SOURCE: Lantronix, Inc.

Lantronix, Inc.

January 30, 2014 16:05 ET

Lantronix Reports Second Quarter Fiscal 2014 Financial Results

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

IRVINE, CA--(Marketwired - Jan 30, 2014) -  Lantronix, Inc. (the "Company") (NASDAQ: LTRX), a global provider of smart networking and communications solutions for machine-to-machine (M2M) applications, today reported results for its second fiscal quarter ended December 31, 2013.

Financial Highlights:

  • Net revenue of $11.0 million
  • Gross profit as a percentage of net revenue of 49.6%
  • GAAP net loss of $(323,000), or ($0.02) per share
  • Non-GAAP net income of $191,000, or $0.01 per share
  • Second consecutive quarter of non-GAAP net income and positive cash flow from operations
  • Sequential revenue growth of 11% for Enterprise Solutions product line

Operational and Product Highlights:

  • In January 2014, the Company announced the launch of the xPrintServer® Cloud Print Edition, currently the only Google Cloud Print certified print server. The latest addition to Lantronix' award-winning mobile printing solutions allows users to print to their installed base of network and USB printers from their Google Cloud Print enabled devices, including Chromebooks and Android smartphones.

  • During the second quarter of fiscal 2014, the Company announced several new product collaborations, including:
    • A partnership with Bixolon, a leading manufacturer of receipt and Auto ID printers, to deliver a mobile printing solution for retail and point of sale customers that utilizes Lantronix' award-winning xPrintServer® products.
    • A project with Superwinch, a leading manufacturer of consumer and industrial winches, to demonstrate an innovative mobile winch app powered by the Lantronix xPico® Wi-Fi module at SEMA 2013, the world's premier automotive specialty product trade event.
    • The xPico® Wi-Fi Tower Module, designed specifically for the Freescale Tower™ System. The design kit was developed in collaboration with Freescale Semiconductor, a global leader in embedded processing solutions for the automotive, consumer, industrial and networking markets.

  • In December 2013, Lantronix launched the XPort® Pro Lx6 embedded device server, the newest addition to its XPort Pro family. The new product allows OEM manufacturers to quickly embed their products with easy-to-deploy, secure and robust device connectivity that is Internet Protocol v6 (IPv6) ready.

"The December quarter marked our second consecutive quarter of non-GAAP net income and sequential quarterly growth in sales of our Enterprise Solutions product line as a result of both new customer acquisitions and increased revenue contribution from several of our new Enterprise Solution product families," said Kurt Busch, Lantronix president and CEO. "We continue to be pleased with the steady progress of our new OEM Module product families and as customer design wins ramp to production, we expect to reverse the revenue decline in this product line."

Financial Results for the Second Quarter of Fiscal 2014
Net revenue was $11.0 million for the second quarter of fiscal 2014, a decrease of $1.2 million, compared to $12.2 million for the second quarter of fiscal 2013 and an increase of $85,000, compared to $10.9 million for the first quarter of fiscal 2014. The year-over-year decline in net revenue was primarily due to a decrease in sales of mature product families.

Gross profit as a percentage of net revenue was 49.6% for the second quarter of fiscal 2014, compared to 49.6% for the second quarter of fiscal 2013 and 49.5% for the first quarter of fiscal 2014.

Operating expenses were $5.7 million for the second quarter of fiscal 2014, a decrease of $679,000, compared to $6.4 million for the second quarter of fiscal 2013 and an increase of $76,000, compared to $5.6 million for the first quarter of fiscal 2014.

GAAP net loss for the second quarter of fiscal 2014 was $(323,000), or ($0.02) per share, compared to a GAAP net loss of $(412,000), or ($0.03) per share, for the second quarter of fiscal 2013 and a GAAP net loss of $(267,000) or ($0.02) per share, for the first quarter of fiscal 2014. 

Non-GAAP net income for the second quarter of fiscal 2014 was $191,000, or $0.01 per share compared to non-GAAP net income of $70,000 or $0.00 per share for the second quarter of fiscal 2013 and a non-GAAP net income of $220,000, or $0.01 per share, for the first 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 $6.1 million as of December 31, 2013, an increase of $855,000, compared with $5.2 million as of June 30, 2013.

Conference Call and Webcast

Lantronix will host a conference call and webcast today at 2:00 p.m. Pacific Standard Time (5:00 p.m. Eastern Standard Time) to discuss its second quarter fiscal 2014 financial results. Those wishing to participate in the live call should dial 866-318-8616 (international dial-in 617-399-5135) using the passcode 14576908. 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 7, 2014 by dialing 888-286-8010 (international dial-in 617-801-6888) and entering passcode 71047798.

About Lantronix

Lantronix, Inc. (NASDAQ: LTRX) is a global provider of smart networking and communications solutions for machine-to-machine (M2M) applications. Lantronix OEM Modules and Enterprise Solutions enable machines, devices and sensors to be securely accessed, managed, monitored and controlled. Easy to integrate and deploy, Lantronix solutions enable customers to capitalize on the convergence of mobility with M2M systems and to participate in the Internet of Things (IoT). Lantronix solutions have applications across many industries including, security, industrial and building automation, transportation, energy, retail, financial, government, consumer electronics, medical and information technology. Founded in 1989, Lantronix is headquartered in Irvine, California. For more information, visit www.lantronix.com or follow us at 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, and our product development 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. Lantronix, xPico, XPort and xPrintServer are registered trademarks of Lantronix, Inc. All other trademarks and trade names are the property of their respective holders. Specifications subject to change without notice. All rights reserved.

   
   
LANTRONIX, INC.  
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
             
    December 31,     June 30,  
    2013     2013  
Assets            
Current assets:                
  Cash and cash equivalents   $ 6,098     $ 5,243  
  Accounts receivable, net     2,749       2,599  
  Contract manufacturers' receivable     424       607  
  Inventories, net     8,135       8,741  
  Prepaid expenses and other current assets     545       431  
    Total current assets     17,951       17,621  
Property and equipment, net     1,499       1,687  
Goodwill     9,488       9,488  
Deferred tax assets     476       476  
Other assets     99       87  
    Total assets   $ 29,513     $ 29,359  
                 
Liabilities and stockholders' equity                
Current liabilities:                
  Accounts payable   $ 3,770     $ 2,870  
  Accrued payroll and related expenses     1,705       1,516  
  Warranty reserve     176       193  
  Short-term debt     -       167  
  Deferred tax liabilities     476       476  
  Other current liabilities     3,237       3,877  
    Total current liabilities     9,364       9,099  
Long-term capital lease obligations     29       54  
Other non-current liabilities     199       249  
      Total liabilities     9,592       9,402  
                 
Commitments and contingencies                
                 
Stockholders' equity:                
  Common stock     1       1  
  Additional paid-in capital     204,425       203,871  
  Accumulated deficit     (184,876 )     (184,286 )
  Accumulated other comprehensive income     371       371  
    Total stockholders' equity     19,921       19,957  
    Total liabilities and stockholders' equity   $ 29,513     $ 29,359  
                 
                 
                 
LANTRONIX, INC.  
Unaudited Consolidated Statements of Operations  
(In thousands, except per share data)  
           
Three Months Ended     Six Months Ended  
  December     September     December     December 31,  
   31, 2013      30, 2013      31, 2012     2013     2012  
Net revenue (1) $ 10,968     $ 10,883     $ 12,162     $ 21,851     $ 23,364  
Cost of revenue   5,531       5,493       6,130       11,024       11,860  
Gross profit   5,437       5,390       6,032       10,827       11,504  
Operating expenses:                                      
  Selling, general and administrative   4,062       3,948       4,719       8,010       8,987  
  Research and development   1,643       1,681       1,665       3,324       3,274  
Total operating expenses   5,705       5,629       6,384       11,334       12,261  
Loss from operations   (268 )     (239 )     (352 )     (507 )     (757 )
Interest expense, net   (7 )     (9 )     (16 )     (16 )     (31 )
Other income (expense), net   (22 )     (6 )     (23 )     (28 )     (18 )
Loss before income taxes   (297 )     (254 )     (391 )     (551 )     (806 )
Provision for income taxes   26       13       21       39       36  
Net loss and comprehensive loss $ (323 )   $ (267 )   $ (412 )   $ (590 )   $ (842 )
Net loss per share (basic and diluted) $ (0.02 )   $ (0.02 )   $ (0.03 )   $ (0.04 )   $ (0.06 )
Weighted-average common shares (basic and diluted)   14,621       14,580       14,578       14,600       14,568  
Net revenue from related parties $ 180     $ 193     $ 381     $ 373     $ 673  
                                       
(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     September     December     December 31,  
  31, 2013     30, 2013     31, 2012     2013     2012  
                                       
GAAP net loss $ (323 )   $ (267 )   $ (412 )   $ (590 )   $ (842 )
  Non-GAAP adjustments:                                      
    Cost of revenue:                                      
      Share-based compensation   11       13       10       24       21  
      Depreciation and amortization   124       117       103       241       202  
    Total adjustments to cost of revenue   135       130       113       265       223  
    Selling, general and adminstrative:                                      
      Share-based compensation   159       158       141       317       287  
      Employer portion of withholding taxes on stock grants   -       -       -       -       1  
      Depreciation and amortization   93       110       110       203       226  
    Total adjustments to selling, general and administrative   252       268       251       520       514  
    Research and development:                                      
      Share-based compensation   52       60       55       112       129  
      Employer portion of withholding taxes on stock grants   -       -       -       -       2  
      Depreciation and amortization   20       1       3       21       7  
    Total adjustments to research and development   72       61       58       133       138  
  Total non-GAAP adjustments to operating expenses   324       329       309       653       652  
  Interest expense, net   7       9       16       16       31  
  Other income (expense), net   22       6       23       28       18  
  Provision for income taxes   26       13       21       39       36  
Total non-GAAP adjustments   514       487       482       1,001       960  
Non-GAAP net income $ 191     $ 220     $ 70     $ 411     $ 118  
                                       
Non-GAAP net income per share (diluted) $ 0.01     $ 0.01     $ 0.00     $ 0.03     $ 0.01  
                                       
Denominator for GAAP net income (loss) per share (diluted)   14,621       14,580       14,578       14,600       14,568  
Non-GAAP adjustment   83       87       50       50       92  
Denominator for non-GAAP net income per share (diluted)   14,704       14,667       14,628       14,650       14,660  
                                       
GAAP operating expenses $ 5,705     $ 5,629     $ 6,384     $ 11,334     $ 12,261  
Non-GAAP adjustments to operating expenses   (324 )     (329 )     (309 )     (653 )     (652 )
Non-GAAP operating expenses $ 5,381     $ 5,300     $ 6,075     $ 10,681     $ 11,609  
                                       
                                       
                                       
LANTRONIX, INC.
Unaudited Net Revenues by Product Line and Region
(In thousands)
                       
                       
  Three Months Ended   Six Months Ended    
  December   September   December   December 31,    
  31, 2013   30 ,2013   31, 2012   2013   2012    
OEM Modules $ 4,696   $ 5,218   $ 5,546   $ 9,914   $ 11,334      
Enterprise Solutions   6,272     5,665     6,616     11,937     12,030      
  Net revenue $ 10,968   $ 10,883   $ 12,162   $ 21,851   $ 23,364      
                                   
                                   
                                   
  Three Months Ended December 31,
  2013   2012
  OEM
Modules
  Enterprise
Solutions
  Total   OEM
Modules
  Enterprise
Solutions
  Total
Americas $ 1,732   $ 4,304   $ 6,036   $ 2,220   $ 4,633   $ 6,853
EMEA   1,819     1,194     3,013     2,140     1,435     3,575
Japan   512     334     846     610     152     762
Asia Pacific   633     440     1,073     576     396     972
  $ 4,696   $ 6,272   $ 10,968   $ 5,546   $ 6,616   $ 12,162
                                   
                                   
                                   
  Six Months Ended December 31,
  2013   2012
  OEM
Modules
  Enterprise
Solutions
  Total   OEM
Modules
  Enterprise
Solutions
  Total
Americas $ 3,596   $ 7,990   $ 11,586   $ 4,281   $ 8,527   $ 12,808
EMEA   3,943     2,400     6,343     4,292     2,360     6,652
Japan   1,116     715     1,831     1,563     367     1,930
Asia Pacific   1,259     832     2,091     1,198     776     1,974
  $ 9,914   $ 11,937   $ 21,851   $ 11,334   $ 12,030   $ 23,364
                                   

Contact Information

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

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