAP net loss of $2.8 million, or $0.19 per share for fiscal 2013. 

Non-GAAP net income for fiscal 2014 was $948,000, or $0.06 per share compared to non-GAAP net loss of $935,000 or $0.06 per share for fiscal 2013. For additional information regarding our non-GAAP results, see "Discussion of Non-GAAP Financial Measures" below.

Cash and cash equivalents were $6.3 million as of June 30, 2014, an increase of $1.0 million, compared with $5.2 million as of June 30, 2013.

Financial Results for the Fourth Quarter of Fiscal 2014

Net revenue was $11.1 million for the fourth quarter of fiscal 2014, compared to $11.1 million for the fourth quarter of fiscal 2013 and $11.6 million for the third quarter of fiscal 2014.

Gross profit margin was 50.1% for the fourth quarter of fiscal 2014, compared to 44.7% for the fourth quarter of fiscal 2013 and 50.9% for the third quarter of fiscal 2014.

Operating expenses were $5.8 million for the fourth quarter of fiscal 2014, a decrease of $313,000, compared to $6.1 million for the fourth quarter of fiscal 2013 and a decrease of $243,000, compared to $6.0 million for the third quarter of fiscal 2014. 

GAAP net loss for the fourth quarter of fiscal 2014 was $213,000, or $0.01 per share, compared to a GAAP net loss of $1.1 million, or $0.08 per share, for the fourth quarter of fiscal 2013 and a GAAP net loss of $130,000 or $0.01 per share, for the third quarter of fiscal 2014. 

Non-GAAP net income for the fourth quarter of fiscal 2014 was $206,000, or $0.01 per share compared to non-GAAP net loss of $665,000 or $0.05 per share for the fourth quarter of fiscal 2013 and non-GAAP net income of $331,000, or $0.02 per share, for the third quarter of fiscal 2014. For additional information regarding our non-GAAP results, see "Discussion of Non-GAAP Financial Measures" below.

Conference Call and Webcast

Lantronix will host an investor conference call with a simultaneous audio webcast today at 2:00 p.m. Pacific Daylight Time (5:00 p.m. Eastern Daylight Time) to discuss its fourth quarter and fiscal 2014 results. Those wishing to participate in the live conference call should dial 866-825-3209 (US) or 617-213-8061 (international) using passcode 64637156. 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 August 28, 2014 by dialing 888-286-8010 (US) or 617-801-6888 (international) and entering passcode 16447251.

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.

© 2014 Lantronix, Inc. All rights reserved. Lantronix and xPico are registered trademarks of Lantronix, Inc. SLB is a trademark of Lantronix, Inc. All other trademarks and trade names are the property of their respective holders.

   
   
LANTRONIX, INC.  
Unaudited Consolidated Balance Sheets  
(In thousands, except share and par value data)  
   
    June 30,     June 30,  
    2014     2013  
                 
Assets                
Current Assets:                
  Cash and cash equivalents   $ 6,264     $ 5,243  
  Accounts receivable (net of allowance for doubtful accounts of $34 and $107 at June 30, 2014 and 2013, respectively)     3,631       2,599  
  Inventories, net     8,404       8,741  
  Contract manufacturers' receivable     359       607  
  Prepaid expenses and other current assets     524       431  
    Total current assets     19,182       17,621  
                 
  Property and equipment, net     1,487       1,687  
  Goodwill     9,488       9,488  
  Deferred tax assets     400       476  
  Other assets     125       87  
    Total assets   $ 30,682     $ 29,359  
                 
Liabilities and stockholders' equity                
Current Liabilities:                
  Accounts payable   $ 4,547     $ 2,870  
  Accrued payroll and related expenses     1,863       1,516  
  Warranty reserve     150       193  
  Short-term debt     -       167  
  Deferred tax liabilities     400       476  
  Other current liabilities     3,418       3,877  
    Total current liabilities     10,378       9,099  
  Long-term capital lease obligations     7       54  
  Other non-current liabilities     131       249  
    Total liabilities     10,516       9,402  
                 
Commitments and contingencies                
                 
Stockholders' equity:                
  Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding     -       -  
  Common stock, $0.0001 par value; 100,000,000 shares authorized; 14,787,158 and 14,579,764 shares issued and outstanding at June 30, 2014 and 2013, respectively     1       1  
  Additional paid-in capital     205,013       203,871  
  Accumulated deficit     (185,219 )     (184,286 )
  Accumulated other comprehensive income     371       371  
    Total stockholders' equity     20,166       19,957  
    Total liabilities and stockholders' equity   $ 30,682     $ 29,359  
                 
                 
                 
LANTRONIX, INC.  
Unaudited Consolidated Statements of Operations  
(In thousands, except per share data)  
                               
    Three Months Ended     Years Ended  
    June 30,     March 31,     June 30,     June 30,  
    2014     2014     2013     2014     2013  
                                         
Net revenue (1)   $ 11,102     $ 11,593     $ 11,127     $ 44,546     $ 46,655  
Cost of revenue     5,543       5,694       6,148       22,261       24,555  
Gross profit     5,559       5,899       4,979       22,285       22,100  
Operating expenses:                                        
  Selling, general and administrative     4,097       4,248       4,318       16,355       17,990  
  Research and development     1,665       1,757       1,757       6,746       6,748  
Total operating expenses     5,762       6,005       6,075       23,101       24,738  
Loss from operations     (203 )     (106 )     (1,096 )     (816 )     (2,638 )
Interest expense, net     (6 )     (6 )     (14 )     (28 )     (59 )
Other income (expense), net     2       (2 )     (10 )     (28 )     (18 )
Loss before income taxes     (207 )     (114 )     (1,120 )     (872 )     (2,715 )
Provision for income taxes     6       16       6       61       54  
Net loss   $ (213 )   $ (130 )   $ (1,126 )   $ (933 )   $ (2,769 )
                                         
Net loss per share (basic and diluted)   $ (0.01 )   $ (0.01 )   $ (0.08 )   $ (0.06 )   $ (0.19 )
                                         
Weighted average shares (basic and diluted)     14,707       14,686       14,580       14,657       14,574  
                                         
Net revenue from related parties   $ 72     $ 79     $ 164     $ 524     $ 1,058  
                                         
(1) Includes net revenue from related parties  
   
   
   
LANTRONIX, INC.  
Unaudited Reconciliation of Non-GAAP Adjustments  
(In thousands, except per share data)  
   
    Three Months Ended     Years Ended  
    June 30,     March 31,     June 30,     June 30,  
    2014     2014     2013     2014     2013  
                                         
GAAP net loss   $ (213 )   $ (130 )   $ (1,126 )   $ (933 )   $ (2,769 )
  Non-GAAP adjustments:                                        
    Cost of revenue:                                        
      Share-based compensation     10       11       11       45       44  
      Depreciation and amortization     109       122       107       472       400  
    Total adjustment to costs of revenue     119       133       118       517       444  
    Selling, general and administrative:                                        
      Share-based compensation and related witholding taxes     145       144       137       606       563  
      Depreciation and amortization     69       83       113       355       439  
    Total adjustments to selling, general and administrative     214       227       250       961       1,002  
    Research and development:                                        
      Share-based compensation and related witholding taxes     52       54       59       218       243  
      Depreciation and amortization     24       23       4       68       14  
    Total adjustments to research and development     76       77       63       286       257  
    Total non-GAAP adjustments to operating expenses     290       304       313       1,247       1,259  
  Interest expense, net     6       6       14       28       59  
  Other (income) expense, net     (2 )     2       10       28       18  
  Provision for income taxes     6       16       6       61       54  
Total Non-GAAP adjustments     419       461       461       1,881       1,834  
Non-GAAP net income (loss)   $ 206     $ 331     $ (665 )   $ 948     $ (935 )
                                         
Non-GAAP net income (loss) per share (diluted)   $ 0.01     $ 0.02     $ (0.05 )   $ 0.06     $ (0.06 )
                                         
                                         
Denominator for GAAP net income (loss) per share (diluted)     14,707       14,686       14,580       14,657       14,574  
Non-GAAP adjustment     413       662       -       253       -  
Denominator for non-GAAP net income (loss) per share (diluted)     15,120       15,348       14,580       14,910       14,574  
                                         
                                         
GAAP operating expenses   $ 5,762     $ 6,005     $ 6,075     $ 23,101     $ 24,738  
Non-GAAP adjustments to operating expenses     (290 )     (304 )     (313 )     (1,247 )     (1,259 )
Non-GAAP operating expenses   $ 5,472     $ 5,701     $ 5,762     $ 21,854     $ 23,479  
                                         
                                         
                                         
LANTRONIX, INC.
Unaudited Net Revenues by Product Line and Region
(In thousands)
                         
    Three Months Ended   Years Ended    
                June 30,    
    June 30, 2014   March 31,
2014
  June 30, 2013   2014   2013    
OEM Modules   $ 5,429   $ 6,091   $ 5,914   $ 21,434   $ 23,569      
Enterprise Solutions     5,673     5,502     5,213     23,112     23,086      
  Net revenue   $ 11,102   $ 11,593   $ 11,127   $ 44,546   $ 46,655      
                                     
                         
    Three Months Ended June 30,
    2014   2013
    OEM
Modules
  Enterprise
Solutions
  Total   OEM
Modules
  Enterprise
Solutions
  Total
Americas   $ 2,186   $ 4,160   $ 6,346   $ 2,193   $ 3,683   $ 5,876
EMEA     2,150     1,019     3,169     2,475     960     3,435
Asia Pacific     488     257     745     627     355     982
Japan     605     237     842     619     215     834
    $ 5,429   $ 5,673   $ 11,102   $ 5,914   $ 5,213   $ 11,127
                                     
                         
    Years Ended June 30,
    2014   2013
    OEM
Modules
  Enterprise
Solutions
  Total   OEM
Modules
  Enterprise
Solutions
  Total
Americas   $ 8,191   $ 15,625   $ 23,816   $ 8,845   $ 16,340   $ 25,185
EMEA     8,334     4,874     13,208     9,143     4,550     13,693
Asia Pacific     2,412     1,408     3,820     2,471     1,349     3,820
Japan     2,497     1,205     3,702     3,110     847     3,957
    $ 21,434   $ 23,112   $ 44,546   $ 23,569   $ 23,086   $ 46,655
                                     

Contact Information

  • Investor Relations Contacts:

    Lantronix, Inc.
    Jeremy Whitaker
    Chief Financial Officer
    (949) 453-3990

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