UNITED
STATES
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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)
: February 21, 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))
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 Fourth Quarter 2018 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
185
th
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 Fourth Quarter 2018 Results
Fifth
Consecutive Year of Profitability Driven by Leadership in Automotive
Electronics
Redmond, WA,
Thursday – February 21, 2019 --
Data
I/O Corporation (NASDAQ: DAIO), the leading global provider of advanced data
and security programming solutions for flash, flash-memory based intelligent
devices and microcontrollers, today announced financial results for the fourth
quarter and year ended December 31, 2018.
Fourth Quarter 2018 Highlights
·
Net sales of $7.9 million; bookings of $6.5 million
·
Gross margin as a percentage of sales of 58.2%
·
Net income of $648,000 or $0.08 diluted earnings per share
·
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA)*, excluding equity compensation, of $1.2 million
·
Cash & Equivalents of $18.3 million; no debt
·
Won multiple industry awards for technology, products, and
service
·
Automotive electronics and advanced programming leadership
o
Automotive represented 60% of bookings for the year
o
Released Lumen®X version 1.6 to support doubling of programming download
speed and Dynamic Data Injection
o
Released SentriX® Scripting Interface Upgrade for more advanced
security provisioning
·
Repurchased 102,000 shares as part of a $2 million buyback program
authorized in October 2018
Full Year 2018 Highlights
·
Net sales of $29.2 million; bookings of $27.0 million
·
Gross margin as a percentage of sales of 59.4%
·
Net income of $1.6 million or $0.19 diluted earnings per share
·
Ended year with 12 partners and 4 system deployments for SentriX
system
*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, 2018, Anthony Ambrose, President and
CEO of Data I/O Corporation, said, “2018 was a solid year for Data I/O as we
strengthened the Company’s position as the global leader
in programming and security provisioning solutions, and delivered our 5
th
consecutive year of profitability.
“In 2018 we extended
our leadership in automotive electronics programming technologies. Automotive
customers represented 60% of our total bookings for the year, up from 54% in
2017. Our PSV family of high speed programming systems, which is ideal for
automotive electronics, is capturing market share as we won several new sites
and marquee customers. In 2018, we celebrated the sale of our 200
th
PSV system. Separately, the industry celebrated Data I/O, honoring our programming
innovations with three industry awards in the past few months alone. We also
expanded and extended our SentriX platform for IoT security. We announced
several new partnerships and deployments, and planted the seeds for the longer
term industry transition to security.
“In 2018 we
continued to drive operational excellence across our organization to manage our
expenses and effectively drive profitability. Our gross profit as a percentage
of sales was higher for the year, despite lower revenues. We attribute much of
this performance to continued business process improvement and focus on
manufacturing efficiencies. Beyond investing in the business to capitalize on
the many growth opportunities ahead of us, we are simultaneously returning
capital to shareholders. During the fourth quarter we repurchased
approximately 102,000 shares valued at $536,000 as part of a $2 million buyback
program. At the end of the year, we maintained our strong balance sheet with $18.3 million in cash and no debt.
“Our formula for
long term profitable growth and success is unchanged. We continue to invest in
our technology platforms to address the secular growth for automotive
electronics and meet the emerging demands for a secure IoT. In 2019, we are
focused on the UFS Flash memory transition in automotive infotainment and
Advanced Driver Assist Systems (ADAS) enhancing performance, expanding our
SentriX device supports while bringing early customers to revenue, maintaining
our commitment to operational excellence, and being excellent stewards of
capital.”
Financial Results
Net sales in the fourth
quarter of 2018 were $7.9 million, as compared with $8.1 million in the fourth
quarter of 2017, and $6.5 million in the third quarter of 2018. The
year-over-year decline in sales was a result of cyclical demand during 2017,
particularly from programming center customers, while the increase from the
third quarter reflects growth driven in large part by demand from the
automotive electronics industry. For all of 2018, net sales were $29.2
million, down 14.4% from $34.1 million in 2017.
For the 2018 fourth quarter,
gross margin as a percentage of sales was 58.2%, as compared to 58.5% in the
fourth quarter of 2017. The fourth
quarter 2018 level is at the higher end of the Company’s anticipated target due
to a favorable channel and product mix and currency impacts. Cost reduction
and manufacturing efforts to improve factory utilization also contributed to
the strength of gross margins. Data I/O has realized the benefits of these
initiatives throughout 2018, although certain tariffs and
commodity prices have partially mitigated the overall impact. For all of 2018, gross margin was 59.4%, compared to
58.9% for the prior year.
Total operating
expenses in the fourth quarter of 2018 were $3.8 million, up from $3.6 million
in the 2017 period, and slightly up from $3.7 million in the third quarter of
2018. Spending on research and development (“R&D”) to support the
Company’s two primary technology platforms was $1.8 million which is flat as
compared with both the fourth quarter of 2017 and the third quarter of 2018.
Selling, general and administrative expenses of $2.0 million in the fourth
quarter of 2018 were up from $1.9 million in the third quarter of 2018 and $1.8
million in the year earlier period. The Company continues to actively engage
in market development and R&D initiatives for its SentriX platform while
emphasizing ongoing expense management practices. Total operating expenses for
all of 2018 were $15.6 million, up 4% from $15.0 million in 2017 due to higher
marketing expenses and R&D, partially offset by reduced variable
compensation.
Operating income was
$744,000 for the fourth quarter of 2018, up from $404,000 for the third quarter
of 2018 and down from $1.2 million in the fourth quarter of 2017. For the full
year, operating income was $1.7 million in 2018 as compared with $5.0 million
for 2017.
Net income in the
fourth quarter of 2018 was $648,000, or $0.08 per diluted share, compared with
net income of $342,000, or $0.04 per diluted share, in the third quarter of
2018, and $1.5 million, or $0.18 per diluted share, in the fourth quarter of
2017. Included in non-operating income is a currency loss of $98,000 for the
fourth quarter of 2018, a currency gain of $108,000 for the third quarter of
2018, and a currency loss of $123,000 in the fourth quarter of 2017. Included
in fourth quarter 2017 net income is a one-time net benefit recorded as a
result of the Tax Cuts and Jobs Act of 2017 of $531,000. For the year, net income in 2018 was $1.6 million, or $0.19 per
diluted share, as compared with net income in 2017 of $5.4 million, or $0.65
per diluted share. Gains on sales of
non-core internet domain assets contributed non-operating income of $366,000 in
2017, while 2018 gain was $19,000.
Earnings
Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $881,000 in
the fourth quarter of 2018, compared to $742,000 in the third quarter of 2018 and
$1.2 million in the prior year period. Adjusted EBITDA, excluding equity
compensation, was $1.2 million in the fourth quarter of 2018, compared to $1.0
million in the third quarter of 2018 and $1.4 million in the prior year period.
For all of 2018, EBITDA was $2.8 million,
compared to $6.0 million for 2017, while Adjusted EBITDA, excluding equity
compensation, was $4.0 million in 2018 compared to $6.7 million in 2017.
Bookings in the
fourth quarter of 2018 were $6.5 million, compared to $7.6 million in the
fourth quarter of 2017 and $7.0 million in the third quarter of 2018. Bookings
for all of 2018 were $27.0 million, down from $34.3 million in 2017 and up from
bookings of $26.9 million in 2016. Backlog at December 31, 2018 was $1.9
million, as compared with $4.0 million at December 31, 2017.
Data I/O’s financial
condition remains strong with cash of $18.3 million at December 31, 2018, down
from $18.9 million at September 30, 2018, and $18.5 million at December 31,
2017. Cash at the end of the fourth quarter reflects part of the $2 million share repurchase program authorized in
October 2018. Accounts receivable of
$3.8 million at December 31, 2018 increased by $1 million from $2.8 million at
September 30, 2018 and was flat as compared with the end of the prior year.
Net working capital at the end of 2018 was $21.1 million, up from $20.6 million
at September 30, 2018, and $19.5 million at December 31, 2017. The Company
continues to have no debt.
Conference
Call Information
A
conference call discussing the fourth quarter ended December 31, 2018,
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 10128659. The
conference call will also be simultaneously webcast over the Internet; visit
the News and Events section of the Data I/O Corporation website at 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 markets. Today,
our customers manufacture hundreds of millions of products each year using Data
I/O 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, assuring 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.
-
tables follow -