Equipment Sales and Recurring/Consumable
Strategy in Focus as Revenues Rise 13%
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 third quarter ended September 30,
2021.
Third Quarter 2021 Highlights
- Net sales of $6.7 million, up 13% from the prior year; bookings
of $5.0 million
- Quarter-end backlog of $3.3 million
- Gross margin as a percentage of sales of 60.7%
- Net income of $12,000 or $0.00 earnings per share
- Adjusted EBITDA* of $564,000
- Cash & Equivalents of $14.2 million; no debt
- Automotive Electronics represented 61% of third quarter 2021
bookings
- Growth in SentriX® Security Deployment Platform supports and
design wins
- Deployed first SentriX capital equipment order with software
license
*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, 2021,
Anthony Ambrose, President and CEO of Data I/O Corporation, said,
“We are pleased to return to profitability in the third quarter.
Performance in the quarter was driven by the recovery in the
automotive electronics market, solid delivery performance of our
factories in challenging conditions, and continued strength in
adapters. Revenues increased 13% in the third quarter as compared
to the prior year, and are up 27% year-to-date as compared to the
same period in 2020.
“Bookings of $19.2 million through the first nine months of the
year increased 30% over the same period of the prior year. Third
quarter bookings of $5 million were down from $8.9 million in the
second quarter, which we believe reflects a pull in of orders from
the third quarter into the second quarter, and pushouts from
customers who had not yet secured adequate silicon supply for their
planned capacity expansion.
“Adapter bookings in the third quarter of 2021 remained strong.
Our increasing installed base of PSV machines provide recurring and
consumable revenues which supplement our capital equipment sales.
Additionally, we have seen customers qualifying second source
designs which require new adapters from Data I/O. We have also seen
increased software and service contract bookings year-to-date,
which will increase revenue as it is recognized.
“Our resilient supply chain delivered well in the third quarter.
Our factories in Redmond and Shanghai were able to ship despite
global supply shortages, shipping issues, and ongoing concerns with
COVID-19 in many customer locations. Our strategy to extend our
purchase commitments for the PSV family late last year has paid
dividends for us and our customers. We are maintaining lead times
on the PSV family and are ready to respond to the next uptick in
orders. The industry sees a decade of 10-15% long term growth rate
in silicon for the automotive electronics market, and Data I/O is
extremely well positioned in this space with about 60% of our sales
to the automotive industry. While we expect some short-term
turbulence in demand as silicon remains constrained, we are
investing for this long-term growth trend.
“We believe the continued execution of our operational and
growth strategies has positioned Data I/O as the most resilient
market leader with unparalleled secure programming technologies and
the strongest balance sheet. As the automotive industry operating
environment returns to more normal times, we expect to benefit from
the resurgence of demand for both machines and consumables with the
increase in automotive demand. This should enable the Company to
demonstrate its full earnings and cash flow leverage.”
Financial Results
Net sales in the third quarter of 2021 were $6.7 million, up 13%
as compared with $5.9 million in the third quarter of 2020. The
increase from the prior year period primarily reflects higher
overall demand for equipment, higher adapter usage and growing
installed base of systems throughout the world. Recurring and
consumable revenues which includes adapter sales represented $2.7
million or 39% of total revenues in the third quarter 2021, as
compared with $2.1 million or 35% of the lower third quarter 2020
total.
Third quarter 2021 bookings were $5.0 million, down from $5.6
million in the third quarter of the prior year. Backlog at
September 30, 2021 was approximately $3.3 million, down from $5.0
million at June 30, 2021 and up from $2.8 million at September 30,
2020.
Gross margin as a percentage of sales was 60.7% in the third
quarter of 2021, as compared to 55.1% in the same period of the
prior year. The difference in gross margin as a percentage of sales
primarily reflects the impact of higher sales volume on relatively
fixed costs, improved factory variances and channel mix in the 2021
period.
Total operating expenses in the third quarter of 2021 were $3.9
million, as compared to operating expenses of $3.4 million in the
2020 period. Data I/O’s R&D expenses were $1.7 million in the
third quarter of 2021 and $1.6 million in the third quarter of
2020. Selling, general and administrative expenses in the third
quarter of 2021 increased by approximately $406,000 from the prior
year period primarily due to higher sales commissions associated
with the increased demand for programming equipment, as well as
higher incentive compensation.
Net income in the third quarter of 2021 was $12,000, or $0.00
per share, compared with a net loss of ($707,000), or ($0.09) per
share, for the third quarter of 2020. Included in net loss are
foreign currency transaction losses of ($26,000) for the 2021
period and ($271,000) for the third quarter of 2020.
Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”), which excludes equity
compensation, was $564,000 in the third quarter of 2021, compared
to Adjusted EBITDA of $169,000 in the third quarter of 2020.
Data I/O’s financial condition remained strong with cash of
$14.2 million at September 30, 2021, up from $13.0 million at June
30, 2021. The difference in the cash balance from the end of the
second quarter primarily reflects the shift in working capital from
accrued expenses and collection of receivables, partially offset by
increased inventory related to the continued and anticipated
improvement in market conditions. Data I/O had net working capital
of $18.5 million at September 30, 2021, up from $18.2 million at
June 30, 2021, and $18.1 million at December 31, 2020, and
continues to have no debt.
Conference Call Information
A conference call discussing financial results for the third
quarter ended September 30, 2021 will follow this release today at
2 p.m. Pacific Time/5 p.m. Eastern Time. To listen to the
conference call, please dial 412-317-5788. 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
10160692. 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,
silicon chip shortages, supply chain expectations, 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, part shortages and
other risks including those described in the Company's filings on
Forms 10-K and 10-Q 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.
- 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,
2021
2020
2021
2020
Net Sales
$
6,730
$
5,947
$
19,478
$
15,387
Cost of goods sold
2,642
2,670
8,215
6,887
Gross margin
4,088
3,277
11,263
8,500
Operating expenses:
Research and development
1,730
1,567
5,009
4,763
Selling, general and administrative
2,216
1,810
6,332
5,324
Total operating expenses
3,946
3,377
11,341
10,087
Operating income(loss)
142
(100
)
(78
)
(1,587
)
Non-operating income:
Interest income
8
4
11
13
Foreign currency transaction gain
(loss)
(26
)
(271
)
(64
)
(302
)
Total non-operating income(loss)
(18
)
(267
)
(53
)
(289
)
Income(loss) before income taxes
124
(367
)
(131
)
(1,876
)
Income tax (expense) benefit
(112
)
(340
)
(219
)
(442
)
Net income(loss)
$
12
($
707
)
($
350
)
($
2,318
)
Basic earnings(loss) per share
$
0.00
($
0.09
)
($
0.04
)
($
0.28
)
Diluted earnings(loss) per share
$
0.00
($
0.09
)
($
0.04
)
($
0.28
)
Weighted-average basic shares
8,621
8,394
8,519
8,305
Weighted-average diluted shares
8,760
8,394
8,519
8,305
DATA I/O CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(UNAUDITED)
September 30,
2021
December 31,
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
14,241
$
14,167
Trade accounts receivable, net of
allowance for
doubtful accounts of $84 and $66,
respectively
4,051
2,494
Inventories
6,050
5,270
Other current assets
518
1,319
TOTAL CURRENT ASSETS
24,860
23,250
Property, plant and equipment – net
940
1,216
Other assets
1,454
1,126
TOTAL ASSETS
$
27,254
$
25,592
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
1,527
$
1,245
Accrued compensation
2,206
1,509
Deferred revenue
1,223
1,068
Other accrued liabilities
1,281
1,307
Income taxes payable
141
62
TOTAL CURRENT LIABILITIES
6,378
5,191
Operating lease liabilities
942
588
Long-term other payables
221
174
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, 8,621,007 shares
as of September 30,
2021 and 8,416,335 shares as of December
31, 2020
20,608
20,071
Accumulated earnings
(1,806
)
(1,456
)
Accumulated other comprehensive income
911
1,024
TOTAL STOCKHOLDERS’ EQUITY
19,713
19,639
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
27,254
$
25,592
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(in thousands)
Net Income (loss)
$
12
($
707
)
($
350
)
($
2,318
)
Interest (income)
(8
)
(4
)
(11
)
(13
)
Taxes
112
340
219
442
Depreciation and amortization
168
174
516
620
EBITDA earnings (loss)
$
284
($
197
)
$
374
($
1,269
)
Equity compensation
280
366
960
1,096
Adjusted EBITDA earnings (loss)
$
564
$
169
$
1,334
($
173
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028005964/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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