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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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CURRENT
REPORT
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Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date
of Report (Date of earliest event
reported): October 31, 2019
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Data
I/O Corporation
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(Exact
name of registrant as specified in its charter)
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Washington
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0-10394
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91-0864123
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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6645
185th Ave. N.E., Suite 100, Redmond, WA 98052
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(Address
of principal executive offices, including zip code)
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(425)
881-6444
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(Registrant’s
telephone number, including area code)
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Not
Applicable
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(Former
name or former address, if changed since last report)
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Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
□
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
□ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
□
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to
Section 12(b) of the Act:
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Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on which registered
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Common
Stock
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DAIO
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NASDAQ
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Indicate by check mark whether the
registrant is an emerging growth company as defined in Rule 405 of the
Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company □
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act □
EXHIBIT INDEX
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Press Release: Data I/O Reports Third Quarter 2019 Results
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Joel Hatlen
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Darrow
Associates, Inc.
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Chief
Operating and Financial Officer
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Jordan
Darrow
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Data
I/O Corporation
6645
185th Ave. NE, Suite 100
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(512)
551-9296
jdarrow@darrowir.com
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Redmond,
WA 98052
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(425)
881-6444
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Data
I/O Reports Third Quarter 2019 Results
Redmond, WA,
Thursday – October 31, 2019 -- Data
I/O Corporation (NASDAQ: DAIO), the leading global provider of advanced data
and security deployment solutions for flash, flash-memory based intelligent
devices and microcontrollers, today announced financial results for the third
quarter ended September 30, 2019.
Third Quarter 2019 Highlights
·
Net sales of $3.8 million;
bookings of $4.3 million
·
Gross margin as a percentage of
sales of over 52%
·
Net loss of $(844,000) or $(0.10)
per share
·
Adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA)*, excluding equity compensation,
of $(306,000)
·
Cash & Equivalents of $15.2
million; no debt
·
Repurchased 56,000 shares to
complete $2 million buyback authorized in October 2018
·
Automotive electronics, advanced
programming and secure provisioning leadership
o
Automotive represented 57% of
bookings year to date through 3Q19
o
Announced the new PSV2800 system with
performance up to 3000 parts per hour for dedicated high-volume programming
applications
o
Growth in SentriX® devices
provisioned, device types supported, design wins, and sales funnel
o
Received 2019 Mexico Technology
Award in the category of Device Programming for the new Job Composer Software
Application
o
Key speaking engagements and
presentations planned for productronica, the major biennial electronics
manufacturing innovations trade show in Munich, Germany
*Adjusted EBITDA is a non-GAAP
financial measure. A reconciliation is provided in the tables of this press
release.
Management
Comments
Commenting on the
third quarter ended September 30, 2019, Anthony
Ambrose, President and CEO of Data I/O
Corporation, said, “Our financial results for the period reflect the market
challenges we had experienced throughout the first half of the year, which
deteriorated as we entered the third quarter. The down cycle for semiconductor
programming capital equipment that began last year was exacerbated this year by
geopolitical issues and international
trade challenges, which has wreaked havoc on the electronics supply chain, and
softened demand for automobiles. In turn, this has reduced near term capital
expenditure purchases by OEMs and programming centers,
with particular impact on our primary vertical market of automotive electronics.
“In the second
quarter, we adjusted our planned 2019 spending and targets. With minimal
backlog coming into the third quarter, weak July and August bookings led to an
expected reduction in third quarter revenue. Demand picked up in September and
remained at that improved level through October. Backlog at the end of the
third quarter increased, due to these September orders, by approximately 20% to
$1.7 million from June 30, 2019. The balance of our financial performance in
the quarter reflects the revenue in the period and steadfast execution of our
business strategies that include investing in our future and continued focus on
managing our costs, improving manufacturing efficiencies, and prudent
allocation of capital and human resources.
“We remain committed
to our core strategy of investing in our technology platforms which target two
long-term growth markets in automotive electronics and IoT security. Earlier
this week, we announced the PSV2800 platform with up to 3000 parts per hour
handling performance. This product is our first entry into the ultra-fast
segment of the handling market, and opens new markets to Data I/O. We see
potential applications across a broad spectrum of end markets, and can make
inroads into programming applications that are traditionally done at the end of
the line.
“We continue to make great strides with our SentriX
security deployment platform. Key performance metrics increasing in Q3 include
number of customers, design wins, device types supported and sales funnel. Our
customer engagements in 2019 have doubled from the same period last year. We
also have been awarded numerous patents to protect our unique intellectual
property, and have additional filings pending. Based upon our encouraging
results to date, we will be increasing our SentriX platform investment even as
we manage spending elsewhere.
“Despite weakness in the core business, continued
R&D to support new products and initiatives, and completion of the $2
million share buyback, we are pleased to have maintained a very strong balance
sheet. Cash of $15.2 million at the end of the third quarter was marginally
higher from the end of the second quarter.”
Financial Results
Net sales in the third
quarter of 2019 were $3.8 million, as compared with $6.5 million in the third
quarter of 2018. The year-over-year decline in sales was a result of a
cyclical downtrend in the industry that began at the end of 2017 and demand
impacted by international trade and geopolitical issues in 2019.
For the 2019 third quarter,
gross margin as a percentage of sales was 52.6%, as compared to 63.0% in the third
quarter of 2018. The third quarter gross margin was primarily impacted by
fixed costs being spread over lower revenue.
Total operating expenses in the third quarter of 2019 were $3.0
million, down from $3.7 million in the 2018 period. Spending declined across
the board with the most significant reductions due to lower variable incentive
compensation accrual and stock compensation. Most discretionary and variable
expenses declined compared to the prior year period. Data I/O continues to
support its industry leading platform of programming and provisioning solutions
while emphasizing ongoing expense management practices. Research and
development expenses of $1.5 million declined from $1.8 million in the prior
year period but represented 40% of sales as compared with 28% of sales in the
third quarter of 2018.
An operating loss of
$(1.0) million for the third quarter of 2019 compares to operating income of
$404,000 for the third quarter of 2018. Net loss in the third quarter of 2019
was $(844,000), or $(0.10) per share, compared with net income of $342,000, or
$0.04 per diluted share, in the third quarter of 2018. Included in net income
is foreign currency transaction gains of $226,000 for the third quarter of 2019
and $108,000 for the same period of the prior year.
Earnings
Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $(566,000)
in the third quarter of 2019, compared to EBITDA of $742,000 in the third quarter
of 2018. Adjusted EBITDA, excluding equity compensation, was $(306,000) in the
third quarter of 2019, compared to adjusted EBITDA of $1.0 million in the third
quarter of 2018.
Bookings in the third
quarter of 2019 were $4.3 million, compared to $7.0 million in the third quarter
of 2018 and $5.1 million in the second quarter of 2019. Backlog at September
30, 2019 was $1.7 million, as compared with $1.4 million at June 30, 2019.
Data I/O’s financial
condition remains strong with cash of $15.2 million at September 30, 2019, marginally
higher from $15.2 million at June 30, 2019. During the third quarter,
approximately $244,000 was used to buyback common stock. The $2.0 million buyback
program which commenced in October 2018 has been fulfilled with a total of
404,000 shares purchased at an average cost of $4.95. The Company had net
working capital of $18.4 million at September 30, 2019, down from $19.5 million
at June 30, 2019, which reflects accounts receivables collections more than
offsetting the reduction in accounts payables and the cash spent on the share
repurchase. The Company continues to have no debt.
Conference
Call Information
A conference call discussing the third quarter ended September
30, 2019, financial results will follow this release today at 2 p.m. Pacific
Time/5 p.m. Eastern Time. To listen to the conference call, please dial 412-902-6510. A replay will be made available
approximately one hour after the conclusion of the call. To access the replay,
please dial 412-317-0088, access code 10135554. The conference call will also be simultaneously webcast
over the Internet; visit
the Webcasts and Presentations area within the Investor Relations section of
the Data I/O Corporation website at www.dataio.com to access the call from the
site. This webcast will be recorded and available for replay
on the Data I/O Corporation website approximately one hour after the conclusion
of the conference call.
About
Data I/O Corporation
Since 1972 Data I/O has developed
innovative solutions to enable the design and manufacture of electronic
products for automotive, Internet-of-Things, medical, wireless, consumer
electronics, industrial controls and other electronic devices. Today, our
customers use Data I/O security deployment and programming solutions to
reliably, securely, and cost-effectively bring innovative new products to life.
These solutions are backed by a global network of Data I/O support and service
professionals, ensuring success for our customers.
Learn more at dataio.com
Forward
Looking Statement and Non-GAAP financial measures
Statements in this news release concerning economic outlook, expected
revenue, expected margins, expected savings, expected results, orders,
deliveries, backlog and financial positions, as well as any other statement
that may be construed as a prediction of future performance or events are forward-looking
statements which involve known and unknown risks, uncertainties and other
factors which may cause actual results to differ materially from those
expressed or implied by such statements. These factors include uncertainties
as to the ability to record revenues based upon the timing of product
deliveries, installations and acceptance, accrual of expenses, changes in
economic conditions and other risks including those described in the Company's
filings on Forms 10K and 10Q with the Securities and Exchange Commission (SEC),
press releases and other communications.
Non-GAAP financial measures, such as EBITDA and Adjusted EBITDA
excluding equity compensation, should not be considered a substitute for, or
superior to, measures of financial performance prepared in accordance with
GAAP. We believe that these non-GAAP financial measures provide meaningful
supplemental information regarding the Company’s results and facilitate the
comparison of results.
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tables follow -