SOURCE: Lantronix, Inc.

Lantronix, Inc.

January 31, 2013 16:05 ET

Lantronix Reports Second Quarter Fiscal Year 2013 Financial Results

Company Reports Fourth Consecutive Quarter of Non-GAAP Income; Company Reports GAAP Net Loss of $(0.03) per Share and Non-GAAP Breakeven EPS

IRVINE, CA--(Marketwire - Jan 31, 2013) - Lantronix, Inc. (the "company") (NASDAQ: LTRX), a leading global provider of smart M2M connectivity solutions, today reported results for its second fiscal quarter ended December 31, 2012.

Financial Highlights

  • Net revenue of $12.2 million
  • Gross profit as a percentage of net revenue of 49.6%
  • GAAP net loss of $(412,000), or ($0.03) per share
  • Non-GAAP net income of $70,000, or breakeven per share

Operational Highlights

  • In October 2012, the company entered into an agreement with Ingram Micro Europe, a division of Ingram Micro Inc. (NYSE: IM), the largest global wholesale provider of technology products and supply chain management services, under which Ingram Micro Europe will provide advanced logistics, product delivery and distribution services for Lantronix throughout Europe. 
  • In November 2012, the company announced a sales and marketing partnership agreement with DataVision, New York's largest independent computer and video retailer, under which DataVision agreed to market and sell the Lantronix award-winning xPrintServer™ family of mobile printing solutions both online and through DataVision's flagship store.
  • In November 2012, OKI Data Americas, a leading provider of print management solutions, expanded its relationship with Lantronix to become the first printer manufacturer to resell the Lantronix xPrintServer mobile printing solution. 
  • In January 2013, the company entered into an agreement with Arrow Electronics, Inc. (NYSE: ARW), to extend Arrow's product sales programs, product delivery and distribution services for Lantronix throughout the Asia-Pacific (APAC) region.

Product Highlights

  • In October 2012, the company began shipping the xDirect™ device server -- a compact serial-to-Ethernet device server that provides quick and easy connectivity to virtually any device or machine with a serial interface. In November 2012, the company announced the launch and worldwide availability of its new vSLM™ -- the Virtual Secure Lantronix Management Appliance -- a software solution designed to enable IT (information technology) managers to seamlessly integrate and manage multiple pieces of IT equipment anywhere in the enterprise. 
  • In November 2012, the company launched and began shipping the xPrintServer -- Office Edition, an enterprise version of its award-winning mobile printing solution. 

"Our operational and financial results for the quarter ended December 31, 2012 reflect the continued progress we achieved in executing on our strategic plan and marked the fourth consecutive quarter of non-GAAP profitability," said Lantronix CEO Kurt Busch. "During the quarter, we continued to expand our distribution and sales relationships worldwide, launched three new products, and enhanced Lantronix' visibility in the marketplace through increased marketing efforts."

Financial Results for the Second Quarter of Fiscal 2013 Ended December 31, 2012

Net revenue was $12.2 million for the second quarter of fiscal 2013, an increase of $1.7 million or 16%, compared to $10.5 million for the second quarter of fiscal 2012 and an increase of $1.0 million or 9%, compared to $11.2 million for the first quarter of fiscal 2013. In large part, the sequential and year-over-year revenue growth was due to increased unit sales of our xPrintServer and SLC console server product families.

Gross profit as a percentage of net revenue was 49.6% for the second quarter of fiscal 2013, compared to 48.2% for the second quarter of fiscal 2012 and 48.8% for the first quarter of fiscal 2013.

Operating expenses were $6.4 million for the second quarter of fiscal 2013 compared to $6.4 million for the second quarter of fiscal 2012 and increased by $0.5 million or 9%, compared to $5.9 million for the first quarter of fiscal 2013. The sequential change in operating expenses was primarily due to an increase in selling, general and administrative expenses related to a marketing plan we initiated in November 2012 to drive sales growth and brand awareness for the xPrintServer product family.

GAAP net loss for the second quarter of fiscal 2013 was $(412,000), or ($0.03) per share, compared to a GAAP net loss of $(1.4 million), or ($0.13) per share, for the second quarter of fiscal 2012 and a GAAP net loss of $(430,000), or ($0.03) per share, for the first quarter of fiscal 2013. 

Non-GAAP net income for the second quarter of fiscal 2013 was $70,000, or $0.00 per share compared to non-GAAP net loss of $(629,000) or $(0.06) per share for the second quarter of fiscal 2012 and non-GAAP net income of $48,000, or $0.00 per share, for the first quarter of fiscal 2013.

Cash and cash equivalents as of December 31, 2012 were $8.5 million, compared to $11.4 million as of June 30, 2012. The decrease in cash was primarily due to an increase in inventory from $6.0 million as of June 30, 2012 to $9.7 million as of December 31, 2012 to support buffer stock and anticipated customer demand.

Conference Call and Webcast

Lantronix will host a conference call and webcast today at 2:00 p.m. Pacific Time (5:00 p.m. ET) to discuss its second quarter fiscal year 2013 financial results. Those wishing to participate in the live call should dial 866-700-7477 (international dial-in 617-213-8840) using the passcode 31619690. A telephone replay of the call will be available through February 7, 2013 by dialing (888) 286-8010 (international dial-in 617-801-6888) and entering passcode 72135803.

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 serves some of the largest medical, security, industrial and building automation, transportation, retail/POS, financial, government, consumer electronics/appliances, IT/data center and pro-AV/signage entities in the world. 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.

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 to those financial statements 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 (ii) depreciation and amortization, and (iii) restructuring charges.

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 future business plans, future financial position, future results of operations and future product development strategies and schedules. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that could cause actual reported results and outcomes to differ materially from those expressed in the forward-looking statements. Factors that could cause our expectations and reported results to vary, include, but are not limited to: final accounting adjustments and results; quarterly fluctuations in operating results; our ability to identify and profitably develop new products that will be attractive to our target markets, including products in our device networking business and the timing and success of new product introductions; changing market conditions and competitive landscape; market acceptance of our products by our customers; pricing trends; actions by competitors; future revenues and margins; changes in the cost or availability of critical components; unusual or unexpected expenses; and cash usage including cash used for product development or strategic transactions; and other factors that may affect financial performance. For a more detailed discussion of these and other risks and uncertainties, see our Annual Report on Form 10-K for the year ended June 30, 2012 and subsequent Reports on Forms 10-Q and 8-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances. If the company does update or correct one or more of these forward-looking statements, investors and others should not conclude that the company will make additional updates or corrections.

© 2013 Lantronix, Inc. Lantronix is a registered trademark, and vSLM, xDirect and xPrintServer are 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,
2012
 
 
 
 
June 30,
2012
 
 
 
 
Change  
$     %  
Assets                              
Current assets:                              
  Cash and cash equivalents   $ 8,452     $ 11,374     $ (2,922 )   -26 %
  Accounts receivable, net     2,348       2,674       (326 )   -12 %
  Contract manufacturers' receivable     704       622       82     13 %
  Inventories, net     9,694       5,955       3,739     63 %
  Prepaid expenses and other current assets     598       549       49     9 %
  Deferred tax assets     657       657       -        
    Total current assets     22,453       21,831       622     3 %
                               
  Property and equipment, net     1,426       1,605       (179 )   -11 %
  Goodwill     9,488       9,488       -     0 %
  Other assets     79       87       (8 )   -9 %
    Total assets   $ 33,446     $ 33,011     $ 435     1 %
                               
Liabilities and stockholders' equity                              
Current liabilities:                              
  Accounts payable   $ 5,126     $ 3,563     $ 1,563     44 %
  Accrued payroll and related expenses     1,466       2,100       (634 )   -30 %
  Warranty reserve     222       232       (10 )   -4 %
  Short-term debt     500       667       (167 )   -25 %
  Other current liabilities     3,615       3,342       273     8 %
    Total current liabilities     10,929       9,904       1,025     10 %
Non-current liabilities:                              
  Long-term liabilities     281       303       (22 )   -7 %
  Long-term capital lease obligations     78       48       30     63 %
  Long-term debt     -       167                
  Deferred tax liabilities     657       657       -     0 %
    Total non-current liabilities     1,016       1,175       (159 )   -14 %
      Total liabilities     11,945       11,079       866     8 %
                               
Commitments and contingencies                              
                               
Stockholders' equity:                              
  Common stock     1       1       -     0 %
  Additional paid-in capital     203,460       203,049       411     0 %
  Accumulated deficit     (182,359 )     (181,517 )     (842 )   0 %
  Accumulated other comprehensive income     399       399       -     0 %
    Total stockholders' equity     21,501       21,932       (431 )   -2 %
      Total liabilities and stockholders' equity   $ 33,446     $ 33,011     $ 435     1 %
                               
                               
                               
Check figure     -       -                
                               
Total receivables     3,052       3,296       (244 )   -7 %
Working capital     11,524       11,927       (403 )   -3 %
                               
                               
                               
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,  
    2012     2012     2011     2012     2011  
Net revenue (1)   $ 12,162     $ 11,202     $ 10,452     $ 23,364     $ 21,636  
Cost of revenue     6,130       5,730       5,411       11,860       11,293  
Gross profit     6,032       5,472       5,041       11,504       10,343  
Operating expenses:                                        
  Selling, general and administrative     4,719       4,268       4,441       8,987       9,405  
  Research and development     1,665       1,609       1,646       3,274       3,341  
  Restructuring charges     -               269       -       269  
  Amortization of purchased intangible assets     -       -       18       -       36  
Total operating expenses     6,384       5,877       6,374       12,261       13,051  
Loss from operations     (352 )     (405 )     (1,333 )     (757 )     (2,708 )
Interest expense, net     (16 )     (15 )     (23 )     (31 )     (50 )
Other expense, net     (23 )     5       (8 )     (18 )     (37 )
Loss before income taxes     (391 )     (415 )     (1,364 )     (806 )     (2,795 )
Provision for income taxes     21       15       13       36       26  
Net loss and comprehensive loss   $ (412 )   $ (430 )   $ (1,377 )   $ (842 )   $ (2,821 )
                                         
Net loss per share (basic and diluted)   $ (0.03 )   $ (0.03 )   $ (0.13 )   $ (0.06 )   $ (0.27 )
                                         
Weighted-average common shares (basic and diluted)     14,578       14,558       10,581       14,568       10,571  
                                         
Net revenue from related parties   $ 381     $ 292     $ 174     $ 673     $ 411  
                                         
(1) Includes net revenue from related parties  
                                         
                                         
                                         
LANTRONIX, INC.        
Unaudited Reconciliation of Non-GAAP Adjustments        
(In thousands, except per share data)        
                                  Three Months  
    Three Months Ended     Six Months Ended     30-Sep-12  
    December 31,     September 30,     December 31,     December 31,        
    2012     2012     2011     2012     2011     $  
                                                 
GAAP net loss   $ (412 )   $ (430 )   $ (1,377 )   $ (842 )   $ (2,821 )   $ (430 )
  Non-GAAP adjustments:                                                
    Cost of revenue:                                                
      Share-based compensation     10       11       9       21       22       11  
      Depreciation and amortization     103       99       99       202       194       99  
    Total adjustments to cost of revenue     113       110       108       223       216       110  
    Selling, general and adminstrative:                                                
      Costs associated with the investigation     -       -       -       -       108       -  
      Consulting fees for former CEO and CFO     -       -       -       -       153       -  
      Share-based compensation     141       146       113       287       194       146  
      Employer portion of withholding taxes on stock grants     -       1       -       1       2       1  
      Depreciation and amortization     110       116       118       226       248       116  
    Total adjustments to selling, general and administrative     251       263       231       514       705       263  
    Research and development:                                                
      Share-based compensation     55       74       71       129       137       74  
      Employer portion of withholding taxes on stock grants     -       2       -       2       3       2  
      Depreciation and amortization     3       4       7       7       16       4  
    Total adjustments to research and development     58       80       78       138       156       80  
    Restructuring charges     -       -       269       -       269       -  
    Amortization of purchased intangible assets     -       -       18       -       36       -  
  Total non-GAAP adjustments to operating expenses     309       343       596       652       1,166       343  
  Interest expense, net     16       15       23       31       50       15  
  Other expense, net     23       (5 )     8       18       37       (5 )
  Provision for income taxes     21       15       13       36       26       15  
Total non-GAAP adjustments     482       478       748       960       1,495       478  
Non-GAAP net income (loss)   $ 70     $ 48     $ (629 )   $ 118     $ (1,326 )   $ 48  
                                                 
Non-GAAP net income (loss) per share (diluted)   $ 0.00     $ 0.00     $ (0.06 )   $ 0.01     $ (0.13 )   $ 0.00  
                                                 
Denominator for GAAP net income (loss) per share (diluted)     14,578       14,558       10,581       14,568       10,571       14,558  
Non-GAAP adjustment     50       92       -       92       -       92  
Denominator for non-GAAP net income (loss) per share (diluted)     14,628       14,650       10,581       14,660       10,571       14,650  
                                                 
GAAP operating expenses   $ 6,384     $ 5,877     $ 6,374     $ 12,261     $ 13,051     $ 5,877  
Non-GAAP adjustments to operating expenses     (309 )     (343 )     (596 )     (652 )     (1,166 )     (343 )
Non-GAAP operating expenses   $ 6,075     $ 5,534     $ 5,778     $ 11,609     $ 11,885     $ 5,534  
                                                 
                                                 
                                                 
LANTRONIX, INC.  
Unaudited Net Revenues by Product Line and Region  
(In thousands, except percentages)  
                               
                               
                               
    Three Months Ended December 31,            
        % of Net         % of Net     Change  
    2012   Revenue     2011   Revenue     $   %  
                                     
Embedded device enablement   $ 5,546   45.6 %   $ 4,994   47.8 %   $ 552   11.1 %
External device enablement     3,480   28.6 %     3,349   32.0 %     131   3.9 %
Device management     3,136   25.8 %     2,109   20.2 %     1,027   48.7 %
  Net revenue   $ 12,162   100.0 %   $ 10,452   100.0 %   $ 1,710   16.4 %
                                     
                                     
                                     
    Six Months Ended December 31,            
        % of Net         % of Net     Change  
    2012   Revenue     2011   Revenue     $   %  
                                     
Embedded enablement   $ 11,334   48.5 %   $ 10,471   48.4 %   $ 863   8.2 %
External enablement     6,755   28.9 %     6,635   30.7 %     120   1.8 %
Device management     5,275   22.6 %     4,530   20.9 %     745   16.4 %
  Net revenue   $ 23,364   100.0 %   $ 21,636   100.0 %   $ 1,728   8.0 %
                                     
                                     
                                     
    Three Months Ended December 31,            
        % of Net         % of Net     Change  
    2012   Revenue     2011   Revenue     $   %  
                                     
Americas   $ 6,852   56.3 %   $ 5,847   55.9 %   $ 1,005   17.2 %
EMEA     3,575   29.4 %     2,933   28.1 %     642   21.9 %
Asia Pacific     1,735   14.3 %     1,672   16.0 %     63   3.8 %
  Net revenue   $ 12,162   100.0 %   $ 10,452   100.0 %   $ 1,710   16.4 %
                                     
                                     
                                     
    Six Months Ended December 31,            
        % of Net         % of Net     Change  
    2012   Revenue     2011   Revenue     $   %  
Americas   $ 12,808   54.8 %   $ 11,524   53.3 %   $ 1,284   11.1 %
EMEA     6,652   28.5 %     6,448   29.8 %     204   3.2 %
Asia Pacific     3,904   16.7 %     3,664   16.9 %     240   6.6 %
  Net revenue   $ 23,364   100.0 %   $ 21,636   100.0 %   $ 1,728   8.0 %
                                     
                                     
                                     

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