Leadership Extended in Automotive
Electronics and Security Deployment -- Targeting Large and High
Growth Markets
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 fourth quarter ended December
31, 2019.
Fourth Quarter 2019 Highlights
- Net sales of $5.9 million; bookings of $6.9 million
- Gross margin as a percentage of sales of 55.9%
- Net loss of ($496,000) or ($0.06) per share. Adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA)*,
excluding equity compensation, of ($67,000)
- Cash & Equivalents of $13.9 million; no debt
- Automotive electronics, advanced programming and secure
provisioning leadership
- New PSV2800 received major awards since introduction in October
2019
- Recognized by customers with 2020 Circuits Assembly Service
Excellence Award in the Device Programming Equipment category
- Extended programming technology leadership with launch of
machine learning-based automated teach capability & 4x
programming performance improvement for UFS
- Growth in SentriX® devices provisioned, device types supported,
and design wins
Full Year 2019 Highlights
- Net sales of $21.6 million; bookings of $22.5 million
- Gross margin as a percentage of sales of 58.2%
- Net loss of ($1.2) million or ($0.14) diluted earnings per
share. Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA)*, excluding equity compensation, of
$830,000
- Automotive Electronics represented 60% of bookings for
2019
- Repurchased 302,000 shares in 2019 (404,00 shares in total) to
complete $2 million buyback authorized in October 2018
- Ended year with 5 system deployments, 12 partners and 10
supported devices for SentriX secure provisioning platform
*Adjusted EBITDA is a non-GAAP financial measure. A
reconciliation is provided in the tables of this press release.
Management Comments
Commenting on the fourth quarter and year ended December 31,
2019, Anthony Ambrose, President and CEO of Data I/O Corporation,
said, “2019 was a challenging year for the business, due to a
downturn in automotive electronics and structural changes in the
global supply chain. We sustained our first loss in 6 years due to
a downturn in orders combined with increased investments in
security. Fourth quarter revenue increased 54% compared to the 2019
third quarter as bookings increased to their highest level in five
quarters.
“As the market leader, we plan to invest for the long term to
enhance and extend our leadership position. We continue to value
long term growth over short-term GAAP profitability. Our strong
cash position combined with our long-term view of the market gives
us the financial flexibility to make these decisions.
“Throughout 2019 we bolstered our technology suite with
innovations that have been recognized globally. At the cornerstone
of our strategy is the PSV family of high-speed programming systems
which have been met with worldwide acceptance as deployments
increased to nearly 300 globally in 2019. Only a few months after
the October 2019 launch of the PSV2800 for ultra-fast performance,
we were awarded the 2020 NPI Award in the category of Device
Programming at the IPC APEX EXPO trade show held in San Diego in
February 2020. Earlier, we received the 2019 Global Technology
Award in the category of Programming in Munich, Germany, among
other industry awards ranging from products to customer support
during the year.
“We continue to make great strides with our SentriX Platform, a
highly flexible cost-effective security provisioning and data
programming deployment system for authentication devices, secure
elements and secure microcontrollers. Device supports increased
throughout the year along with design wins and a broadening of our
sales funnel and customer engagements.
“Regarding the coronavirus impact, our global workforce has no
reported incidence of contraction and our China-based team was
required to close for an additional week and follow recommended
best practices in accordance with government mandates. We have been
up and running in China since February 9 and are delivering
products. The situation is highly fluid and changeable, but at this
time we believe our multi-sourced supply chain will see minimal
impact from business interruption in the short term.
“On the demand creation side, we are seeing impacts from the
coronavirus, primarily in Asia as the sales process has slowed, and
business travel has been restricted. In Europe, we saw impacts to
demand creation as the Mobile World Congress trade show was
cancelled and we made the decision to pull out of the Embedded
World trade show the same week. Whether this is a one quarter
deferral, as we saw with tariffs in the third quarter of last year,
or a longer-term impact remains to be seen.
“While possessing a strong balance sheet with no debt, we have
positioned the Company for growth. We will be vigilant on our
management of short terms risks while maintaining our long-term
growth focus.”
Financial Results
Net sales in the fourth quarter of 2019 were $5.9 million, as
compared with $7.9 million in the fourth 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.
Sequential quarterly revenues increased by 54.1% from $3.8 million
in the third quarter of 2019 with an improvement in orders from the
automotive electronics sector. For all of 2019, net sales were
$21.6 million, down 26.2% from $29.2 million in 2018.
For the 2019 fourth quarter, gross margin as a percentage of
sales was 55.9%, as compared to 58.2% in the fourth quarter of
2018. The fourth quarter gross margin was primarily impacted by
fixed costs being spread over lower revenue and tariffs increasing
on US and China trade in 2019. For all of 2019, gross margin was
58.2%, compared to 59.4% for the prior year, with an estimated
reduction of 160 basis points in 2019 resulting from increased
tariffs.
Total operating expenses in the fourth quarter of 2019 were $3.6
million, down from $3.8 million in the 2018 period. We continue to
invest in research and development and SentriX.
An operating loss of ($342,000) for the fourth quarter of 2019
compares to operating income of $744,000 for the fourth quarter of
2018. Net loss in the fourth quarter of 2019 was ($496,000), or
($0.06) per share, compared with net income of $648,000, or $0.08
per diluted share, in the fourth quarter of 2018. For the full
year, an operating loss of ($1.3) million in 2019 compared with
operating income of $1.7 million for 2018. For the year, net loss
in 2019 was ($1.2) million, or ($0.14) per diluted share, as
compared with net income in 2018 of $1.6 million, or $0.19 per
diluted share. Included in annual net income are foreign currency
transaction gains of $5,000 for 2019 and $103,000 for the prior
year.
Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) was ($327,000) in the fourth quarter of 2019, compared
to EBITDA of $880,000 in the fourth quarter of 2018. Adjusted
EBITDA, excluding equity compensation, was ($67,000) in the fourth
quarter of 2019, compared to adjusted EBITDA of $1.2 million in the
fourth quarter of 2018. For all of 2019, EBITDA was ($341,000),
compared to $2.8 million for 2018, while Adjusted EBITDA, excluding
equity compensation, was $830,000 in 2019 compared to $4.0 million
in 2018.
Bookings in the fourth quarter of 2019 were $6.9 million,
compared to $6.5 million in the fourth quarter of 2018 and $4.3
million in the third quarter of 2019. Bookings for all of 2019 were
$22.5 million, down from $27.0 million in 2018. Backlog at December
31, 2019 was $2.9 million, as compared with $1.7 million at
September 30, 2019 and $1.9 million at December 31, 2018.
Data I/O’s financial condition remains strong with cash of $13.9
million at December 31, 2019, as compared with $15.2 million at
September 30, 2019 and $18.3 million at December 31, 2018. The
Company had net working capital of $18.5 million at December 31,
2019, a slight improvement from $18.4 million at September 30, 2019
and down from $21.1 million at the end of 2018. The Company
continues to have no debt.
Conference Call Information
A conference call discussing the fourth quarter ended December
31, 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 10139179. 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,
coronavirus impact, 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, coronavirus
related business interruptions, 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.
- tables follow -
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share amounts)
(UNAUDITED)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Net Sales
$5,868
$7,857
$21,568
$29,224
Cost of goods sold
2,588
3,284
9,018
11,868
Gross margin
3,280
4,573
12,550
17,356
Operating expenses:
Research and development
1,583
1,811
6,451
7,361
Selling, general and administrative
2,039
2,018
7,377
8,257
Total operating expenses
3,622
3,829
13,828
15,618
Operating income(loss)
(342)
744
(1,278)
1,738
Non-operating income:
Interest income
6
11
53
37
Gain on sale of assets
4
15
64
19
Foreign currency transaction gain
(loss)
(185)
(98)
5
103
Total non-operating income
(175)
(72)
122
159
Income(loss) before income taxes
(517)
672
(1,156)
1,897
Income tax (expense) benefit
21
(24)
(31)
(291)
Net income(loss)
($496)
$648
($1,187)
$1,606
Basic earnings(loss) per share
($0.06)
$0.08
($0.14)
$0.19
Diluted earnings(loss) per share
($0.06)
$0.08
($0.14)
$0.19
Weighted-average basic shares
8,212
8,431
8,247
8,378
Weighted-average diluted shares
8,212
8,509
8,247
8,514
DATA I/O CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(UNAUDITED)
December 31, 2019
December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$13,936
$18,343
Trade accounts receivable, net of
allowance for
doubtful accounts of $80 and $75,
respectively
4,099
3,771
Inventories
5,020
5,185
Other current assets
924
621
TOTAL CURRENT ASSETS
23,979
27,920
Property, plant and equipment – net
1,668
1,985
Income tax receivable
640
598
Other assets
1,994
220
TOTAL ASSETS
$28,281
$30,723
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$1,151
$1,755
Accrued compensation
1,541
2,872
Deferred revenue
1,387
1,392
Other accrued liabilities
1,372
789
Income taxes payable
31
47
TOTAL CURRENT LIABILITIES
5,482
6,855
Operating lease liabilities
1,178
-
Long-term other payables
91
511
COMMITMENTS
-
-
STOCKHOLDERS’ EQUITY
Preferred stock -
Authorized, 5,000,000 shares,
including
200,000 shares of Series A Junior
Participating
Issued and outstanding, none
-
-
Common stock, at stated value -
Authorized, 30,000,000 shares
Issued and outstanding, 8,212,748 shares
as of December 31,
2019 and 8,338,628 shares as of December
31, 2018
18,748
19,254
Accumulated earnings
2,508
3,695
Accumulated other comprehensive income
274
408
TOTAL STOCKHOLDERS’ EQUITY
21,530
23,357
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$28,281
$30,723
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
(in thousands)
Net Income (loss)
($496)
$648
($1,187)
$1,606
Interest (income)
(6)
(11)
(53)
(37)
Taxes
(21)
24
31
291
Depreciation and amortization
196
219
868
955
EBITDA earnings(loss)
($327)
$880
($341)
$2,815
Equity compensation
260
298
1,171
1,230
Adjusted EBITDA earnings(loss),
excluding equity compensation
($67)
$1,178
$830
$4,045
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200303005890/en/
Joel Hatlen Chief Operating and Financial Officer Data I/O
Corporation (425) 881-6444
Darrow Associates, Inc. Jordan Darrow (512) 551-9296
jdarrow@darrowir.com
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