Ends Year with Highest Quarterly Bookings
and Cash Position as Automotive Electronics Sector Continues
Recovery
Data I/O Corporation (NASDAQ: DAIO), the leading global provider
of advanced security and data deployment solutions for
microcontrollers, security ICs and memory devices, today announced
financial results for the fourth quarter ended December 31,
2020.
Fourth Quarter 2020 Highlights
- Net sales of $4.9 million; bookings of $6.0 million
- Gross margin as a percentage of sales of 47.0%; Adjusted gross
margin* of 52.9%
- Net loss of ($1.6) million or ($0.20) earnings per share
- Adjusted EBITDA* of ($194,000)
- Cash & Equivalents of $14.2 million; no debt
- New security supports using Data I/O’s SentriX® Security
Deployment Platform for:
- NXP EdgeLock SE050 secure element
- Infineon OPTIGA™ TPM 2.0
Full Year 2020 Highlights
- Net sales of $20.3 million; bookings of $20.8 million
- Gross margin as a percentage of sales of 53.2%; Adjusted gross
margin of 54.7%
- Net loss of ($4.0) million or ($0.48) earnings per share
- Adjusted EBITDA of ($366,000)
- Automotive Electronics represented 53% of bookings for
2020
- Deployment of over 330 PSV systems worldwide
- Ended year with 15 partners and 14 supported devices for
SentriX Security Deployment Platform
*EBITDA, Adjusted EBITDA and Adjusted gross margin are non-GAAP
financial measures. A reconciliation is provided in the tables of
this press release.
Management Comments
Commenting on the fiscal year ended December 31, 2020, Anthony
Ambrose, President and CEO of Data I/O Corporation, said, “In the
most challenging business climate in recent memory, we are pleased
to have exited 2020 better positioned than how we entered the year.
Data I/O’s people are healthy, our cash balance increased, our
operational processes and supply chain resiliency have been
optimized, our automotive electronics and security platforms have
advanced, and we ended 2020 with our strongest bookings quarter of
the year and our largest backlog in three years. After bottoming in
the second quarter of 2020, our outlook is positive for 2021 and
beyond.
“During the year, we won orders for UFS and other programming
requirements which drove our installed base to over 330 PSV units
at the end of the year. Growth in our bookings reflected not only
capital equipment, but also the increased recurring revenues
associated with sales of consumable adapters, software and
services. Total recurring revenues grew for the third consecutive
year, and the percentage of total sales attributable to software
and services also increased for the third year in a row. Backlog at
December 31, 2020 was $3.9 million, up from $2.8 million at the end
of the third quarter and $2.9 million at the end of 2019.
“We have performed well under the circumstances associated with
COVID-19 and have not let the crisis go to waste. Our mission going
into 2020 was to simplify and scale, such that we become more
profitable as sales of our products and services grow. And that is
what we have done. As an essential business, while we continued to
operate to support our customers, we also implemented myriad
process improvements in safety, wellness, travel, remote/virtual
work, and sales and marketing activities. At the same time, we
enhanced our global supply chain and manufacturing for redundancies
and localized support.
“Looking towards 2021, we are well positioned to benefit as the
market cycles upward with increasing momentum. The secular growth
rates for automotive electronics are estimated by market
participants and analysts alike at a compounded annual growth rate
of 10-15% for the next decade. The latest in short term disruption
from certain semiconductor and equipment shortages only highlights
the growth of semiconductors within the automotive industry.
Security demands for IoT, automotive and industrial markets also
continue to grow. This is our market opportunity and why we
continue to invest in R&D to extend our lead. In 2021, we are
planning to grow in line with the automotive semiconductor market,
maintain gross margins in the mid- to high-50% range, hold expenses
to a 2% increase, and drive disproportionate improvements in
profitability and cash flow.
“As the Company prepares for its Annual Meeting to be held on
May 20, 2021, Alan Howe has decided not to seek election for
another term on the Board of Directors. He has no disagreements
with the Board, and will complete his current term as Chairman. We
would like to thank Alan for his more than 8 years of service and
wish him well in his future endeavors.”
Financial Results
Net sales in the fourth quarter of 2020 were $4.9 million, as
compared with $5.9 million in the fourth quarter of 2019. The
decrease from the prior period primarily reflects the timing of
equipment orders and delivery, partially offset by higher recurring
and consumable revenues from the Company’s continuously expanding
installed base of machines throughout the world. For all of 2020,
net sales were $20.3 million, down 6% from $21.6 million in 2019.
Recurring and consumable revenues represented 44% of the total in
2020, an increase from 42% in 2019.
Bookings during 2020 increased successively each quarter
following the onset of COVID-19-related closures early in the year.
Fourth quarter bookings of $6.0 million compared to $5.6 million in
the third quarter, $5.0 million in the second quarter, and $4.3
million in the first quarter. Bookings for all of 2020 were $20.8
million, down from $22.5 million in 2019. Backlog at December 31,
2020 was $3.9 million, up from $2.8 million at September 30, 2020
and $2.9 million at December 31, 2019.
Data I/O’s fourth quarter and full year results included
$943,000 of non-cash, one-time charges. The Company introduced a
new generation of SentriX proprietary tools and technology to
simplify the securitization process for customers; better control
the strategic technology; and improve the ability to scale the
SentriX business. The Company accelerated this process by
discontinuing the third party developed first-generation components
and upgrading deployed SentriX systems immediately to the second
generation where Data I/O has developed the critical Intellectual
Property. This resulted in the impairment of the remaining
first-generation assets totaling $657,000 including: prepaid
royalties, deployed equipment, and inventory. The Company also
ended the service lifetime of three obsolete automated handler
families. Along with ending support for these products, the Company
wrote off approximately $195,000 of service inventory. Finally, the
Company wrote off approximately $91,000 associated with external
cost paid to develop software tools as being impaired. Certain of
the aforementioned charges are applied to cost of goods sold
(inventories of $291,000) and the remainder to operating expenses
(impairment of $652,000).
For the 2020 fourth quarter, gross margin as a percentage of
sales was 47.0%, as compared to 55.9% in the fourth quarter of
2019. For all of 2020, gross margin was 53.2%, compared to 58.2%
for the prior year. Excluding the impairment related obsolete
inventory items, adjusted gross margin was approximately 52.9% in
the fourth quarter of 2020 and 54.7% for the full year.
Total operating expenses in the fourth quarter of 2020 were $3.8
million or $3.2 million excluding one-time items which would have
been a 13% reduction from operating expenses of $3.6 million in the
2019 period. Data I/O maintained consistent R&D expenses of
$1.6 million in the fourth quarter of both 2020 and 2019.
Reflecting process improvements and ongoing management of expenses,
selling, general and administrative expenses were reduced by
$472,000 or 23% for the fourth quarter. For the full year, total
operating expenses were $13.9 million or $13.2 million excluding
one-time items which would have been a reduction of more than 4% as
compared with $13.8 million for 2019.
Adjusted earnings before interest, taxes, depreciation and
amortization, which excludes equity compensation, impairment and
related non-cash, one-time items (“Adjusted EBITDA”) was ($194,000)
in the fourth quarter of 2020, compared to Adjusted EBITDA of
($67,000) in the fourth quarter of 2019. For all of 2020, Adjusted
EBITDA was ($366,000) in 2020 compared to $830,000 in 2019.
While emphasizing cash and working capital management, financial
prudence and operational excellence, Data I/O’s financial condition
remained strong with cash increasing to $14.2 million at December
31, 2020 from $13.0 million at September 30, 2020 and $13.9 million
at December 31, 2019. The Company had net working capital of $18.1
million at December 31, 2020, and continues to have no debt.
Conference Call Information
A conference call discussing financial results for the fourth
quarter ended December 31, 2020 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 10151977. The
conference call will also be simultaneously webcast over the
Internet; visit the Webcasts and Presentations 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. Forward-looking
statement disclaimers also apply to the global COVID-19 pandemic,
including the expected effects on the Company’s business from
COVID-19, the duration and scope, impact on the demand for the
Company’s products, and the pace of recovery for the COVID-19
pandemic to subside. 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, Adjusted EBITDA
excluding equity compensation and impairment & related charges,
and Adjusted gross margin 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.
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,
2020
2019
2020
2019
Net Sales
$4,941
$5,868
$20,328
$21,568
Cost of goods sold
2,619
2,588
9,506
9,018
Gross margin
2,322
3,280
10,822
12,550
Operating expenses:
Research and development
1,594
1,583
6,357
6,451
Selling, general and administrative
1,567
2,039
6,891
7,377
Impairment
652
-
652
-
Total operating expenses
3,813
3,622
13,900
13,828
Operating income(loss)
(1,491)
(342)
(3,078)
(1,278)
Non-operating income:
Interest income
1
6
14
53
Gain on sale of assets
-
4
-
64
Foreign currency transaction gain
(loss)
(211)
(185)
(513)
5
Total non-operating income
(210)
(175)
(499)
122
Income(loss) before income taxes
(1,701)
(517)
(3,577)
(1,156)
Income tax (expense) benefit
55
21
(387)
(31)
Net income(loss)
($1,646)
($496)
($3,964)
($1,187)
Basic earnings(loss) per share
($0.20)
($0.06)
($0.48)
($0.14)
Diluted earnings(loss) per share
($0.20)
($0.06)
($0.48)
($0.14)
Weighted-average basic shares
8,416
8,212
8,333
8,247
Weighted-average diluted shares
8,416
8,212
8,333
8,247
DATA I/O CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(UNAUDITED)
December 31, 2020
December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$14,167
$13,936
Trade accounts receivable, net of
allowance for
doubtful accounts of $66 and $80,
respectively
2,494
4,099
Inventories
5,270
5,020
Other current assets
1,319
924
TOTAL CURRENT ASSETS
23,250
23,979
Property, plant and equipment – net
1,216
1,668
Income tax receivable
-
640
Other assets
1,126
1,994
TOTAL ASSETS
$25,592
$28,281
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$1,245
$1,151
Accrued compensation
1,509
1,541
Deferred revenue
1,068
1,387
Other accrued liabilities
1,307
1,372
Income taxes payable
62
31
TOTAL CURRENT LIABILITIES
5,191
5,482
Operating lease liabilities
588
1,178
Long-term other payables
174
91
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, 8,416,335 shares
as of December 31,
2020 and 8,212,748 shares as of December
31, 2019
20,071
18,748
Accumulated earnings (deficit)
(1,456)
2,508
Accumulated other comprehensive income
1,024
274
TOTAL STOCKHOLDERS’ EQUITY
19,639
21,530
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$25,592
$28,281
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended December
31,
Twelve Months Ended December
31,
2020
2019
2020
2019
(in thousands)
Net Income (loss)
($1,646)
($496)
($3,964)
($1,187)
Interest (income)
(1)
(6)
(14)
(53)
Taxes
(55)
(21)
387
31
Depreciation and amortization
194
196
815
868
EBITDA
($1,508)
($327)
($2,776)
($341)
Equity compensation
371
260
1,467
1,171
Impairment & related charges
943
-
943
-
Adjusted EBITDA, excluding equity
compensation and impairment & related charges
($194)
($67)
($366)
$830
(in thousands)
Gross Margin
$2,322
$3,280
$10,822
$12,550
Impairment related obsolete inventory
charges
291
-
291
-
Adjusted gross margin excluding impairment
related obsolete inventory charges
$2,613
$3,280
$11,113
$12,550
Gross Margin as a % of sales
47.0%
55.9%
53.2%
58.2%
Impairment related obsolete inventory
charges as a % of sales
5.9%
0.0%
1.5%
0.0%
Adjusted gross margin excluding impairment
related obsolete inventory charges as a % of sales
52.9%
55.9%
54.7%
58.2%
Impairment & related charges include
the following:
(in thousands)
Impairment charges
$652
-
$652
-
Obsolete inventory charges
291
-
291
-
Total impairment & related charges
$943
-
$943
-
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210225005965/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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