SOURCE: Lantronix, Inc.

Lantronix, Inc.

May 02, 2013 16:05 ET

Lantronix Reports Third Quarter Fiscal Year 2013 Financial Results

IRVINE, CA--(Marketwired - May 2, 2013) -  Lantronix, Inc. (the "Company") (NASDAQ: LTRX), a leading global provider of smart M2M (machine-to-machine) connectivity solutions, today reported results for its third fiscal quarter ended March 31, 2013.

Financial Highlights

  • Net revenue of $12.2 million
  • Gross profit as a percentage of net revenue of 46.2%
  • GAAP net loss of $(801,000), or ($0.05) per share
  • Non-GAAP net loss of $(388,000), or ($0.03) per share

Operational Highlights

  • 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.
  • In February 2013, the Company announced a distribution agreement with Berkshire Hathaway-owned Mouser Electronics to expand availability of Lantronix external and embedded device enablement solutions from the Americas to worldwide.

Product Highlights

  • In January 2013, the Company's award-winning Lantronix xPrintServer® was showcased at Digital Experience in Las Vegas and MacWorld in San Francisco.
  • In February 2013, Lantronix announced that for the second year in a row, an xPrintServer® product received the MacObserver Editors' Choice Award.
  • In February 2013, at the Embedded World conference in Nuremberg, Germany, the Company announced the introduction of the xPico™ Wi-Fi, a new wireless embedded connectivity solution. With a footprint of just under 4 cm2, the small module features a full IP stack, both client and access point functionality, advanced security features, and can operate in industrial environments. The Embedded World conference is the world's largest global embedded technology conference.
  • In March 2013, Lantronix launched and began shipping the newest addition to its external analog sensor networking product family, the xSenso™ Controller. Designed specifically for use in rugged and harsh environments, the xSenso Controller's analog and relay outputs provide the ability to take action by controlling industrial processes and equipment based on sensor readings and predefined thresholds to solve real-time problems.

"During the third quarter of fiscal 2013, Lantronix continued to make progress on its strategic plan by further expanding the Company's worldwide distribution and sales channels, introducing new products, and increasing awareness of our solutions in the marketplace through our enhanced marketing efforts," said Lantronix CEO Kurt Busch. "These actions resulted in Lantronix achieving continued growth in new product revenues."

Financial Results for the Third Quarter of Fiscal 2013 Ended March 31, 2013

Net revenue was $12.2 million for the third quarter of fiscal 2013, an increase of $30,000, compared to $12.1 million for the third quarter of fiscal 2012 and flat with the second quarter of fiscal 2013.

Gross profit as a percentage of net revenue was 46.2% for the third quarter of fiscal 2013, compared to 48.8% for the third quarter of fiscal 2012 and 49.6% for the second quarter of fiscal 2013. The decline in gross profit as a percentage of net revenue was primarily due to increased manufacturing costs.

Operating expenses were $6.4 million for the third quarter of fiscal 2013 compared to $5.9 million for the third quarter of fiscal 2012 and $6.4 million for the second quarter of fiscal 2013. The year-over-year change in operating expenses was primarily due to an increase in planned marketing activities to drive new product sales growth and brand awareness.

GAAP net loss for the third quarter of fiscal 2013 was ($801,000), or ($0.05) per share, compared to a GAAP net loss of ($41,000), or ($0.00) per share, for the third quarter of fiscal 2012 and a GAAP net loss of ($412,000), or ($0.03) per share, for the second quarter of fiscal 2013. 

Non-GAAP net loss for the third quarter of fiscal 2013 was ($388,000), or ($0.03) per share compared to non-GAAP net income of $471,000 or $0.04 per share for the third quarter of fiscal 2012 and non-GAAP net income of $70,000, or $0.00 per share, for the second quarter of fiscal 2013.

Cash and cash equivalents as of March 31, 2013 were $7.2 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 $9.2 million as of March 31, 2013 to support buffer stock and new product launches. In addition, cash was used to make scheduled payments on our existing term loan and invest in capital assets to support product development and manufacturing.

Conference Call and Webcast

Lantronix will host a conference call and webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its third quarter fiscal year 2013 financial results. Those wishing to participate in the live call should dial 866-318-8620 (international dial-in 617-399-5139) using the passcode 11408138. A telephone replay of the call will be available through May 9, 2013 by dialing (888) 286-8010 (international dial-in 617-801-6888) and entering passcode 39420444.

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/appliances, IT/data center and pro-AV/signage. 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 and xPrintServer are registered trademarks, and xPico and xSenso 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)  
             
    March 31,     June 30,  
    2013     2012  
Assets                
Current assets:                
  Cash and cash equivalents   $ 7,154     $ 11,374  
  Accounts receivable, net     2,808       2,674  
  Contract manufacturers' receivable     529       622  
  Inventories, net     9,177       5,955  
  Prepaid expenses and other current assets     437       549  
  Deferred tax assets     657       657  
    Total current assets     20,762       21,831  
                 
  Property and equipment, net     1,751       1,605  
  Goodwill     9,488       9,488  
  Other assets     81       87  
    Total assets   $ 32,082     $ 33,011  
                 
Liabilities and stockholders' equity                
Current liabilities:                
  Accounts payable   $ 4,355     $ 3,563  
  Accrued payroll and related expenses     1,580       2,100  
  Warranty reserve     226       232  
  Short-term debt     333       667  
  Other current liabilities     3,720       3,342  
    Total current liabilities     10,214       9,904  
Non-current liabilities:                
  Long-term liabilities     270       303  
  Long-term capital lease obligations     66       48  
  Long-term debt     -       167  
  Deferred tax liabilities     657       657  
    Total non-current liabilities     993       1,175  
      Total liabilities     11,207       11,079  
                 
Commitments and contingencies                
                 
Stockholders' equity:                
  Common stock     1       1  
  Additional paid-in capital     203,663       203,049  
  Accumulated deficit     (183,160 )     (181,517 )
  Accumulated other comprehensive income     371       399  
    Total stockholders' equity     20,875       21,932  
      Total liabilities and stockholders' equity   $ 32,082     $ 33,011  

 

   
   
   
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,  
    2013     2012     2012     2013     2012  
Net revenue (1)   $ 12,164     $ 12,162     $ 12,134     $ 35,528     $ 33,770  
Cost of revenue     6,547       6,130       6,215       18,407       17,508  
Gross profit     5,617       6,032       5,919       17,121       16,262  
Operating expenses:                                        
  Selling, general and administrative     4,685       4,719       4,087       13,672       13,492  
  Research and development     1,717       1,665       1,775       4,991       5,116  
  Restructuring charges     -       -       17       -       286  
  Amortization of purchased intangible assets     -       -       18       -       54  
Total operating expenses     6,402       6,384       5,897       18,663       18,948  
Income (loss) from operations     (785 )     (352 )     22       (1,542 )     (2,686 )
Interest expense, net     (14 )     (16 )     (26 )     (45 )     (76 )
Other income (expense), net     10       (23 )     (13 )     (8 )     (50 )
Loss before income taxes     (789 )     (391 )     (17 )     (1,595 )     (2,812 )
Provision for income taxes     12       21       24       48       50  
Net loss   $ (801 )   $ (412 )   $ (41 )   $ (1,643 )   $ (2,862 )
Net loss per share (basic and diluted)   $ (0.05 )   $ (0.03 )   $ (0.00 )   $ (0.11 )   $ (0.27 )
Weighted-average common shares (basic and diluted)     14,580       14,578       10,585       14,572       10,576  
Net revenue from related parties   $ 221     $ 381     $ 238     $ 894     $ 649  
                                         
(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,  
    2013     2012     2012     2013     2012  
                                         
GAAP net loss   $ (801 )   $ (412 )   $ (41 )   $ (1,643 )   $ (2,862 )
  Non-GAAP adjustments:                                        
    Cost of revenue:                                        
      Share-based compensation     12       10       6       33       28  
      Depreciation and amortization     91       103       113       293       307  
    Total adjustments to cost of revenue     103       113       119       326       335  
    Selling, general and adminstrative:                                        
      Costs associated with the investigation     -       -       -       -       108  
      Consulting fees for former CEO and CFO     -       -       -       -       153  
      Share-based compensation     138       141       123       425       317  
      Employer portion of withholding taxes on stock grants     -       -       -       1       2  
      Depreciation and amortization     100       110       105       326       353  
    Total adjustments to selling, general and administrative     238       251       228       752       933  
    Research and development:                                        
      Share-based compensation     53       55       61       182       198  
      Employer portion of withholding taxes on stock grants     -       -       -       2       3  
      Depreciation and amortization     3       3       6       10       22  
    Total adjustments to research and development     56       58       67       194       223  
    Restructuring charges     -       -       17       -       286  
    Amortization of purchased intangible assets     -       -       18       -       54  
  Total non-GAAP adjustments to operating expenses     294       309       330       946       1,496  
  Interest expense, net     14       16       26       45       76  
  Other income (expense), net     (10 )     23       13       8       50  
  Provision for income taxes     12       21       24       48       50  
Total non-GAAP adjustments     413       482       512       1,373       2,007  
Non-GAAP net income (loss)   $ (388 )   $ 70     $ 471     $ (270 )   $ (855 )
                                         
Non-GAAP net income (loss) per share (diluted)   $ (0.03 )   $ 0.00     $ 0.04     $ (0.02 )   $ (0.08 )
                                         
Denominator for GAAP net income (loss) per share (diluted)     14,580       14,578       10,585       14,572       10,576  
Non-GAAP adjustment     -       50       361       -       -  
Denominator for non-GAAP net income (loss) per share (diluted)     14,580       14,628       10,946       14,572       10,576  
                                         
GAAP operating expenses   $ 6,402     $ 6,384     $ 5,897     $ 18,663     $ 18,948  
Non-GAAP adjustments to operating expenses     (294 )     (309 )     (330 )     (946 )     (1,496 )
Non-GAAP operating expenses   $ 6,108     $ 6,075     $ 5,567     $ 17,717     $ 17,452  
   
   
   
LANTRONIX, INC.  
Unaudited Net Revenues by Product Line and Region  
(In thousands, except percentages)  
                                 
                                 
                                 
    Three Months Ended March 31,              
        % of Net         % of Net     Change  
    2013   Revenue     2012   Revenue     $     %  
                                       
Embedded device enablement   $ 6,321   52.0 %   $ 6,267   51.6 %   $ 54     0.9 %
External device enablement     2,805   23.0 %     3,201   26.4 %     (396 )   (12.4 %)
Device management     3,038   25.0 %     2,666   22.0 %     372     14.0 %
    Net revenue   $ 12,164   100.0 %   $ 12,134   100.0 %   $ 30     0.2 %
                                       
                                 
                                 
    Nine Months Ended March 31,              
        % of Net         % of Net     Change  
    2013   Revenue     2012   Revenue     $     %  
                                       
Embedded enablement   $ 17,655   49.7 %   $ 16,738   49.6 %   $ 917     5.5 %
External enablement     9,560   26.9 %     9,836   29.1 %     (276 )   (2.8 %)
Device management     8,313   23.4 %     7,196   21.3 %     1,117     15.5 %
    Net revenue   $ 35,528   100.0 %   $ 33,770   100.0 %   $ 1,758     5.2 %
                                       
                                 
                                 
    Three Months Ended March 31,              
        % of Net         % of Net     Change  
    2013   Revenue     2012   Revenue     $     %  
                                       
Americas   $ 6,501   53.4 %   $ 6,391   52.7 %   $ 110     1.7 %
EMEA     3,606   29.6 %     3,945   32.5 %     (339 )   (8.6 %)
Asia Pacific     2,057   17.0 %     1,798   14.8 %     259     14.4 %
    Net revenue   $ 12,164   100.0 %   $ 12,134   100.0 %   $ 30     0.2 %
                                       
                                 
                                 
    Nine Months Ended March 31,              
        % of Net         % of Net     Change  
    2013   Revenue     2012   Revenue     $     %  
Americas   $ 19,309   54.3 %   $ 17,915   53.1 %   $ 1,394     7.8 %
EMEA     10,258   28.9 %     10,393   30.8 %     (135 )   (1.3 %)
Asia Pacific     5,961   16.8 %     5,462   16.1 %     499     9.1 %
    Net revenue   $ 35,528   100.0 %   $ 33,770   100.0 %   $ 1,758     5.2 %
                                           

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