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
- Automotive represented 57% of bookings year to date through
3Q19
- Announced the new PSV2800 system with performance up to 3000
parts per hour for dedicated high-volume programming
applications
- Growth in SentriX® devices provisioned, device types supported,
design wins, and sales funnel
- Received 2019 Mexico Technology Award in the category of Device
Programming for the new Job Composer Software Application
- 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.
- tables follow -
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share amounts)
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net Sales
$3,808
$6,533
$15,700
$21,367
Cost of goods sold
1,806
2,415
6,430
8,584
Gross margin
2,002
4,118
9,270
12,783
Operating expenses:
Research and development
1,507
1,826
4,868
5,550
Selling, general and administrative
1,535
1,888
5,338
6,239
Total operating expenses
3,042
3,714
10,206
11,789
Operating income(loss)
(1,040)
404
(936)
994
Non-operating income:
Interest income
25
10
47
26
Gain on sale of assets
-
-
60
4
Foreign currency transaction gain
(loss)
226
108
191
201
Total non-operating income
251
118
298
231
Income(loss) before income taxes
(789)
522
(638)
1,225
Income tax (expense) benefit
(55)
(180)
(52)
(267)
Net income(loss)
($844)
$342
($690)
$958
Basic earnings(loss) per share
($0.10)
$0.04
($0.08)
$0.11
Diluted earnings(loss) per share
($0.10)
$0.04
($0.08)
$0.11
Weighted-average basic shares
8,217
8,439
8,259
8,361
Weighted-average diluted shares
8,217
8,507
8,259
8,516
DATA I/O CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(UNAUDITED)
September 30, 2019
December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$15,178
$18,343
Trade accounts receivable, net of
allowance for
doubtful accounts of $48 and $75,
respectively
2,406
3,771
Inventories
5,432
5,185
Other current assets
582
621
TOTAL CURRENT ASSETS
23,598
27,920
Property, plant and equipment – net
1,733
1,985
Income tax receivable
640
598
Other assets
2,108
220
TOTAL ASSETS
$28,079
$30,723
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$869
$1,755
Accrued compensation
1,373
2,872
Deferred revenue
1,586
1,392
Other accrued liabilities
1,308
789
Income taxes payable
49
47
TOTAL CURRENT LIABILITIES
5,185
6,855
Operating lease liabilities
1,334
-
Long-term other payables
126
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, 8,210,884 shares
as of September 30,
2019 and 8,338,628 shares as of December
31, 2018
18,490
19,254
Accumulated earnings
3,005
3,695
Accumulated other comprehensive income
(61)
408
TOTAL STOCKHOLDERS’ EQUITY
21,434
23,357
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$28,079
$30,723
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(in thousands)
Net Income(loss)
($844)
$342
($690)
$958
Interest (income)
(25)
(10)
(47)
(26)
Taxes
55
180
52
267
Depreciation and amortization
248
230
672
736
EBITDA earnings(loss)
($566)
$742
($13)
$1,935
Equity compensation
260
282
911
932
Adjusted EBITDA earnings(loss),
excluding equity compensation
($306)
$1,024
$898
$2,867
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191031005856/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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