Profitability Ramps with Continued Strong
Bookings and Significant Operating Leverage
Backlog and Deferred Revenue Remain
High
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,
2022.
Third Quarter 2022 Highlights
- Net sales of $7.2 million; bookings of $7.1 million
- Quarter-end backlog of $4.9 million
- Gross margin as a percentage of sales of 57.0%
- Net income of $847,000 or $0.10 per share
- Adjusted EBITDA* of $1.4 million
- Cash & Equivalents of $11.0 million; no debt
- Automotive Electronics represented 70% of third quarter 2022
bookings
- VerifyBoostTM Technology announced with up to 4.5x improvement
in programming verify performance for automotive UFS
applications
- SentriX® customer going into production in Asia
- 4 new customer wins
*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, 2022,
Anthony Ambrose, President and CEO of Data I/O Corporation, said,
“Our performance in the third quarter was outstanding as we
delivered strong bookings, operating income and cash generation.
For the fourth consecutive quarter, we achieved bookings in excess
of $6.0 million, with third quarter 2022 bookings of $7.1 million
reaching the highest level in the past year, and the highest level
for the third quarter in 5 years. Backlog at the end of the 2022
third quarter of $4.9 million was at the highest level for any
third quarter period in the past 10 years.
“We continue to gain share in automotive. Automotive electronics
represented 70% of third quarter bookings, and 63% of bookings so
far this year. We had 4 new customer wins in automotive and
industrial during the third quarter.
“Earlier this week, we announced VerifyBoostTM technology to
support the automotive memory market. VerifyBoost is a patent
pending technology that significantly improves UFS memory
programming times by accelerating the verify portion of the
programming cycle over 4.5x. This is game-changing for our
automotive customers. This technology is available as a license for
new and existing systems with our Lumen®X programmers.
“The Company’s factories in the U.S. and China are back on track
and running at normal capacity. As expected, we delivered
profitability in adjusted EBITDA and net income, an increase in
cash, and a return to more normal levels for key balance sheet
items. With a strong sales funnel and high backlog and deferred
revenue, we are off to a fast start for the fourth quarter. It’s an
exciting time for Data I/O.”
Financial Results
Net sales in the third quarter of 2022 were $7.2 million, up 7%
as compared with $6.7 million in the third quarter of 2021. The
increase reflects strength in automotive electronics and industrial
markets, partially offset by the impact of a strong US Dollar.
Total recurring and consumable revenues including adapter sales
represented $3.2 million or 44% of total revenues in the third
quarter of 2022, up 19% as compared with $2.7 million or 39% of
total revenues in the third quarter 2021 total.
Third quarter 2022 bookings were $7.1 million, up 11% from $6.4
million in the second quarter of 2022 and 42% from $5.0 million in
the third quarter of the prior year. Backlog at September 30, 2022
was approximately $4.9 million, down from $5.8 million at June 30,
2022, and $3.3 million at September 30, 2021. Additionally, there
is approximately $300,000 of deferred systems revenue anticipated
to become revenue in the fourth quarter.
Gross margin as a percentage of sales was 57.0% in the third
quarter of 2022, as compared to 60.7% in the same period of the
prior year. The difference in gross margin as a percentage of sales
is primarily due to currency strength of the US Dollar, which is up
approximately 15% versus the Euro and Yuan.
Total operating expenses in the third quarter of 2022 of $3.4
million were down approximately $547,000 or 13.9% as compared to
the 2021 period of $3.9 million. R&D expenses were $1.4 million
in the third quarter of 2022 compared to $1.7 million in the third
quarter of the prior year. Selling, general and administrative
expenses were $2.0 million in the third quarter of 2022 compared to
$2.2 million in the third quarter of the prior year. The lower
operating expense in the third quarter of 2022 was primarily a
result of disciplined spending, lower incentive compensation and
effects of the strong US Dollar.
Net income in the third quarter of 2022 was $847,000, or $0.10
per share, compared with net income of $12,000, or $0.00 per share,
in the third quarter of 2021. Included in net income are foreign
currency transaction gain/(loss) of $307,000 in the third quarter
of 2022 and ($26,000) in the third quarter of the prior year.
Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”), which excludes equity
compensation, was $1,431,000 in the third quarter of 2022, compared
to Adjusted EBITDA of $564,000 in the third quarter of 2021.
For the fourth quarter of 2022, the Company expects to ship the
majority of backlog and systems in deferred revenue as of September
30. The Company also expects relatively flat currency exchange and
flat operating expenses as compared to the third quarter, with
gross margin in the mid 50’s.
Data I/O’s balance sheet remained strong with cash at the end of
the third quarter of 2022 of $11.0 million, up from $10.3 million
at June 30, 2022. The increase in cash primarily reflects operating
profitability and faster collections on increased receivables. Data
I/O had net working capital of $16.5 million at September 30, 2022,
up from $15.9 million at the end of the 2022 second quarter. The
Company continues to have no debt.
Conference Call Information
A conference call discussing financial results for the third
quarter ended September 30, 2022 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
1626055. 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 electronics devices.
Today, our customers use Data I/O’s data programming solutions and
security deployment platform to secure the global electronics
supply chain and protect IoT device intellectual property from
point of inception to deployment in the field. OEMs of any size can
program and securely provision devices from early samples all the
way to high volume production prior to shipping semiconductor
devices to a manufacturing line. Data I/O enables customers to
reliably, securely, and cost-effectively bring innovative new
products to life. These solutions are backed by a portfolio of
patents and 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,
semiconductor 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 Shanghai’s COVID-19
lockdowns, 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, and the Russian invasion of Ukraine including
any related international trade restrictions. These factors include
uncertainties as to the ability to record revenues based upon the
timing of product deliveries, shipping availability, 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,
2022
2021
2022
2021
Net Sales
$7,212
$6,730
$16,946
$19,478
Cost of goods sold
3,101
2,642
7,774
8,215
Gross margin
4,111
4,088
9,172
11,263
Operating expenses:
Research and development
1,432
1,730
4,605
5,009
Selling, general and administrative
1,967
2,216
5,943
6,332
Total operating expenses
3,399
3,946
10,548
11,341
Operating income (loss)
712
142
(1,376)
(78)
Non-operating income (loss):
Interest income
9
8
11
11
Gain on sale of assets
-
-
57
-
Foreign currency transaction gain
(loss)
307
(26)
378
(64)
Total non-operating income (loss)
316
(18)
446
(53)
Income (loss) before income taxes
1,028
124
(930)
(131)
Income tax (expense) benefit
(181)
(112)
(700)
(219)
Net income (loss)
$847
$12
($1,630)
($350)
Basic earnings (loss) per share
$0.10
$0.00
($0.19)
($0.04)
Diluted earnings (loss) per share
$0.10
$0.00
($0.19)
($0.04)
Weighted-average basic shares
8,816
8,621
8,715
8,519
Weighted-average diluted shares
8,859
8,760
8,715
8,519
DATA I/O CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(UNAUDITED)
September 30, 2022
December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$11,041
$14,190
Trade accounts receivable, net of
allowance for doubtful accounts of $98 and $89, respectively
4,412
3,995
Inventories
7,104
6,351
Other current assets
615
737
TOTAL CURRENT ASSETS
23,172
25,273
Property, plant and equipment – net
983
946
Other assets
2,314
2,838
TOTAL ASSETS
$26,469
$29,057
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$1,533
$1,373
Accrued compensation
1,631
2,496
Deferred revenue
1,805
1,507
Other accrued liabilities
1,543
1,413
Income taxes payable
170
-
TOTAL CURRENT LIABILITIES
6,682
6,789
Operating lease liabilities
1,659
2,277
Long-term other payables
203
138
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, 8,816,381 shares as of September 30, 2022 and
8,621,007 shares as of December 31, 2021
21,656
20,886
Accumulated earnings (deficit)
(3,641)
(2,011)
Accumulated other comprehensive income
(90)
978
TOTAL STOCKHOLDERS’ EQUITY
17,925
19,853
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$26,469
$29,057
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
(in thousands)
Net Income (loss)
$847
$12
($1,630)
($350)
Interest (income)
(9)
(8)
(11)
(11)
Taxes
181
112
700
219
Depreciation and amortization
148
168
441
516
EBITDA earnings (loss)
$1,167
$284
($500)
$374
Equity compensation
264
280
935
960
Adjusted EBITDA, excluding equity
compensation
$1,431
$564
$435
$1,334
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221027005913/en/
Joel Hatlen Chief Operating and Financial Officer Data I/O
Corporation
Jordan Darrow (512) 551-9296 jdarrow@darrowir.com
Data I O (NASDAQ:DAIO)
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