Exhibit 99.1

 

 

 

Investor Relations Contacts:

 

Lantronix, Inc.
Jeremy Whitaker

Chief Financial Officer
(949) 453-3990

 

E.E. Wang Lukowski

investors@lantronix.com

949-614-5879

 

Lantronix Reports First Quarter Fiscal Year 2013 Financial Results

 

--Company Reports GAAP Net Loss of $(0.03) Per Share and

Non-GAAP Net Income of $0.00 per share--

 

Irvine, Calif., November 1, 2012 – 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%.

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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

 

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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.

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In September 2012, Fry’s Electronics Mega Stores began carrying the xPrintServer™ product line nationwide.

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In September 2012, Lantronix appointed networking sales veteran Lei Zhong as its sales director for the Asia Pacific region, excluding Japan.

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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

 

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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.

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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.

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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 Net								% of 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 Net								% of 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%