Data I/O Corporation (NASDAQ: DAIO), the leading global provider of
advanced data and security programming solutions for flash, flash-memory
based intelligent devices and microcontrollers, today announced
financial results for the first quarter ended March 31, 2019.
First Quarter 2019 Highlights
- Net sales of $6.1 million; bookings of $6.2 million
- Gross margin as a percentage of sales of 60.8%
- Net income of $26,000 or $0.00 diluted earnings per share
-
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA)*, excluding equity compensation, of $476,000 - Cash & Equivalents of $14.8 million; no debt
-
Repurchased 58,000 shares as part of a $2 million buyback program
authorized in October 2018 -
Automotive electronics, advanced programming and secure provisioning
leadership- Automotive represented 55% of bookings for 1Q19
- Shipped 250th PSV automated device programming system
- Key Contract Manufacturer customer win
-
Embedded World 2019 (Nuremberg, Germany) featured Demonstrations
and Presentations with SentriX® partners Cypress, Digicert and
Microchip -
Ended 1Q19 with 12 partners and 5 system deployments for SentriX
system
*Adjusted EBITDA is a non-GAAP financial measure. A reconciliation is
provided in the tables of this press release.
Management Comments
Commenting on the first quarter ended March 31, 2019, Anthony Ambrose,
President and CEO of Data I/O Corporation, said, “The first quarter was
highlighted by strong margins, expense controls, and favorable variances
amid the continued down cycle for the industry as capacity is absorbed.
Discretionary and variable spending were lower than in the prior year.
Data I/O’s financial condition remains strong and we have made continued
progress as the global leader in programming and security provisioning
solutions. Our long-term growth drivers remain intact and we continue to
invest in our future.
“Automotive customers represented 55% of our total bookings for the
quarter and we had some exciting automotive customer wins. Data I/O
systems are architected to deliver the highest programming performance
today and are extensible to meet projected performance requirements in
the future. Our announcement of TurboBoost™ in the first quarter,
effectively doubling our programming performance in automotive
infotainment applications, further enhanced our lead over the
competition. We also shipped the 250th PSV automated device
programming system in the first quarter, far exceeding any competitor.
We also secured a customer win with a Contract Manufacturer in Southeast
Asia where a competitor had been the supplier of choice. Beyond our
superior financial strength, we believe the investments being made in
our technology and our global support are becoming more evident in the
industry as major competitive advantages.
“We are excited by the interest and momentum in our SentriX platform for
IoT security. In the first quarter, we shipped our 5th system
for deployment in Europe and expect it to come online in the second
quarter. At the Embedded World 2019 trade show in Nuremberg, Germany in
February, the transition to security in IoT was a major theme. Data I/O
presented alongside our SentriX partners Cypress Semiconductor, and
Microchip and DigiCert. As we progress through 2019, we are encouraged
by the prospect of expanding our SentriX platform and bringing early
customers to revenue. We believe the evolution toward secure programming
is inevitable and we have been investing accordingly. At the same time,
we will maintain our commitment to operational excellence and further
enhance our leadership within the other markets we serve, particularly
for automotive electronics, to optimize our financial performance and
improve profitability.“
Financial Results
Net sales in the first quarter of 2019 were $6.1 million, as compared
with $7.6 million in the first quarter of 2018. The year-over-year
decline in sales was a result of strong cyclical demand in 2017 that
culminated in $4.0M of backlog at the end of that year as compared with
backlog of $1.9 million at December 31, 2018.
For the 2019 first quarter, gross margin as a percentage of sales was
60.8%, as compared to 57.9% in the first quarter of 2018. The first
quarter 2019 level exceeded the higher end of the Company’s anticipated
target due to a favorable channel and product mix, and one time
variances.
Total operating expenses in the first quarter of 2019 were $3.7 million,
down from $4.1 million in the 2018 period. The most significant
reduction in expenses on a year-over-year basis pertains to lower
variable incentive compensation accrual, as most other expense
categories were lower as compared to prior periods. Data I/O continues
to actively engage in market development and R&D initiatives while
emphasizing ongoing expense management practices.
Operating income was $29,000 for the first quarter of 2019, down from
$344,000 for the first quarter of 2018. Net income in the first quarter
of 2019 was $26,000, or $0.00 per diluted share, compared with net
income of $130,000, or $0.02 per diluted share, in the first quarter of
2018.
Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) was $189,000 in the first quarter of 2019, compared to
$397,000 in the first quarter of 2018. Adjusted EBITDA, excluding equity
compensation, was $476,000 in the first quarter of 2019, compared to
$574,000 in the first quarter of 2018.
Bookings in the first quarter of 2019 were $6.2 million, compared to
$6.2 million in the first quarter of 2018 and $6.5 million in the fourth
quarter of 2018. Backlog at March 31, 2019 was $2.0 million, as compared
with $1.9 million at December 31, 2018.
Data I/O’s financial condition remains strong with cash of $14.8 million
at March 31, 2019, down from $18.3 million at December 31, 2018 and
$16.8 million at March 31, 2018. Cash was used to fund the inventory
buildup, stock buyback, increased receivables and pay year end accrued
incentive compensation and 401(k) matching.
The first quarter 2019 balance sheet reflects changes made to accounting
for leases (ASC 842) which recognizes a right-of-use asset and a
corresponding liability. As a result, a $2.4 million long term asset,
$660,000 of short term liability, and $1.70 million long term liability
are recognized on the balance sheet. Net working capital of $20.4
million at March 31, 2019 reflects this $660,000 short term liability,
resulting in a net decrease to working capital of $648,000 from $21.1
million at December 31, 2018 and $500,000 from $19.9 million at March
31, 2018. The Company continues to have no debt.
Conference Call Information
A conference call discussing the first quarter ended March 31, 2019,
financial results 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 10130524. The conference call will also be
simultaneously webcast over the Internet; visit the News and Events
section of the Data I/O Corporation website at 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 markets. Today, our customers manufacture hundreds of
millions of products each year using Data I/O 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, assuring 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.
These factors include uncertainties as to the ability to record
revenues based upon the timing of product deliveries, installations and
acceptance, accrual of expenses, 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 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 |
||||||||
| 2019 | 2018 | |||||||
| Net Sales | $ | 6,058 | $ | 7,629 | ||||
| Cost of goods sold | 2,373 | 3,213 | ||||||
| Gross margin | 3,685 | 4,416 | ||||||
| Operating expenses: | ||||||||
| Research and development | 1,681 | 1,879 | ||||||
| Selling, general and administrative | 1,975 | 2,193 | ||||||
| Total operating expenses | 3,656 | 4,072 | ||||||
| Operating income | 29 | 344 | ||||||
| Non-operating income (expense): | ||||||||
| Interest income | 12 | 7 | ||||||
| Gain on sale of assets | 60 | – | ||||||
| Foreign currency transaction gain (loss) | (104 | ) | (176 | ) | ||||
| Total non-operating income (expense) | (32 | ) | (169 | ) | ||||
| Income (loss) before income taxes | (3 | ) | 175 | |||||
| Income tax (expense) benefit | 29 | (45 | ) | |||||
| Net income | $ | 26 | $ | 130 | ||||
| Basic earnings per share | $ | 0.00 | $ | 0.02 | ||||
| Diluted earnings per share | $ | 0.00 | $ | 0.02 | ||||
| Weighted-average basic shares | 8,303 | 8,287 | ||||||
| Weighted-average diluted shares | 8,417 | 8,542 | ||||||
| DATA I/O CORPORATION | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (in thousands, except share data) | ||||||
| (UNAUDITED) | ||||||
|
March 31, |
December 31, |
|||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ | 14,782 | $ | 18,343 | ||
| Trade accounts receivable, net of allowance for | ||||||
| doubtful accounts of $87 and $75, respectively | 4,663 | 3,771 | ||||
| Inventories | 5,744 | 5,185 | ||||
| Other current assets | 854 | 621 | ||||
| TOTAL CURRENT ASSETS | 26,043 | 27,920 | ||||
| Property, plant and equipment – net | 1,969 | 1,985 | ||||
| Income tax receivable | 640 | 598 | ||||
| Other assets | 2,618 | 220 | ||||
| TOTAL ASSETS | $ | 31,270 | $ | 30,723 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Accounts payable | $ | 1,236 | $ | 1,755 | ||
| Accrued compensation | 1,401 | 2,872 | ||||
| Deferred revenue | 1,436 | 1,392 | ||||
| Other accrued liabilities | 1,508 | 789 | ||||
| Income taxes payable | 44 | 47 | ||||
| TOTAL CURRENT LIABILITIES | 5,625 | 6,855 | ||||
| Long-term other payables | 2,153 | 511 | ||||
| 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, 8,287,825 shares as of March 31, | ||||||
| 2019 and 8,338,628 shares as of December 31, 2018 | 19,235 | 19,254 | ||||
| Accumulated earnings | 3,721 | 3,695 | ||||
| Accumulated other comprehensive income | 536 | 408 | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 23,492 | 23,357 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 31,270 | $ | 30,723 | ||
| DATA I/O CORPORATION | ||||||||
| NON-GAAP FINANCIAL MEASURE RECONCILIATION | ||||||||
|
Three Months Ended |
||||||||
| 2019 | 2018 | |||||||
| (in thousands) | ||||||||
| Net Income | $ | 26 | $ | 130 | ||||
| Interest (income) | (12 | ) | (7 | ) | ||||
| Taxes | (29 | ) | 45 | |||||
| Depreciation and amortization | 204 | 229 | ||||||
| EBITDA earnings | $ | 189 | $ | 397 | ||||
| Equity compensation | 287 | 177 | ||||||
| Adjusted EBITDA earnings, | ||||||||
| excluding equity compensation | $ | 476 | $ | 574 | ||||
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