Lantronix, Inc. (the "company") (NASDAQ: LTRX), a leading global
provider of smart M2M connectivity solutions, today reported
results for its first quarter ended September 30, 2012.
Financial Highlights
- Net revenue of $11.2 million.
- Gross profit as a percentage of net revenue was 48.8%.
- GAAP net loss of $(430,000), or ($0.03) per share.
- Non-GAAP net income of $48,000, or $0.00 per share.
Operational Highlights
- In August 2012, the company launched its new, enhanced global
premier partner program, directed at expanding sales opportunities
for its solutions providers, systems integrators, product vendors
and distributors.
- In September 2012, Fry's Electronics Mega Stores began carrying
the xPrintServer™ product line nationwide.
- In September 2012, Lantronix appointed networking sales veteran
Lei Zhong as its sales director for the Asia Pacific region,
excluding Japan.
- In October 2012, the company entered into an agreement with
Ingram Micro Europe, a division of Ingram Micro Inc. (NYSE: IM),
the largest global wholesale provider of technology products and
supply chain management services. Under terms of the agreement,
Ingram Micro Europe will provide advanced logistics, product
delivery and distribution services for Lantronix throughout Europe.
Ingram Micro Europe will focus on external device enablement and
device management product families to leverage their strong
presence in data center and IT management.
Product Highlights
- In July 2012, the company began shipping samples of the
xSenso™, the first of a family of analog device servers that
enables remote monitoring, real-time charting and event
notification for virtually any analog sensor.
- In July 2012, the company began shipping its xPrintServer™ --
Home Edition, designed specifically for home use by consumers
wishing to print from their iPad®, iPhone® or iPod® Touch to a USB
or network printer.
- In October 2012, the company began shipping the xDirect™ device
server -- a compact serial-to-Ethernet device server that provides
quick and easy connectivity to virtually any device or machine with
a serial interface. Featuring plug-and-play simplicity and a small
form factor, xDirect is suitable for a variety of markets including
security, industrial automation, medical and more.
- Today, the company announced the launch and worldwide
availability of its new vSLM™ -- the Virtual Secure Lantronix
Management Appliance -- a software solution designed to enable IT
(information technology) managers to seamlessly integrate and
manage multiple pieces of IT equipment anywhere in the
enterprise.
"In spite of the economic situation that continued to impact
sales in Europe, we were encouraged by the ramp of new product
revenues during the first quarter, and we made significant progress
on our strategic plan to expand our sales and marketing efforts,"
said CEO Kurt Busch. "While we continue to closely manage our
expenses in alignment with fluctuating market conditions, our focus
in the current fiscal year continues to be on executing our growth
strategy to become the leading provider of secure, feature rich and
simple to deploy machine to machine solutions."
Financial Results for the First Quarter of
Fiscal 2013 Ended September 30, 2012
Net revenue was $11.2 million for the first quarter of fiscal
2013, an increase of $18,000, compared to $11.2 million for the
first quarter of fiscal 2012 and a decrease of $0.4 million or 4%,
compared to $11.6 million for the fourth quarter of fiscal
2012.
Net revenue from embedded device enablement products in the
first quarter of fiscal 2013 was $5.8 million, or 52% of net
revenue, compared to $5.5 million, or 49% of net revenue, in the
first quarter of fiscal 2012, an increase of $0.3 million, or 6%.
Net revenue from external device enablement products was $3.3
million, or 29% of net revenue, in the first quarter of fiscal 2013
compared to $3.3 million, or 29% of net revenue, in the first
quarter of fiscal 2012, a decrease of $11,000, or less than 1%. Net
revenue from device management products was $2.1 million, or 19% of
net revenue, in the first quarter of fiscal 2013 compared to $2.4
million, or 22% of net revenue, in the first quarter of fiscal
2012, a decrease of $0.3 million, or 12%.
Net revenue in the Americas was $6.0 million in the first
quarter of fiscal 2013, compared to $5.7 million in the first
fiscal quarter of 2012, an increase of $0.3 million, or 5%. Net
revenue in the Asia Pacific region was $2.2 million in the first
quarter of fiscal 2013 compared to $2.0 million in the first
quarter of fiscal 2012, an increase of $0.2 million, or 9%. Net
revenue in the EMEA region (Europe, Middle East and Africa) was
$3.1 million in the first quarter of fiscal 2013, compared to $3.5
million in the first fiscal quarter of 2012, a decrease of $0.4
million, or 13%.
Gross profit as a percentage of net revenue ("gross margin") was
48.8% for the first quarter of fiscal 2013, compared to 47.4% for
the first quarter of fiscal 2012 and 50.7% for the fourth quarter
of fiscal 2012.
GAAP operating expenses for the first quarter of fiscal 2013
were $5.9 million, a decrease of $0.8 million or 12%, compared to
$6.7 million for the first quarter of fiscal 2012 and a decrease of
$0.1 million or 2%, compared to $6.0 million for the fourth quarter
of fiscal 2012.
- Selling, general and administrative expenses were $4.3 million
for the first quarter of fiscal 2013, a decrease of $0.7 million
compared to $5.0 million for the first quarter of fiscal 2012 and
an increase of $0.1 million compared to $4.2 million for the fourth
quarter of fiscal 2012.
- Research and development expenses were $1.6 million for the
first quarter of fiscal 2013, compared with $1.7 million for the
first quarter of fiscal 2012 and $1.8 million for the fourth
quarter of fiscal 2012.
Non-GAAP operating expenses for the first quarter of fiscal 2013
were $5.5 million, a decrease of $0.6 million or 9%, compared with
$6.1 million for the first quarter of fiscal 2012, and a decrease
of $0.1 million or 2%, compared to $5.7 million for the fourth
quarter of fiscal 2012.
GAAP net loss for the first quarter of fiscal 2013 was
$(430,000), or ($0.03) per share, compared to a GAAP net loss of
$(1.4 million), or ($0.14) per share, for the first quarter of
fiscal 2012 and a GAAP net loss of $(178,000), or ($0.01) per
share, for the fourth quarter of fiscal 2012.
Non-GAAP net income for the first quarter of fiscal 2013 was
$48,000, or $0.00 per share compared to non-GAAP net loss of
$(697,000) or $(0.07) per share for the first quarter of fiscal
2012 and non-GAAP net income of $351,000, or $0.03 per share, for
the fourth quarter of fiscal 2012.
Balance Sheet Summary
Cash and cash equivalents were $10.5 million as of September 30,
2012, compared to $11.4 million as of June 30, 2012.
Accounts receivable were $2.2 million as of September 30, 2012,
compared to $2.7 million as of June 30, 2012.
Net inventories were $7.7 million as of September 30, 2012,
compared to $6.0 million as of June 30, 2012.
Accounts payable were $4.8 million as of September 30, 2012,
compared to $3.6 million as of June 30, 2012.
Working capital was $11.6 million as of September 30, 2012,
compared to $11.9 million as of June 30, 2012.
Discussion of Non-GAAP Financial
Measures
Lantronix believes that the presentation of non-GAAP financial
information, when presented in conjunction with the corresponding
GAAP measures, provides important supplemental information to
management and investors regarding financial and business trends
relating to the Company's financial condition and results of
operations. The non-GAAP financial measures disclosed by the
Company should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the
financial results calculated in accordance with GAAP and
reconciliations to those financial statements should be carefully
evaluated. The non-GAAP financial measures used by the Company may
be calculated differently from, and therefore may not be comparable
to, similarly titled measures used by other companies. The Company
has provided reconciliations of the non-GAAP financial measures to
the most directly comparable GAAP financial measures. Management
believes that non-GAAP operating expenses, non-GAAP net income
(loss) and non-GAAP net income (loss) per share are important
measures of the Company's business. Management uses the
aforementioned non-GAAP measures to monitor and evaluate ongoing
operating results and trends to gain an understanding of our
comparative operating performance.
Non-GAAP operating expenses consist of operating expenses
excluding (i) share-based compensation and related payroll taxes,
(ii) depreciation and amortization, (iii) costs associated with the
2011 independent investigation of certain allegations by a director
of Lantronix, and (iv) consulting fees for former named executive
officers.
Non-GAAP net income (loss) consists of net income (loss)
excluding (i) non-GAAP adjustments to operating expenses, (ii)
interest income (expense), (iii) other income (expense), and (iv)
income tax provision (benefit).
Non-GAAP net income (loss) per share is calculated by dividing
non-GAAP net income (loss) by non-GAAP weighted-average shares
outstanding (diluted). For purposes of calculating non-GAAP net
income (loss) per share, the calculation of GAAP weighted-average
shares outstanding (diluted) is adjusted to exclude share-based
compensation, which for GAAP purposes is treated as proceeds
assumed to be used to repurchase shares under the GAAP treasury
stock method.
Conference Call and Webcast
Lantronix will host a conference call and webcast today at 2:00
p.m. Pacific Time (5:00 p.m. ET) to discuss its first quarter
fiscal year 2013 financial results. Those wishing to participate in
the live call should dial 866-788-0547
(international dial-in 857-350-1685) using the passcode 38014979. A telephone replay of the call will be
available through November 8, 2012 by dialing (888) 286-8010 (international dial-in 617-801-6888) and
entering passcode 59543811.
About Lantronix
Lantronix, Inc. (NASDAQ: LTRX) is a global leader of secure
communication technologies that simplify access and communication
with and between virtually any electronic device. Our smart
connectivity solutions enable sharing data between devices and
applications to empower businesses to make better decisions based
on real-time information, and gain a competitive advantage by
generating new revenue streams, improving productivity and
increasing efficiency and profitability. Easy to integrate and
deploy, Lantronix products remotely and securely connect electronic
equipment via networks and the Internet. Founded in 1989, Lantronix
serves some of the largest medical, security, industrial and
building automation, transportation, retail/POS, financial,
government, consumer electronics/appliances, IT/data center and
pro-AV/signage entities in the world. The company's headquarters
are located in Irvine, California.
For more information, visit www.lantronix.com. The Lantronix
blog, http://www.lantronix.com/blog, features industry discussion
and updates.
Forward-Looking Statements
This news release contains forward-looking statements, including
statements concerning our future business plans, future financial
position, future results of operations and future product
development strategies and schedules. These forward-looking
statements are based on current management expectations and are
subject to risks and uncertainties that could cause actual reported
results and outcomes to differ materially from those expressed in
the forward-looking statements. Factors that could cause our
expectations and reported results to vary, include, but are not
limited to: final accounting adjustments and results; quarterly
fluctuations in operating results; our ability to identify and
profitably develop new products that will be attractive to our
target markets, including products in our device networking
business and the timing and success of new product introductions;
changing market conditions and competitive landscape; market
acceptance of our products by our customers; pricing trends;
actions by competitors; future revenues and margins; changes in the
cost or availability of critical components; unusual or unexpected
expenses; and cash usage including cash used for product
development or strategic transactions; and other factors that may
affect financial performance. For a more detailed discussion of
these and other risks and uncertainties, see our Annual Report on
Form 10-K for the year ended June 30, 2012 and subsequent Reports
on Forms 10-Q and 8-K. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof, and the Company undertakes no obligation to
update these forward-looking statements to reflect subsequent
events or circumstances. If the Company does update or correct one
or more of these forward-looking statements, investors and others
should not conclude that the Company will make additional updates
or corrections.
LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, June 30,
2012 2012
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 10,526 $ 11,374
Accounts receivable, net 2,237 2,674
Contract manufacturers' receivable 656 622
Inventories, net 7,650 5,955
Prepaid expenses and other current assets 718 549
Deferred tax assets 657 657
------------- -------------
Total current assets 22,444 21,831
Property and equipment, net 1,527 1,605
Goodwill 9,488 9,488
Other assets 86 87
------------- -------------
Total assets $ 33,545 $ 33,011
============= =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 4,809 $ 3,563
Accrued payroll and related expenses 1,408 2,100
Warranty reserve 209 232
Short-term debt 667 667
Other current liabilities 3,745 3,342
------------- -------------
Total current liabilities 10,838 9,904
------------- -------------
Non-current liabilities:
Long-term liabilities 302 303
Long-term capital lease obligations 41 48
Long-term debt - 167
Deferred tax liabilities 657 657
------------- -------------
Total non-current liabilities 1,000 1,175
------------- -------------
Total liabilities 11,838 11,079
------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock 1 1
Additional paid-in capital 203,254 203,049
Accumulated deficit (181,947) (181,517)
Accumulated other comprehensive income 399 399
------------- -------------
Total stockholders' equity 21,707 21,932
------------- -------------
Total liabilities and stockholders'
equity $ 33,545 $ 33,011
============= =============
LANTRONIX, INC.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended
September 30,
------------------------
2012 2011
----------- -----------
Net revenue (1) $ 11,202 $ 11,184
Cost of revenue 5,730 5,882
----------- -----------
Gross profit 5,472 5,302
----------- -----------
Operating expenses:
Selling, general and administrative 4,268 4,964
Research and development 1,609 1,695
Amortization of purchased intangible assets - 18
----------- -----------
Total operating expenses 5,877 6,677
----------- -----------
Loss from operations (405) (1,375)
Interest expense, net (15) (27)
Other income (expense), net 5 (29)
----------- -----------
Loss before income taxes (415) (1,431)
Provision for income taxes 15 13
----------- -----------
Net loss and comprehensive loss $ (430) $ (1,444)
=========== ===========
Net loss per share (basic and diluted) $ (0.03) $ (0.14)
=========== ===========
Weighted-average common shares (basic and diluted) 14,558 10,560
=========== ===========
Net revenue from related parties $ 292 $ 237
=========== ===========
(1) Includes net revenue from related parties
LANTRONIX, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share data)
Three Months Ended
September 30,
------------------------
2012 2011
----------- -----------
GAAP net loss $ (430) $ (1,444)
----------- -----------
Non-GAAP adjustments:
Cost of revenue:
Share-based compensation 11 13
Depreciation and amortization 99 95
----------- -----------
Total adjustments to cost of revenue 110 108
----------- -----------
Selling, general and adminstrative:
Costs associated with the investigation - 108
Consulting fees for former CEO and CFO - 153
Share-based compensation 146 81
Employer portion of withholding taxes on
stock grants 1 2
Depreciation and amortization 116 130
----------- -----------
Total adjustments to selling, general and
administrative 263 474
----------- -----------
Research and development:
Share-based compensation 74 66
Employer portion of withholding taxes on
stock grants 2 3
Depreciation and amortization 4 9
----------- -----------
Total adjustments to research and
development 80 78
----------- -----------
Amortization of purchased intangible assets - 18
----------- -----------
Total non-GAAP adjustments to operating
expenses 343 570
----------- -----------
Interest expense, net 15 27
Other income (expense), net (5) 29
Provision for income taxes 15 13
----------- -----------
Total non-GAAP adjustments 478 747
----------- -----------
Non-GAAP net income (loss) $ 48 $ (697)
=========== ===========
Non-GAAP net income (loss) per share (diluted) $ 0.00 $ (0.07)
=========== ===========
Denominator for GAAP net income (loss) per share
(diluted) 14,558 10,560
Non-GAAP adjustment 92 -
----------- -----------
Denominator for non-GAAP net income (loss) per
share (diluted) 14,650 10,560
=========== ===========
GAAP operating expenses $ 5,877 $ 6,677
Non-GAAP adjustments to operating expenses (343) (570)
----------- -----------
Non-GAAP operating expenses $ 5,534 $ 6,107
=========== ===========
LANTRONIX, INC.
Unaudited Net Revenues by Product Line and Region
(In thousands, except percentages)
Three Months Ended September 30,
--------------------------------
% of % of
Net Net Change
-------------
2012 Revenue 2011 Revenue $ %
------- ------- ------- ------- ------ -----
Embedded device enablement $ 5,788 51.7% $ 5,477 49.0% $ 311 5.7%
External device enablement 3,275 29.2% 3,286 29.4% (11) (0.3%)
Device management 2,139 19.1% 2,421 21.6% (282) (11.6%)
------- ------- ------- ------- ------
Net revenue $11,202 100.0% $11,184 100.0% $ 18 0.2%
======= ======= ======= ======= ======
Three Months Ended September 30,
--------------------------------
% of % of
Net Net Change
-------------
2012 Revenue 2011 Revenue $ %
------- ------- ------- ------- ------ -----
Americas $ 5,956 53.2% $ 5,677 50.8% $ 279 4.9%
EMEA 3,077 27.5% 3,515 31.4% (438) (12.5%)
Asia Pacific 2,169 19.3% 1,992 17.8% 177 8.9%
------- ------- ------- ------- ------
Net revenue $11,202 100.0% $11,184 100.0% $ 18 0.2%
======= ======= ======= ======= ======
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Investor Relations Contacts: Lantronix, Inc. Jeremy
Whitaker Chief Financial Officer (949) 453-3990 E.E. Wang Lukowski
investors@lantronix.com 949-614-5879
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