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 second quarter ended June 30,
2019.
Second Quarter 2019 Highlights
- Net sales of $5.8 million; bookings of $5.1 million
- Gross margin as a percentage of sales of over 61%
- Net income of $127,000 or $0.02 diluted earnings per share
- Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA)*, excluding equity compensation, of
$728,000
- Cash & Equivalents of $15.2 million; no debt
- Repurchased 188,000 shares as part of a $2 million buyback
program authorized in October 2018
- Automotive electronics, advanced programming and secure
provisioning leadership
- Automotive represented 56% of bookings year to date through
2Q19
- Appointed Michael Tidwell as Vice President of Marketing and
Business Development
- Added Assembly Products LLC to expand sales in New York/New
England region of USA
- Embedded Technologies Conference speaking engagements included
Managed & Secure Programming for the Automotive World
- Announced support for NXP SE050 Secure Element; the fourth NXP
product supported by the SentriX®™ 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 second quarter ended June 30, 2019, Anthony
Ambrose, President and CEO of Data I/O Corporation, said, “The
global market for programming capital equipment in the second
quarter remained in the down cycle that began last year. Automotive
sales declines, semiconductor cyclicality and global supply chain
uncertainty are headwinds to the deployment of capital right now,
and we are adjusting our planned 2019 spending and targets
accordingly. Similar to the first quarter of this year, our
performance in the second quarter reflects our disciplined and
effective management practices. Margin strength and expense
controls led to improved earnings on lower revenue as compared to
the first quarter. As we invest and plan for the next upward cycle,
we took the opportunity to return cash to shareholders through the
continuation of our stock buyback.
“The long-term catalysts for our business continue to be the
secular growth of electronic content in automobiles and IoT
devices, and the increasing need to secure these platforms. We
continued to invest in market development and R&D in the second
quarter at a robust level even as discretionary and variable
expenses declined compared to the first quarter and the prior year
period.
“The investments we have been making include our SentriX
platform for IoT security. Revenue adoption remains lower than we
originally planned due to the longer time required for security
provisioning to be designed into OEM production models. Despite the
longer adoption cycle, we remain bullish on the market opportunity
and our position in this emerging market. The 5th SentriX system
was brought online in Europe in the second quarter.”
Financial Results
Net sales in the second quarter of 2019 were $5.8 million, as
compared with $7.2 million in the second 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.
For the 2019 second quarter, gross margin as a percentage of
sales was 61.4%, as compared to 59.0% in the second quarter of
2018. The second quarter 2019 level exceeded the higher end of the
Company’s anticipated 2019 target due to a favorable product mix
and variances, primarily labor and overhead as well as foreign
currency effects.
Total operating expenses in the second quarter of 2019 were $3.5
million, down from $4.0 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. Data I/O continues to support its industry leading
platform of programming and provision solutions while emphasizing
ongoing expense management practices.
Operating income was $75,000 for the second quarter of 2019,
down from $246,000 for the second quarter of 2018. Net income in
the second quarter of 2019 was $127,000, or $0.02 per diluted
share, compared with net income of $486,000, or $0.06 per diluted
share, in the second quarter of 2018. Included in net income is
foreign currency transaction gains of $69,000 for the second
quarter of 2019 and $269,000 for the same period of the prior
year.
Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) was $364,000 in the second quarter of 2019, compared to
$796,000 in the second quarter of 2018. Adjusted EBITDA, excluding
equity compensation, was $728,000 in the second quarter of 2019,
compared to $1.3 million in the second quarter of 2018.
Bookings in the second quarter of 2019 were $5.1 million,
compared to $7.2 million in the second quarter of 2018 and $6.2
million in the first quarter of 2019. Backlog at June 30, 2019 was
$1.4 million, as compared with $2.0 million at March 31, 2019.
Data I/O’s financial condition remains strong with cash of $15.2
million at June 30, 2019, up from $14.8 million at March 31, 2019.
During the second quarter, approximately $908,000 was used to
buyback common stock. The Company had net working capital of $19.5
million at June 30, 2019, down from $20.4 million at March 31,
2019, which reflects the cash spent on the share repurchase. The
Company continues to have no debt.
Conference Call Information
A conference call discussing the second quarter ended June 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 10133624. 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 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, 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 -
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share amounts)
(UNAUDITED)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Net Sales
$5,834
$7,204
$11,892
$14,834
Cost of goods sold
2,250
2,955
4,623
6,169
Gross margin
3,584
4,249
7,269
8,665
Operating expenses:
Research and development
1,680
1,845
3,361
3,724
Selling, general and administrative
1,829
2,158
3,803
4,351
Total operating expenses
3,509
4,003
7,164
8,075
Operating income
75
246
105
590
Non-operating income:
Interest income
10
9
22
16
Gain on sale of assets
-
4
60
4
Foreign currency transaction gain
(loss)
69
269
(36)
93
Total non-operating income
79
282
46
113
Income before income taxes
154
528
151
703
Income tax (expense) benefit
(27)
(42)
2
(87)
Net income
$127
$486
$153
$616
Basic earnings per share
$0.02
$0.06
$0.02
$0.07
Diluted earnings per share
$0.02
$0.06
$0.02
$0.07
Weighted-average basic shares
8,257
8,356
8,280
8,321
Weighted-average diluted shares
8,332
8,500
8,375
8,521
DATA I/O CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(UNAUDITED)
June 30, 2019
December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$15,165
$18,343
Trade accounts receivable, net of
allowance for
doubtful accounts of $72 and $75,
respectively
3,812
3,771
Inventories
5,218
5,185
Other current assets
618
621
TOTAL CURRENT ASSETS
24,813
27,920
Property, plant and equipment – net
1,953
1,985
Income tax receivable
640
598
Other assets
2,284
220
TOTAL ASSETS
$29,690
$30,723
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$1,006
$1,755
Accrued compensation
1,415
2,872
Deferred revenue
1,365
1,392
Other accrued liabilities
1,451
789
Income taxes payable
35
47
TOTAL CURRENT LIABILITIES
5,272
6,855
Operating lease liabilities
1,532
-
Long-term other payables
157
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, 8,261,702 shares
as of June 30,
2019 and 8,338,628 shares as of December
31, 2018
18,463
19,254
Accumulated earnings
3,848
3,695
Accumulated other comprehensive income
418
408
TOTAL STOCKHOLDERS’ EQUITY
22,729
23,357
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$29,690
$30,723
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
(in thousands)
Net Income
$127
$486
$153
$616
Interest (income)
(10)
(9)
(22)
(16)
Taxes
27
42
(2)
87
Depreciation and amortization
220
277
424
506
EBITDA earnings
$364
$796
$553
$1,193
Equity compensation
364
473
650
650
Adjusted EBITDA earnings,
excluding equity compensation
$728
$1,269
$1,203
$1,843
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005902/en/
Joel Hatlen Chief Operating and Financial Officer Data I/O
Corporation 6645 185th Ave. NE, Suite 100 Redmond, WA 98052 (425)
881-6444
Darrow Associates, Inc. Jordan Darrow (512) 551-9296
jdarrow@darrowir.com
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