Transformation Initiatives Drive Record
Quarterly Revenues
Digi International® Inc. (NASDAQ: DGII), a leading global
provider of mission critical Internet of Things ("IoT") products,
services, and solutions, reported revenue of $65.8 million for the
second fiscal quarter of 2019 compared to $54.5 million in the
second fiscal quarter of 2018 and compared to our guidance range of
$59.0 million to $63.0 million. This reflects a 20.6% growth rate
compared to the prior year quarter.
Net income for the second fiscal quarter of 2019 was $1.3
million, or $0.05 per diluted share, compared to a net loss of $0.1
million, or $0.00 loss per diluted share in the second fiscal
quarter of 2018 and compared to our guidance range of $0.01 per
diluted share to $0.05 per diluted share.
Adjusted EBITDA in the second fiscal quarter of 2019 was $6.5
million, or 10.0% of total revenue, compared to our guidance range
of $4.5 million to $6.5 million. In the second fiscal quarter of
2018, our adjusted EBITDA was $5.2 million, or 9.6% of total
revenue.
Reconciliations of GAAP and non-GAAP financial measures appear
at the end of this release.
"Our results reflect the investments we have made to simplify
our business and drive success with our customers, distribution
partners, and new products" said Ron Konezny, President and Chief
Executive Officer. "We remain squarely focused on building off
these results to complete a record fiscal 2019."
Financial Results
GAAP Results Three months ended March 31, Six months
ended March 31, 2018 2018 (in thousands, except per
share data) 2019 (as adjusted)* 2019 (as adjusted)* Total Revenue $
65,764 $ 54,548 $ 128,077 $ 99,503 Gross Profit $ 30,329 $ 26,834 $
60,112 $ 48,793 Gross Margin 46.1 % 49.2 % 46.9 % 49.0 % Operating
Income (Loss) ** $ 785 $ 818 $ 6,343 $ (1,181 ) Operating Income as
% of Total Revenue 1.2 % 1.5 % 5.0 % (1.2 )% Net Income (Loss) ** $
1,342 $ (126 ) $ 6,024 $ (4,613 ) Net Income (Loss) per Diluted
Share $ 0.05 $ — $ 0.21 $ (0.17 )
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.** The six months ended
March 31, 2019 includes a gain of $4.4 million ($3.4 million net of
tax) on the sale of our corporate headquarters reported in general
and administrative expense on the Condensed Consolidated Statements
of Operations.
Non-GAAP Results** Three months ended March 31, Six
months ended March 31, 2018 2018 (in thousands,
except per share data) 2019 (as adjusted)* 2019 (as adjusted)*
Adjusted Net Income (Loss) $ 1,140 $ 65 $ 2,300 $ (1,657 ) Adjusted
Net Income (Loss) per Diluted Share $ 0.04 $ — $ 0.08 $ (0.06 )
Adjusted EBITDA 6,548 5,245 $ 12,709 $ 8,208 Adjusted EBITDA
as % of Total Revenue 10.0 % 9.6 % 9.9 % 8.2 %
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.** A reconciliation of
GAAP to non-GAAP financial measures appears at the end of this
release.
Business Results for the Three Months
Ended March 31, 2019 and 2018
Revenue Detail Three months ended March 31,
2018 (in thousands) 2019 (as adjusted)* Change % Change
Product $ 52,097 $ 47,588 $ 4,509 9.5% Services 3,942 2,237 1,705
76.2% Solutions 9,725 4,723 5,002 105.9% Total revenue $ 65,764 $
54,548 $ 11,216 20.6% North America, primarily United States
$ 48,869 $ 39,169 $ 9,700 24.8% Europe, Middle East and Africa
10,764 9,504 1,260 13.3% Other 6,131 5,875 256 4.4% Total revenue $
65,764 $ 54,548 $ 11,216 20.6%
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Total revenue increased 20.6% to $65.8 million in the
second fiscal quarter of 2019 from $54.5 million in the second
fiscal quarter of 2018.
Product
Product revenue increased by $4.5 million, or 9.5%, in the
second fiscal quarter of 2019 compared to the second fiscal quarter
of 2018. We experienced growth compared to the second fiscal
quarter of 2018 across most of our product categories, with the
largest growth in our cellular product offerings, partially offset
by a decline in our network products.
Services
Services revenue increased by $1.7 million, or 76.2%, in the
second fiscal quarter of 2019 compared to the second fiscal quarter
of 2018, related to increased revenues from our Digi Remote
Manager® and support services.
Solutions
Solutions revenue increased by $5.0 million, or 105.9%, in the
second fiscal quarter of 2019 compared to the second fiscal quarter
of 2018. This increase was driven by new customer deployments,
additional purchases and equipment upgrades from existing
customers, and an increase in our recurring revenue base. We are
serving just over 57,000 sites as of March 31, 2019, compared to
nearly 42,000 sites a year ago.
Gross profit was $30.3 million, or 46.1% of revenue in
the second fiscal quarter of 2019 compared to $26.8 million, or
49.2% of revenue for the second fiscal quarter of 2018. This $3.5
million increase was driven primarily by increased sales from our
IoT Solutions segment. Our gross margin decline was primarily a
result of product and customer mix and costs associated with our
transition to third-party manufacturing.
Operating income was $0.8 million, or 1.2% of revenue for
the second fiscal quarter of 2019 and $0.8 million, or 1.5% of
revenue, for the second fiscal quarter of 2018. Our operating
income was driven by our $3.5 million gross profit increase, offset
by an increase in operating expenses of $3.5 million. The increase
in operating expenses primarily included $1.9 million of additional
employee-related costs, $0.8 million in acquisition-related
expenses and $0.6 million of adjustments to contingent
consideration.
Net income was $1.3 million in the second fiscal quarter
of 2019, or $0.05 per diluted share, compared to a net loss of $0.1
million, or $0.00 loss per diluted share, in the second fiscal
quarter of 2018.
Adjusted EBITDA in the second fiscal quarter of 2019 was
$6.5 million, or 10.0% of total revenue, compared to $5.2 million,
or 9.6% of total revenue, in the second fiscal quarter of 2018.
Business Results for the Six Months
Ended March 31, 2019 and 2018
Revenue Detail Six months ended March 31,
2018 (in thousands) 2019 (as adjusted)* Change % Change
Product $ 102,909 $ 86,042 $ 16,867 19.6% Services 6,424 4,663
1,761 37.8% Solutions 18,744 8,798 9,946 113.0% Total revenue $
128,077 $ 99,503 $ 28,574 28.7% North America, primarily
United States $ 95,204 $ 68,506 $ 26,698 39.0% Europe, Middle East
and Africa 20,868 19,660 1,208 6.1% Other 12,005 11,337 668 5.9%
Total revenue $ 128,077 $ 99,503 $ 28,574 28.7%
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Total revenue increased 28.7% to $128.1 million in the
first six months of fiscal 2019 from $99.5 million in the first six
months of fiscal 2018.
Product
Product revenue increased by $16.9 million, or 19.6%, in the
first six months of fiscal 2019 compared to the first six months of
fiscal 2018. This increase included $5.4 million of incremental
revenue from Accelerated Concepts, Inc. ("Accelerated"), a provider
of cellular (LTE) networking equipment, since the acquisition in
January 2018. Additionally, we experienced growth compared to the
first six months of fiscal 2018 within our industrial cellular
products, RF products and our embedded modules, partially offset by
a decline in sales of terminal servers.
Services
Services revenue increased by $1.8 million, or 37.8%, in the
first six months of fiscal 2019 compared to the first six months of
fiscal 2018, related to increased revenues from our Digi Remote
Manager and support services.
Solutions
Solutions revenue increased by $9.9 million, or 113.0%, in the
first six months of fiscal 2019 compared to the first six months of
fiscal 2018. This increase was driven by new customer deployments,
additional purchases and equipment upgrades from existing
customers, and an increase in our recurring revenue base. We are
serving just over 57,000 sites as of March 31, 2019, compared to
nearly 42,000 sites a year ago.
Gross profit was $60.1 million, or 46.9% of revenue in
the first six months of fiscal 2019 compared to $48.8 million, or
49.0% of revenue for the first six months of fiscal 2018. This
$11.3 million increase was driven primarily by our acquisition of
Accelerated, increased sales from our IoT Solutions segment, and
increased sales from most of our IoT Products. Our gross margin
decline was primarily a result of product and customer mix,
increased costs associated with our transition to a third-party
manufacturer and increased amortization expense associated with the
Accelerated acquisition.
Operating income for the first six months of fiscal 2019
was $6.3 million, or 5.0% of revenue, as compared to an operating
loss of $1.2 million, or 1.2% of revenue, for the first six months
of fiscal 2018, an increase of $7.5 million. This increase was a
result of increased gross profit of $11.3 million described above,
offset by an increase in operating expenses of $3.8 million. The
increase in operating expenses included $2.8 million of incremental
costs, primarily employee-related, associated with Accelerated,
$3.7 million of additional employee-related costs and $1.2 million
of increased contingent consideration expense. These were mostly
offset by a $4.4 million gain from the sale of our corporate
headquarters in October 2018 and lower acquisition-related expenses
of $0.8 million.
Net income was $6.0 million in the first six months of
fiscal 2019, or $0.21 per diluted share, compared to a net loss of
$4.6 million, or $0.17 loss per diluted share, in the first six
months of fiscal 2018.
Adjusted EBITDA in the first six months of fiscal 2019
was $12.7 million, or 9.9% of total revenue, compared to $8.2
million, or 8.2% of total revenue, in the first six months of
fiscal 2018.
Balance Sheet, Liquidity and Capital
Structure
Digi continues to maintain a strong balance sheet with no debt.
As of March 31, 2019, Digi had:
- Cash and cash equivalents and
marketable securities balance of $72.1 million, an increase of $9.3
million from the end of fiscal 2018. The increase includes $10.0
million of proceeds received in the first fiscal quarter of 2019
for the sale of our corporate headquarters.
- Current contingent consideration
liabilities of $8.5 million.
Customer Highlights
IoT PRODUCTS & SERVICES
- A North American provider of personal
transportation solutions selected Digi’s XBee Cellular LTE Cat 1
embedded modem and connectivity services, including Digi Remote
Manager, for the primary communication path on a mobility project.
The XBee modem and connectivity offering from Digi provides robust
communications and enabled a rapid pace of development to
production without the time risks of regulatory and carrier
certifications.
- A large manufacturer of people moving
systems has selected Digi cellular routers to provide core systems
communications for their IoT deployments. The Digi routers enable
real-time collection of usage and wear data that help accelerate a
move to a more predictive global maintenance model. Digi is also
providing key IoT connectivity that enhances rider experience and
system safety and was chosen for our industrial reliability and
security focus in our Digi Remote Manager platform.
- A leading provider of solar energy
products has selected Digi’s XBee3 ZigBee module for solar tracking
systems. The XBee3 ZigBee will enable reliable communication with
gateways for remote management.
IoT SOLUTIONS
- Two large school districts, one in
Colorado and the other in Texas, selected Digi SmartSense for food
safety monitoring across all of their respective campuses,
approximating 480 sites in total.
- A leading grocery chain in the western
United States selected Digi to provide task management in all 300+
of their stores.
- A large regional hospital in Canada, is
using Digi SmartSense to monitor all lab and pharmacy locations
across its entire campus.
Fiscal 2019 Guidance
For the third fiscal quarter of 2019, Digi projects revenue to
be in a range of $60 million to $64 million. EPS is projected to be
in a range of $0.02 per diluted share to $0.06 per diluted share.
Adjusted EBITDA is projected to be between $4.5 million and $6.5
million.
For the full fiscal year 2019, Digi projects revenue to be in a
range of $248 million to $258 million. EPS is projected to be in a
range of $0.27 per diluted share to $0.37 per diluted share.
Adjusted EBITDA continues to be projected in a range of
$24 million to $28 million.
Second Fiscal Quarter 2019 Conference
Call Details
As announced on April 4, 2019, Digi will discuss its second
fiscal quarter 2019 results on a conference call on Thursday, May
2, 2019 after market close at 5:00 p.m. ET (4:00 p.m. CT). The call
will be hosted by Ron Konezny, President and Chief Executive
Officer and Brian Ballenger, Acting Principal Financial Officer and
Acting Principal Accounting Officer.
Digi invites all those interested in hearing management's
discussion of its quarter to access a live webcast of the
conference call through the investor relations section of Digi's
website at www.digi.com. Participants may also join the call
directly by dialing (855) 638-5675 and entering passcode 2443699.
International participants may access the call by dialing (262)
912-4765 and entering passcode 2443699. A replay will be available
within approximately three hours after the completion of the call,
and for one week following the call, by dialing (855) 859-2056 for
domestic participants or (404) 537-3406 for international
participants and entering access code 2443699 when prompted. A
replay of the webcast will be available for one week through Digi's
website.
A copy of this earnings release can be accessed through the
financial releases page of the investor relations section of Digi's
website at www.digi.com.
For more news and information on us, please visit www.digi.com/aboutus/investorrelations.
About Digi International
Digi International (NASDAQ: DGII) is a leading global provider
of Internet of Things ("IoT") connectivity products, services and
solutions. We help our customers create next-generation connected
products and deploy and manage critical communications
infrastructures in demanding environments with high levels of
security and reliability. Founded in 1985, we’ve helped our
customers connect over 100 million things, and growing. For more
information, visit Digi's website at www.digi.com, or call
877–912–3444 (U.S.) or 952–912–3444 (International).
Forward-Looking
Statements
This press release contains forward-looking statements that are
based on management’s current expectations and assumptions. These
statements often can be identified by the use of forward-looking
terminology such as "anticipate," "believe," "estimate," "looking
forward," "may," "will," "expect," "plan," "project," "should," or
"continue" or the negative thereof or other variations thereon or
similar terminology. Among other items, these statements relate to
expectations of the business environment in which the company
operates, projections of future performance, perceived marketplace
opportunities and statements regarding our mission and vision. Such
statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions. Among others, these
include risks related to the highly competitive market in which our
company operates, rapid changes in technologies that may displace
products sold by us, declining prices of networking products, our
reliance on distributors and other third parties to sell our
products, delays in product development efforts, uncertainty in
user acceptance of our products, the ability to integrate our
products and services with those of other parties in a commercially
accepted manner, potential liabilities that can arise if any of our
products have design or manufacturing defects, our ability to
defend or settle satisfactorily any litigation, uncertainty in
global economic conditions and economic conditions within
particular regions of the world which could negatively affect
product demand and the financial solvency of customers and
suppliers, the impact of natural disasters and other events beyond
our control that could negatively impact our supply chain and
customers, potential unintended consequences associated with
restructuring or other similar business initiatives that may impact
our ability to retain important employees, the ability to achieve
the anticipated benefits and synergies associated with acquisitions
or divestitures, and changes in our level of revenue or
profitability which can fluctuate for many reasons beyond our
control. These and other risks, uncertainties and assumptions
identified from time to time in our filings with the United States
Securities and Exchange Commission, including without limitation,
our annual report on Form 10-K for the year ended September 30,
2018 and subsequent quarterly reports on Form 10-Q and other
filings, could cause the company's future results to differ
materially from those expressed in any forward-looking statements
made by us or on our behalf. Many of such factors are beyond our
ability to control or predict. These forward-looking statements
speak only as of the date for which they are made. We disclaim any
intent or obligation to update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Presentation of Non-GAAP Financial
Measures
This release includes adjusted net income, adjusted net income
per diluted share and adjusted earnings before interest, taxes and
amortization ("adjusted EBITDA"), each of which is a non-GAAP
measure.
We understand that there are material limitations on the use of
non-GAAP measures. Non-GAAP measures are not substitutes for GAAP
measures, such as net income, for the purpose of analyzing
financial performance. The disclosure of these measures does not
reflect all charges and gains that were actually recognized by the
company. These non-GAAP measures are not in accordance with, or an
alternative for measures prepared in accordance with, generally
accepted accounting principles and may be different from non-GAAP
measures used by other companies or presented by us in prior
reports. In addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. We believe
that non-GAAP measures have limitations in that they do not reflect
all of the amounts associated with our results of operations as
determined in accordance with GAAP and that these measures should
only be used to evaluate our results of operations in conjunction
with the corresponding GAAP measures. Additionally, Adjusted EBITDA
does not reflect our cash expenditures, the cash requirements for
the replacement of depreciated and amortized assets, or changes in
or cash requirements for our working capital needs.
We believe that providing historical and adjusted income and
income per diluted share, respectively, exclusive of such items as
reversals of tax reserves, discrete tax benefits and restructuring
permits investors to compare results with prior periods that did
not include these items. Management uses the aforementioned
non-GAAP measures to monitor and evaluate ongoing operating results
and trends and to gain an understanding of our comparative
operating performance. In addition, certain of our stockholders
have expressed an interest in seeing financial performance measures
exclusive of the impact of matters such as the impact of decisions
related to taxes and restructuring, which while important, are not
central to the core operations of our business. Management believes
that Adjusted EBITDA, defined as EBITDA adjusted for stock-based
compensation expense, acquisition-related expenses, restructuring
charges and recoveries, and gains from the disposition of our
former corporate headquarters is useful to investors to evaluate
the Company’s core operating results and financial performance
because it excludes items that are significant non-cash or
non-recurring expenses reflected in the Condensed Consolidated
Statements of Operations. We believe that the presentation of
Adjusted EBITDA as a percentage of revenue is useful because it
provides a reliable and consistent approach to measuring our
performance from year to year and in assessing our performance
against that of other companies. We believe this information helps
compare operating results and corporate performance exclusive of
the impact of our capital structure and the method by which assets
were acquired.
For more information, visit Digi's website at www.digi.com, or
call 877-912-3444 (U.S.) or 952-912-3444 (International).
Digi International Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three months ended Six months ended March 31, March
31, 2018 2018 2019 (as adjusted)* 2019 (as adjusted)*
Revenue: Product $ 52,097 $ 47,588 $ 102,909 $ 86,042 Services and
solutions 13,667 6,960 25,168 13,461
Total revenue 65,764 54,548 128,077 99,503 Cost of sales: Cost of
product 28,496 23,080 54,309 42,290 Cost of services and solutions
6,214 3,864 12,191 7,043 Amortization of intangibles 725 770
1,465 1,377 Total cost of sales 35,435
27,714 67,965 50,710 Gross profit 30,329
26,834 60,112 48,793 Operating expenses: Sales and marketing 11,534
11,175 23,191 20,935 Research and development 9,569 8,617 19,087
16,368 General and administrative 8,441 6,224 11,558 12,671
Restructuring reversal — — (67 ) — Total
operating expenses 29,544 26,016 53,769 49,974
Operating income (loss) 785 818 6,343 (1,181 ) Other income,
net: Interest income, net 142 34 258 239 Other income (expense),
net 257 (527 ) 305 (572 ) Total other income
(expense), net 399 (493 ) 563 (333 ) Income (loss)
before income taxes 1,184 325 6,906 (1,514 ) Income tax (benefit)
expense (158 ) 451 882 3,099 Net income (loss)
$ 1,342 $ (126 ) $ 6,024 $ (4,613 ) Net income
(loss) per common share: Basic $ 0.05 $ — $ 0.22
$ (0.17 ) Diluted $ 0.05 $ — $ 0.21 $
(0.17 ) Weighted average common shares: Basic 27,866 27,084
27,687 26,914 Diluted 28,438 27,084
28,289 26,914
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Digi International Inc.
Condensed Consolidated Statements of
Comprehensive Income (Loss)
(In thousands)
(Unaudited)
Three months ended March 31, Six months ended March
31, 2018 2018 2019 (as adjusted)* 2019 (as adjusted)*
Net income (loss) $ 1,342 $ (126 ) $ 6,024 $ (4,613 ) Other
comprehensive (loss) income, net of tax: Foreign currency
translation adjustment (83 ) 1,787 (1,652 ) 2,058 Change in net
unrealized gain (loss) on investments 9 (19 ) 14 (40 ) Less income
tax (expense) benefit (2 ) 5 (4 ) 8 Reclassification of realized
loss on investments included in net income (1) — 31 — 31 Less
income tax benefit (2) — (8 ) — (8 ) Other
comprehensive (loss) income, net of tax (76 ) 1,796 (1,642 )
2,049 Comprehensive income (loss) $ 1,266 $ 1,670
$ 4,382 $ (2,564 ) (1) Recorded in Other
income (expense), net in our Condensed Consolidated Statements of
Operations. (2) Recorded in Income tax (benefit) expense in our
Condensed Consolidated Statements of Operations.
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Digi International Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
March 31, September 30, 2018 2019 (as adjusted)*
ASSETS Current assets: Cash and cash equivalents $ 69,593 $ 58,014
Marketable securities 2,497 4,736 Accounts receivable, net 53,493
49,819 Inventories 44,035 41,644 Other current assets 5,549 2,613
Assets held for sale — 5,220 Total current assets
175,167 162,046 Property, equipment and improvements, net 13,926
8,354 Intangible assets, net 34,807 39,320 Goodwill 154,049 154,535
Deferred tax assets 5,236 6,600 Other non-current assets 350
1,291 Total assets $ 383,535 $ 372,146
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts
payable $ 14,628 $ 12,911 Accrued compensation 6,991 8,190 Unearned
revenue 6,576 3,177 Contingent consideration on acquired businesses
8,527 5,890 Other current liabilities 4,369 5,405
Total current liabilities 41,091 35,573 Income taxes payable 759
851 Deferred tax liabilities 317 334 Contingent consideration on
acquired businesses — 4,175 Other non-current liabilities 530
720 Total liabilities 42,697 41,653 Stockholders’
equity: Preferred stock, $.01 par value; 2,000,000 shares
authorized; none issued and outstanding — — Common stock, $.01 par
value; 60,000,000 shares authorized; 34,471,378 and 33,812,838
shares issued 345 338 Additional paid-in capital 262,392 255,936
Retained earnings 157,985 151,961 Accumulated other comprehensive
loss (25,168 ) (23,526 ) Treasury stock, at cost, 6,412,682 and
6,385,336 shares (54,716 ) (54,216 ) Total stockholders’ equity
340,838 330,493 Total liabilities and stockholders’
equity $ 383,535 $ 372,146
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Digi International Inc.
Condensed Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Six months ended March 31, 2018 2019 (as
adjusted)* Operating activities: Net income (loss) $ 6,024 $ (4,613
) Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities: Depreciation of property,
equipment and improvements 2,217 1,546 Amortization of intangible
assets 4,609 4,287 Stock-based compensation 2,707 2,378 Deferred
income tax provision 1,338 2,808 Gain on sale of property,
equipment and improvements (4,395 ) 5 Change in fair value of
contingent consideration 810 (425 ) Provision for bad debt and
product returns 568 395 Provision for inventory obsolescence 900
900 Restructuring reversal (67 ) — Other (116 ) 25 Changes in
operating assets and liabilities (net of acquisitions) (8,393 )
(12,287 ) Net cash provided by (used in) operating activities 6,202
(4,981 ) Investing activities: Proceeds from maturities and
sales of marketable securities 2,252 29,513 Proceeds from sale of
business — 2,000 Acquisition of businesses, net of cash acquired —
(56,588 ) Proceeds from sale of property and equipment 10,047 —
Purchase of property, equipment, improvements and certain other
intangible assets (7,346 ) (785 ) Net cash provided by (used in)
investing activities 4,953 (25,860 ) Financing activities:
Acquisition earn-out payments (2,348 ) — Proceeds from stock option
plan transactions 3,751 3,427 Proceeds from employee stock purchase
plan transactions 549 618 Purchases of common stock (1,044 ) (681 )
Net cash provided by financing activities 908 3,364 Effect of
exchange rate changes on cash and cash equivalents (484 ) 1,646
Net increase (decrease) in cash and cash equivalents 11,579
(25,831 ) Cash and cash equivalents, beginning of period 58,014
78,222 Cash and cash equivalents, end of period $
69,593 $ 52,391 Supplemental schedule of
non-cash investing and financing activities: Transfer of inventory
to property, equipment and improvements $ (654 ) $ (827 ) Accrual
for purchase of property, equipment, improvements and certain other
intangible assets $ (20 ) $ (27 ) Liability related to acquisition
of business $ — $ (2,300 )
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
DIGI INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY
(UNAUDITED)
Accumulated
Additional Other Total Common Stock Treasury Stock Paid-In Retained
Comprehensive Stockholders’ (in thousands) Shares Par Value Shares
Value Capital Earnings* Loss Equity Balances, September 30, 2017
33,008 $ 330 6,437 $ (54,533 ) $ 245,528 $ 150,363 $ (22,659 ) $
319,029 Cumulative-effect adjustment from adoption of ASU 2016-09
52 (33 ) 19 Net loss (4,613 ) (4,613 ) Other comprehensive income
2,049 2,049 Employee stock purchase plan issuances (74 ) 631 (13 )
618 Repurchase of common stock 68 (681 ) (681 ) Issuance of stock
under stock award plans 573 6 3,421 3,427 Stock-based compensation
expense 2,378
2,378 Balances, March 31, 2018 33,581 $ 336
6,431 $ (54,583 ) $ 251,366 $ 145,717 $
(20,610 ) $ 322,226 Balances, September 30, 2018
33,813 $ 338 6,385 $ (54,216 ) $ 255,936 $ 151,961 $ (23,526 ) $
330,493 Net income 6,024 6,024 Other comprehensive loss (1,642 )
(1,642 ) Employee stock purchase plan issuances (63 ) 544 5 549
Repurchase of common stock 91 (1,044 ) (1,044 ) Issuance of stock
under stock award plans 658 7 3,744 3,751 Stock-based compensation
expense 2,707
2,707 Balances, March 31, 2019 34,471 $ 345
6,413 $ (54,716 ) $ 262,392 $ 157,985 $
(25,168 ) $ 340,838
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
Non-GAAP Financial
Measures
TABLE 1
Reconciliation of Net Income (Loss) and
Net Income (Loss) per Diluted Share to
Adjusted Net Income (Loss) and Adjusted
Net Income (Loss) per Diluted Share
(In thousands, except per share
amounts)
Three months ended March 31, Six months ended March
31, 2018 2018 2019 (as adjusted)* 2019 (as adjusted)*
Net income (loss) and net income (loss) per diluted share $ 1,342
$ 0.05 $ (126 ) $ — $ 6,024 $ 0.21 $ (4,613 )
$ (0.17 ) Restructuring reversal — — — — (67 ) — — — Gain on
sale of building — — — — (4,396 ) (0.16 ) — — Tax effect from
restructuring reversal and gain on sale of building — — — — 1,047
0.04 — — Discrete tax (benefits) expense (1) (202 ) (0.01 ) 191
0.01 (308 ) (0.01 ) 2,956 0.11 Adjusted
net income (loss) and adjusted net income (loss) per diluted share
(2) $ 1,140 $ 0.04 $ 65 $ — $ 2,300
$ 0.08 $ (1,657 ) $ (0.06 ) Diluted weighted average
common shares 28,438 27,084 28,289 26,914
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
(1) For the three and six months ended March 31, 2019,
discrete tax expense primarily includes reversals of tax reserves
due to the expiration of statutes of limitation. For the three and
six months ended March 31, 2018, discrete tax expense primarily
includes one-time adjustments for the re-measurement of deferred
tax assets and the impact of ASU 2016-09 relating to the accounting
for the tax effects of stock compensation. This was partially
offset by reversals of tax reserves due to the expiration of
statutes of limitation. (2) Adjusted net income per diluted share
may not add due to the use of rounded numbers.
TABLE 2
Reconciliation of Net Income to
Adjusted EBITDA
(In thousands)
Three months ended March 31, Six months ended March
31, 2018 2018 2019 (as adjusted)* 2019 (as adjusted)*
% of % of % of % of total total total
total revenue revenue revenue revenue Total revenue $ 65,764
100.0 % $ 54,548 100.0 % $ 128,077 100.0 % $ 99,503
100.0 % Net income $ 1,342 $ (126 ) $ 6,024 $ (4,613
) Interest income, net (142 ) (34 ) (258 ) (239 ) Income tax
(benefit) expense (158 ) 451 882 3,099 Depreciation and
amortization 3,153 3,380 6,826 5,833 Stock-based compensation 1,293
1,325 2,707 2,378 Gain on sale of building — — (4,396 ) —
Restructuring reversal — — (67 ) — Acquisition expense 1,060
249 991 1,750 Adjusted EBITDA $ 6,548
10.0 % $ 5,245 9.6 % $ 12,709 9.9 % $ 8,208
8.2 %
*Prior period information has been restated for the adoption of
ASU No. 2014-09, “Revenue from Contracts with Customers (Topic
606)”, which we adopted on October 1, 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190502005870/en/
Brian G. BallengerVice President of Finance and Accounting,
Acting PrincipalFinancial Officer, Acting Principal Accounting
Officer andInterim TreasurerDigi International952-912-3070Email:
brian.ballenger@digi.com
Digi (NASDAQ:DGII)
Historical Stock Chart
From Aug 2024 to Sep 2024
Digi (NASDAQ:DGII)
Historical Stock Chart
From Sep 2023 to Sep 2024