Year-over-year Increase in Profits and Cash
Generation Reflect Continued Business Momentum
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 first quarter ended March 31, 2023.
First Quarter 2023 Highlights
- Net sales of $7.2 million; bookings of $5.7 million
- Quarter-end backlog of $3.2 million
- Gross margin as a percentage of sales of 59.5%
- Net income of $95,000 or $0.01 per diluted share
- Adjusted EBITDA* of $502,000
- Cash & Equivalents of $11.9 million; no debt
- Automotive Electronics represented 63% of first quarter 2023
bookings
- SentriX® traction in Asia with Nuvoton Technology Corporation
Japan and Noa Leading Co., Ltd. partnership announcements
- 10 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 fiscal first quarter ended March 31, 2023,
Anthony Ambrose, President and CEO of Data I/O Corporation, said,
“We are very pleased to report continued strong conditions through
the first three months of 2023, which marks the third quarter in a
row of more normalized operations. Our first quarter performance is
highlighted by 46% top line growth and, reflecting our significant
operating leverage, a nearly $2 million swing in net income as
compared to the first quarter 2022. Quarterly revenues reached the
highest first quarter level since 2018.
“Year-over-year financial performance comparisons reflect
continued growth in sales combined with the elimination of
operational barriers from 2022 (the COVID shutdown in Shanghai,
China and semiconductor supply chain shortages). In addition, we
benefited in the first quarter 2023 from the impact of a weaker US
dollar against foreign currencies.
“Demand is being driven by continued growth in the automotive
electronics market based upon the amount of programmable content
per vehicle and market share gains by EVs over traditional
combustion engine vehicles. The automotive market accounted for
over 63% of bookings in the first quarter 2023. Automotive
continues to represent the largest, fastest growing and most
attractive market segment for our programming technologies. We are
very well positioned to capitalize on the growth for advanced
programming requirements for digitally enhanced connected cars as
well as IoT devices, particularly as a security layer is bundled
with firmware to provide physical protection of mobile assets. In
addition, we are experiencing strength in the industrial sector as
factories continue to automate globally and IoT devices demand more
security. We had 10 new customer wins in automotive and industrial
during the first three months of the year, an impressive
achievement following at least 20 new customers in each of the past
two full years.
“Our worldwide installed base of PSV systems increased to over
450 machines reported at the end of March. This is helping to
create a more sustainable revenue profile through recurring and
consumable sales. SentriX®, our security technology platform,
contributes to these revenues. In the first quarter, we had strong
pay-per-use revenue with SentriX and announced new developments in
the strategically important Japanese market. A new partnership was
launched with Noa Leading Co., Ltd. to establish the first SentriX
security provisioning service in Japan, and a separate
collaboration was formed with Nuvoton Technology Corporation Japan
to enable security deployment services for one of its IoT
microcontroller product lines.
“We are off to a great start for 2023 as we deliver on our
growth strategies. We have emerged even stronger and more resilient
from last year’s operational challenges as proven by our
performance in the past three quarters. The Company’s sales funnel
remains robust as we benefit from secular and regulatory growth
trends moving in our favor. For 2023, we believe Data I/O is on
track for double digit annual revenue growth, increased net income
and cash flow generation.”
Financial Results
Data I/O’s financial results featured strong revenues, gross
margin, and profitability for the first quarter 2023. This is
combined with growth in cash and working capital, and a strong
balance sheet that is debt free.
Net sales in the first quarter 2023 were $7.2 million, up 46% as
compared with $5.0 million in the first quarter 2022. The increase
from the prior year period primarily reflects a more normalized
operating environment. The Company continues to benefit from higher
overall demand for equipment and higher adapter usage with a
growing installed base of systems throughout the world. Total
recurring and consumable revenues represented $3.2 million or 44%
of total revenues in the first quarter 2023, as compared with $2.4
million in the first quarter 2022. Revenues in the first quarter
2023 benefited from the impact of the US dollar declining against
foreign currencies during the quarter.
First quarter 2023 bookings were $5.7 million, down from $6.2
million in the first quarter 2022. European orders were lower after
a strong fourth quarter. Asia was flat on COVID related softer
Chinese demand offset by strength elsewhere. Automotive electronics
represented 63% of first quarter bookings compared to 61% for all
of 2022. Backlog at the end of first quarter 2023 remained strong
at $3.2 million, and the Company ended the period with deferred
revenue of $2.0 million.
Gross margin as a percentage of sales was 59.5% in the first
quarter 2023, as compared to 46.4% 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. Product and channel mix as well as factory variances
also contributed to the strong first quarter 2023 gross margin
performance.
Total operating expenses in the first quarter 2023 of $4.1
million were up approximately $469,000 as compared to the 2022
period of $3.7 million. R&D expenses were $1.6 million in the
first quarter 2023 compared to $1.6 million in the first quarter of
the prior year. Selling, general and administrative (“SG&A”)
expenses were $2.5 million in the first quarter 2023 compared to
$2.0 million in the first quarter of the prior year. The marginally
higher operating expenses against a more significant increase in
revenue in the first quarter 2023 as compared to the prior year
period are primarily a result of higher channel and incentive
compensation and recruiting costs amid continued disciplined
expense management. First quarter operating expenses are typically
higher than other quarters of the year due to annual payments for
incentive and other forms of compensation and public company costs
including audit and NASDAQ fees.
Net income in the first quarter 2023 was $95,000, or $0.01 per
diluted share, compared with a net loss of ($1,820,000), or ($0.21)
per share, for the first quarter 2022. Included in taxes during the
first quarter 2022 were dividend withholding taxes of $442,000.
Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”), which excludes equity
compensation, was $502,000 in the first quarter 2023, compared to
Adjusted EBITDA of ($932,000) in the first quarter 2022.
Data I/O’s balance sheet remained strong with cash at the end of
the first quarter 2023 of $11.9 million, up from $11.5 million on
December 31, 2022. The increase in cash from December 31, 2022
primarily reflects operating profitability and favorable foreign
currency exchange rates partially offset by expected use of cash
for one-time or annual seasonal cash requirements. Data I/O had net
working capital of $18.0 million on March 31, 2023, up from $17.6
million on December 31, 2022. The Company continues to have no
debt.
Financial Outlook for 2023
The Company provided a financial outlook for 2023 upon reporting
year end 2022 results. The first quarter 2023 financial results
affirm the improved visibility and ongoing strength in the
Company’s primary end markets. For 2023, the Company continues to
expect:
- Double-digit revenue growth, consistent with the long-term
double-digit semiconductor growth rate in the automotive
electronics industry;
- Gross margins to be in the mid-to-high 50% range for the year;
and
- Operating expenses to be consistent with 2022, except for
variability in incentive compensation, sales commissions, and
currency.
Financial results expectations are provided on a constant
currency basis effective January 1, 2023.
Conference Call Information
A conference call discussing financial results for the first
quarter ended March 31, 2023 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 4646317. 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. See:
dataio.com/Company/Patents.
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 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 March
31,
2023
2022
Net Sales
$7,231
$4,965
Cost of goods sold
2,929
2,662
Gross margin
4,302
2,303
Operating expenses:
Research and development
1,625
1,616
Selling, general and administrative
2,508
2,048
Total operating expenses
4,133
3,664
Operating income (loss)
169
(1,361
)
Non-operating income (loss):
Interest income
35
1
Gain on sale of assets
-
58
Foreign currency transaction gain
(loss)
(74
)
(60
)
Total non-operating income (loss)
(39
)
(1
)
Income (loss) before income taxes
130
(1,362
)
Income tax (expense) benefit
(35
)
(458
)
Net income (loss)
$95
($1,820
)
Basic earnings (loss) per share
$0.01
($0.21
)
Diluted earnings (loss) per share
$0.01
($0.21
)
Weighted-average basic shares
8,818
8,622
Weighted-average diluted shares
9,029
8,622
DATA I/O CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(UNAUDITED)
March 31, 2023
December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$11,868
$11,510
Trade accounts receivable, net of
allowance for
doubtful accounts of $142 and $147,
respectively
4,932
4,992
Inventories
6,976
6,751
Other current assets
684
645
TOTAL CURRENT ASSETS
24,460
23,898
Property, plant and equipment – net
1,000
1,072
Other assets
2,012
2,195
TOTAL ASSETS
$27,472
$27,165
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$1,534
$1,366
Accrued compensation
1,493
1,670
Deferred revenue
1,733
1,575
Other accrued liabilities
1,544
1,596
Income taxes payable
124
112
TOTAL CURRENT LIABILITIES
6,428
6,319
Operating lease liabilities
1,298
1,500
Long-term other payables
221
237
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, 8,818,076 shares
as of March 31,
2023 and 8,816,381 shares as of December
31, 2022
22,153
21,897
Accumulated earnings (deficit)
(3,036
)
(3,131
)
Accumulated other comprehensive income
408
343
TOTAL STOCKHOLDERS’ EQUITY
19,525
19,109
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$27,472
$27,165
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended March
31,
2023
2022
(in thousands)
Net Income (loss)
$95
($1,820
)
Interest (income)
(35
)
(1
)
Taxes
35
458
Depreciation and amortization
158
140
EBITDA earnings (loss)
$253
($1,223
)
Equity compensation
249
291
Adjusted EBITDA, excluding equity
compensation
$502
($932
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230427005828/en/
Joel Hatlen Chief Operating and Financial Officer Data I/O
Corporation Darrow Associates, Inc. Jordan Darrow (512) 551-9296
jdarrow@darrowir.com
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