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8-K - CURRENT REPORT ON FORM 8-K - LANTRONIX INClantronix_8k.htm

Exhibit 99.1

 

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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

 

Lantronix Reports Second Quarter Fiscal Year 2013 Financial Results

--Company Reports Fourth Consecutive Quarter of Non-GAAP Income; Company Reports GAAP Net Loss of $(0.03) Per Share and Non-GAAP Breakeven EPS --

 

Irvine, Calif., January 31, 2013 – Lantronix, Inc. (the “company”) (NASDAQ: LTRX), a leading global provider of smart M2M connectivity solutions, today reported results for its second fiscal quarter ended December 31, 2012.

Financial Highlights

§Net revenue of $12.2 million
§Gross profit as a percentage of net revenue of 49.6%
§GAAP net loss of $(412,000), or ($0.03) per share
§Non-GAAP net income of $70,000, or breakeven per share

 

Operational Highlights

§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 which Ingram Micro Europe will provide advanced logistics, product delivery and distribution services for Lantronix throughout Europe.
§In November 2012, the company announced a sales and marketing partnership agreement with DataVision, New York’s largest independent computer and video retailer, under which DataVision agreed to market and sell the Lantronix award-winning xPrintServer™ family of mobile printing solutions both online and through DataVision’s flagship store.
§In November 2012, OKI Data Americas, a leading provider of print management solutions, expanded its relationship with Lantronix to become the first printer manufacturer to resell the Lantronix xPrintServer mobile printing solution.
§In January 2013, the company entered into an agreement with Arrow Electronics, Inc. (NYSE: ARW), to extend Arrow’s product sales programs, product delivery and distribution services for Lantronix throughout the Asia-Pacific (APAC) region.

 

 

 

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Product Highlights

§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. In November 2012, 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 November 2012, the company launched and began shipping the xPrintServer – Office Edition, an enterprise version of its award-winning mobile printing solution.

 

“Our operational and financial results for the quarter ended December 31, 2012 reflect the continued progress we achieved in executing on our strategic plan and marked the fourth consecutive quarter of non-GAAP profitability,” said Lantronix CEO Kurt Busch. “During the quarter, we continued to expand our distribution and sales relationships worldwide, launched three new products, and enhanced Lantronix’ visibility in the marketplace through increased marketing efforts.”

Financial Results for the Second Quarter of Fiscal 2013 Ended December 31, 2012

Net revenue was $12.2 million for the second quarter of fiscal 2013, an increase of $1.7 million or 16%, compared to $10.5 million for the second quarter of fiscal 2012 and an increase of $1.0 million or 9%, compared to $11.2 million for the first quarter of fiscal 2013. In large part, the sequential and year-over-year revenue growth was due to increased unit sales of our xPrintServer and SLC console server product families.

Gross profit as a percentage of net revenue was 49.6% for the second quarter of fiscal 2013, compared to 48.2% for the second quarter of fiscal 2012 and 48.8% for the first quarter of fiscal 2013.

Operating expenses were $6.4 million for the second quarter of fiscal 2013 compared to $6.4 million for the second quarter of fiscal 2012 and increased by $0.5 million or 9%, compared to $5.9 million for the first quarter of fiscal 2013. The sequential change in operating expenses was primarily due to an increase in selling, general and administrative expenses related to a marketing plan we initiated in November 2012 to drive sales growth and brand awareness for the xPrintServer product family.

GAAP net loss for the second quarter of fiscal 2013 was $(412,000), or ($0.03) per share, compared to a GAAP net loss of $(1.4 million), or ($0.13) per share, for the second quarter of fiscal 2012 and a GAAP net loss of $(430,000), or ($0.03) per share, for the first quarter of fiscal 2013.

Non-GAAP net income for the second quarter of fiscal 2013 was $70,000, or $0.00 per share compared to non-GAAP net loss of $(629,000) or $(0.06) per share for the second quarter of fiscal 2012 and non-GAAP net income of $48,000, or $0.00 per share, for the first quarter of fiscal 2013.

Cash and cash equivalents as of December 31, 2012 were $8.5 million, compared to $11.4 million as of June 30, 2012. The decrease in cash was primarily due to an increase in inventory from $6.0 million as of June 30, 2012 to $9.7 million as of December 31, 2012 to support buffer stock and anticipated customer demand.

 

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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 second quarter fiscal year 2013 financial results. Those wishing to participate in the live call should dial 866-700-7477 (international dial-in 617-213-8840) using the passcode 31619690.  A telephone replay of the call will be available through February 7, 2013 by dialing (888) 286-8010 (international dial-in 617-801-6888) and entering passcode 72135803.

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.

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, and (iii) restructuring charges.

 

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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.

 

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.

© 2013 Lantronix, Inc. Lantronix is a registered trademark, and vSLM, xDirect and xPrintServer are trademarks of Lantronix, Inc.

All other trademarks and trade names are the property of their respective holders. Specifications subject to change without notice. All rights reserved.

 

 

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LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
         
   December 31,   June 30, 
   2012   2012 
Assets          
Current assets:          
Cash and cash equivalents  $8,452   $11,374 
Accounts receivable, net   2,348    2,674 
Contract manufacturers' receivable   704    622 
Inventories, net   9,694    5,955 
Prepaid expenses and other current assets   598    549 
Deferred tax assets   657    657 
Total current assets   22,453    21,831 
           
Property and equipment, net   1,426    1,605 
Goodwill   9,488    9,488 
Other assets   79    87 
Total assets  $33,446   $33,011 
           
Liabilities and stockholders' equity          
Current liabilities:          
Accounts payable  $5,126   $3,563 
Accrued payroll and related expenses   1,466    2,100 
Warranty reserve   222    232 
Short-term debt   500    667 
Other current liabilities   3,615    3,342 
Total current liabilities   10,929    9,904 
Non-current liabilities:          
Long-term liabilities   281    303 
Long-term capital lease obligations   78    48 
Long-term debt       167 
Deferred tax liabilities   657    657 
Total non-current liabilities   1,016    1,175 
Total liabilities   11,945    11,079 
           
Commitments and contingencies          
           
Stockholders' equity:          
Common stock   1    1 
Additional paid-in capital   203,460    203,049 
Accumulated deficit   (182,359)   (181,517)
Accumulated other comprehensive income   399    399 
Total stockholders' equity   21,501    21,932 
Total liabilities and stockholders' equity  $33,446   $33,011 

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LANTRONIX, INC.

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

                     
                     
   Three Months Ended   Six Months Ended 
   December 31,   September 30,   December 31,  

 December 31,

 
   2012   2012   2011   2012   2011 
Net revenue (1)  $12,162   $11,202   $10,452   $23,364   $21,636 
Cost of revenue   6,130    5,730    5,411    11,860    11,293 
Gross profit   6,032    5,472    5,041    11,504    10,343 
Operating expenses:                         
Selling, general and administrative   4,719    4,268    4,441    8,987    9,405 
Research and development   1,665    1,609    1,646    3,274    3,341 
Restructuring charges           269        269 
Amortization of purchased intangible assets           18        36 
Total operating expenses   6,384    5,877    6,374    12,261    13,051 
Loss from operations   (352)   (405)   (1,333)   (757)   (2,708)
Interest expense, net   (16)   (15)   (23)   (31)   (50)
Other expense, net   (23)   5    (8)   (18)   (37)
Loss before income taxes   (391)   (415)   (1,364)   (806)   (2,795)
Provision for income taxes   21    15    13    36    26 
Net loss and comprehensive loss  $(412)  $(430)  $(1,377)  $(842)  $(2,821)
Net loss per share (basic and diluted)  $(0.03)  $(0.03)  $(0.13)  $(0.06)  $(0.27)
Weighted-average common shares (basic and diluted)   14,578    14,558    10,581    14,568    10,571 
Net revenue from related parties  $381   $292   $174   $673   $411 

 

                     
(1) Includes net revenue from related parties                    

 

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LANTRONIX, INC.

Unaudited Reconciliation of Non-GAAP Adjustments

(In thousands, except per share data)

                     
   Three Months Ended  

 Six Months Ended

 
   December 31,   September 30,   December 31,   December 31, 
   2012   2012   2011   2012   2011 
                     
GAAP net loss  $(412)  $(430)  $(1,377)  $(842)  $(2,821)
Non-GAAP adjustments:                         
Cost of revenue:                         
Share-based compensation   10    11    9    21    22 
Depreciation and amortization   103    99    99    202    194 
Total adjustments to cost of revenue   113    110    108    223    216 
Selling, general and administrative:                         
Costs associated with the investigation                   108 
Consulting fees for former CEO and CFO                   153 
Share-based compensation   141    146    113    287    194 
Employer portion of withholding taxes on stock grants       1        1    2 
Depreciation and amortization   110    116    118    226    248 
Total adjustments to selling, general and administrative   251    263    231    514    705 
Research and development:                         
Share-based compensation   55    74    71    129    137 
Employer portion of withholding taxes on stock grants       2        2    3 
Depreciation and amortization   3    4    7    7    16 
Total adjustments to research and development   58    80    78    138    156 
Restructuring charges           269        269 
Amortization of purchased intangible assets           18        36 
Total non-GAAP adjustments to operating expenses   309    343    596    652    1,166 
Interest expense, net   16    15    23    31    50 
Other expense, net   23    (5)   8    18    37 
Provision for income taxes   21    15    13    36    26 
Total non-GAAP adjustments   482    478    748    960    1,495 
Non-GAAP net income (loss)  $70   $48   $(629)  $118   $(1,326)
                          
Non-GAAP net income (loss) per share (diluted)  $0.00   $0.00   $(0.06)  $0.01   $(0.13)
                          
Denominator for GAAP net income (loss) per share (diluted)   14,578    14,558    10,581    14,568    10,571 
Non-GAAP adjustment   50    92        92     
Denominator for non-GAAP net income (loss) per share (diluted)   14,628    14,650    10,581    14,660    10,571 
                          
GAAP operating expenses  $6,384   $5,877   $6,374   $12,261   $13,051 
Non-GAAP adjustments to operating expenses   (309)   (343)   (596)   (652)   (1,166)
Non-GAAP operating expenses  $6,075   $5,534   $5,778   $11,609   $11,885 

 

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LANTRONIX, INC.

Unaudited Net Revenues by Product Line and Region

(In thousands, except percentages)

 

                         
   Three Months Ended December 31,         
       % of Net       % of Net   Change 
   2012   Revenue   2011   Revenue   $   % 
                               
Embedded device enablement  $5,546    45.6%   $4,994    47.8%   $552    11.1% 
External device enablement   3,480    28.6%    3,349    32.0%    131    3.9% 
Device management   3,136    25.8%    2,109    20.2%    1,027    48.7% 
Net revenue  $12,162    100.0%   $10,452    100.0%   $1,710    16.4% 

 

 

                               
   Six Months Ended December 31,           
        % of Net        % of Net   Change 
   2012   Revenue   2011   Revenue   $   % 
                               
Embedded enablement  $11,334    48.5%   $10,471    48.4%   $863    8.2% 
External enablement   6,755    28.9%    6,635    30.7%    120    1.8% 
Device management   5,275    22.6%    4,530    20.9%    745    16.4% 
Net revenue  $23,364    100.0%   $21,636    100.0%   $1,728    8.0% 

 

 

   Three Months Ended December 31,     
       % of Net       % of Net   Change 
   2012   Revenue   2011   Revenue   $   % 
                               
Americas  $6,852    56.3%   $5,847    55.9%   $1,005    17.2% 
EMEA   3,575    29.4%    2,933    28.1%    642    21.9% 
Asia Pacific   1,735    14.3%    1,672    16.0%    63    3.8% 
Net revenue  $12,162    100.0%   $10,452    100.0%   $1,710    16.4% 

 

 

 

   Six Months Ended December 31,         
       % of Net       % of Net   Change
   2012   Revenue   2011   Revenue   $   % 
Americas  $12,808    54.8%  $11,524    53.3%  $1,284    11.1%
EMEA   6,652    28.5%   6,448    29.8%   204    3.2%
Asia Pacific   3,904    16.7%   3,664    16.9%   240    6.6%
Net revenue  $23,364    100.0%  $21,636    100.0%  $1,728    8.0%

 

 

 

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