Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - DATA I/O CORP | daio_8k.htm |
Exhibit 99.0
|
Joel
Hatlen
|
Darrow
Associates, Inc.
|
|
Chief
Operating and Financial Officer
|
Jordan
Darrow
|
|
Data
I/O Corporation
6645
185th Ave.
NE, Suite 100
|
(512)
551-9296
jdarrow@darrowir.com
|
|
Redmond,
WA 98052
|
|
|
(425)
881-6444
|
|
Data I/O Reports Fourth Quarter 2019 Results
Leadership Extended in Automotive Electronics and Security
Deployment -- Targeting Large and High Growth Markets
Redmond, WA, Tuesday – March 3, 2020 -- Data I/O
Corporation (NASDAQ: DAIO), the leading global provider of advanced
data and security deployment solutions for flash, flash-memory
based intelligent devices and microcontrollers, today announced
financial results for the fourth quarter ended December 31,
2019.
Fourth Quarter 2019 Highlights
●
Net sales of $5.9
million; bookings of $6.9 million
●
Gross margin as a
percentage of sales of 55.9%
●
Net loss of
($496,000) or ($0.06) per share. Adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA)*, excluding equity
compensation, of ($67,000)
●
Cash &
Equivalents of $13.9 million; no debt
●
Automotive
electronics, advanced programming and secure provisioning
leadership
o
New PSV2800
received major awards since introduction in October
2019
o
Recognized by
customers with 2020 Circuits Assembly Service Excellence Award in
the Device Programming Equipment category
o
Extended
programming technology leadership with launch of machine
learning-based
automated
teach capability & 4x programming performance improvement for
UFS
o
Growth in
SentriX® devices provisioned, device types supported, and
design wins
Full Year 2019 Highlights
●
Net sales of $21.6
million; bookings of $22.5 million
●
Gross margin as a
percentage of sales of 58.2%
●
Net loss of ($1.2)
million or ($0.14) diluted earnings per share. Adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA)*,
excluding equity compensation, of $830,000
●
Automotive
Electronics represented 60% of bookings for 2019
●
Repurchased 302,000
shares in 2019 (404,00 shares in total) to complete $2 million
buyback authorized in October 2018
●
Ended year with 5
system deployments, 12 partners and 10 supported devices for
SentriX secure provisioning platform
*Adjusted
EBITDA is a non-GAAP financial measure. A reconciliation is
provided in the tables of this press release.
1
Management Comments
Commenting
on the fourth quarter and year ended December 31, 2019, Anthony
Ambrose, President and CEO of Data I/O Corporation, said,
“2019 was a challenging year for the business, due to a
downturn in automotive electronics and structural changes in the
global supply chain. We sustained our first loss in 6 years due to
a downturn in orders combined with increased investments in
security. Fourth quarter revenue increased 54% compared to the 2019
third quarter as bookings increased to their highest level in five
quarters.
“As
the market leader, we plan to invest for the long term to enhance
and extend our leadership position. We continue to value long term
growth over short-term GAAP profitability. Our strong cash position
combined with our long-term view of the market gives us the
financial flexibility to make these decisions.
“Throughout
2019 we bolstered our technology suite with innovations that have
been recognized globally. At the cornerstone of our strategy is the
PSV family of high-speed programming systems which have been met
with worldwide acceptance as deployments increased to nearly 300
globally in 2019. Only a few months after the October 2019 launch
of the PSV2800 for ultra-fast performance, we were awarded the 2020
NPI Award in the category of Device Programming at the IPC APEX
EXPO trade show held in San Diego in February 2020. Earlier, we
received the 2019 Global Technology Award in the category of
Programming in Munich, Germany, among other industry awards ranging
from products to customer support during the year.
“We
continue to make great strides with our SentriX Platform, a highly
flexible cost-effective security provisioning and data programming
deployment system for authentication devices, secure elements and
secure microcontrollers. Device supports increased throughout the
year along with design wins and a broadening of our sales funnel
and customer engagements.
“Regarding
the coronavirus impact, our global workforce has no reported
incidence of contraction and our China-based team was required to
close for an additional week and follow recommended best practices
in accordance with government mandates. We have been up and running
in China since February 9 and are delivering products. The
situation is highly fluid and changeable, but at this time we
believe our multi-sourced supply chain will see minimal impact from
business interruption in the short term.
“On
the demand creation side, we are seeing impacts from the
coronavirus, primarily in Asia as the sales process has slowed, and
business travel has been restricted. In Europe, we saw impacts to
demand creation as the Mobile World Congress trade show was
cancelled and we made the decision to pull out of the Embedded
World trade show the same week. Whether this is a one quarter
deferral, as we saw with tariffs in the third quarter of last year,
or a longer-term impact remains to be seen.
2
“While
possessing a strong balance sheet with no debt, we have positioned
the Company for growth. We will be vigilant on our management of
short terms risks while maintaining our long-term growth
focus.”
Financial Results
Net
sales in the fourth quarter of 2019 were $5.9 million, as compared
with $7.9 million in the fourth quarter of 2018. The year-over-year
decline in sales was a result of a cyclical downtrend in the
industry that began at the end of 2017 and demand impacted by
international trade and geopolitical issues in 2019. Sequential
quarterly revenues increased by 54.1% from $3.8 million in the
third quarter of 2019 with an improvement in orders from the
automotive electronics sector. For all of 2019, net sales were
$21.6 million, down 26.2% from $29.2 million in 2018.
For the
2019 fourth quarter, gross margin as a percentage of sales was
55.9%, as compared to 58.2% in the fourth quarter of 2018. The
fourth quarter gross margin was primarily impacted by fixed costs
being spread over lower revenue and tariffs increasing on US and
China trade in 2019. For all of 2019, gross margin was 58.2%,
compared to 59.4% for the prior year, with an estimated reduction
of 160 basis points in 2019 resulting from increased
tariffs.
Total
operating expenses in the fourth quarter of 2019 were $3.6 million,
down from $3.8 million in the 2018 period. We continue to invest in
research and development and SentriX.
An
operating loss of ($342,000) for the fourth quarter of 2019
compares to operating income of $744,000 for the fourth quarter of
2018. Net loss in the fourth quarter of 2019 was ($496,000), or
($0.06) per share, compared with net income of $648,000, or $0.08
per diluted share, in the fourth quarter of 2018. For the full
year, an operating loss of ($1.3) million in 2019 compared with
operating income of $1.7 million for 2018. For the year, net loss
in 2019 was ($1.2) million, or ($0.14) per diluted share, as
compared with net income in 2018 of $1.6 million, or $0.19 per
diluted share. Included in annual net income are foreign currency
transaction gains of $5,000 for 2019 and $103,000 for the prior
year.
Earnings
Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) was ($327,000) in the fourth quarter of
2019, compared to EBITDA of $880,000 in the fourth quarter of 2018.
Adjusted EBITDA, excluding equity compensation, was ($67,000) in
the fourth quarter of 2019, compared to adjusted EBITDA of $1.2
million in the fourth quarter of 2018. For all of 2019, EBITDA was
($341,000), compared to $2.8 million for 2018, while Adjusted
EBITDA, excluding equity compensation, was $830,000 in 2019
compared to $4.0 million in 2018.
Bookings
in the fourth quarter of 2019 were $6.9 million, compared to $6.5
million in the fourth quarter of 2018 and $4.3 million in the third
quarter of 2019. Bookings for all of 2019 were $22.5 million, down
from $27.0 million in 2018. Backlog at December 31, 2019 was $2.9
million, as compared with $1.7 million at September 30, 2019 and
$1.9 million at December 31, 2018.
3
Data
I/O’s financial condition remains strong with cash of $13.9
million at December 31, 2019, as compared with $15.2 million at
September 30, 2019 and $18.3 million at December 31, 2018. The
Company had net working capital of $18.5 million at December 31,
2019, a slight improvement from $18.4 million at September 30, 2019
and down from $21.1 million at the end of 2018. The Company
continues to have no debt.
Conference Call Information
A
conference call discussing the fourth quarter ended December 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 10139179. The
conference call will also be simultaneously webcast over the
Internet; visit the Webcasts and Presentations area within the
Investor Relations 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 electronic devices. Today, our
customers use Data I/O security deployment and 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,
ensuring success for our customers.
Learn
more at dataio.com
4
Forward Looking Statement and Non-GAAP financial
measures
Statements in this news release concerning economic outlook,
coronavirus impact, 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, coronavirus
related business interruptions, 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
-
5
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(UNAUDITED)
|
|
Three Months
EndedDecember 31,
|
Twelve Months
EndedDecember 31,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
Net
Sales
|
$5,868
|
$7,857
|
$21,568
|
$29,224
|
|
Cost
of goods sold
|
2,588
|
3,284
|
9,018
|
11,868
|
|
Gross
margin
|
3,280
|
4,573
|
12,550
|
17,356
|
|
Operating
expenses:
|
|
|
|
|
|
Research
and development
|
1,583
|
1,811
|
6,451
|
7,361
|
|
Selling,
general and administrative
|
2,039
|
2,018
|
7,377
|
8,257
|
|
Total
operating expenses
|
3,622
|
3,829
|
13,828
|
15,618
|
|
Operating
income(loss)
|
(342)
|
744
|
(1,278)
|
1,738
|
|
Non-operating
income:
|
|
|
|
|
|
Interest
income
|
6
|
11
|
53
|
37
|
|
Gain
on sale of assets
|
4
|
15
|
64
|
19
|
|
Foreign
currency transaction gain (loss)
|
(185)
|
(98)
|
5
|
103
|
|
Total
non-operating income
|
(175)
|
(72)
|
122
|
159
|
|
Income(loss)
before income taxes
|
(517)
|
672
|
(1,156)
|
1,897
|
|
Income
tax (expense) benefit
|
21
|
(24)
|
(31)
|
(291)
|
|
Net
income(loss)
|
$(496)
|
$648
|
$(1,187)
|
$1,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings(loss) per share
|
$(0.06)
|
$0.08
|
$(0.14)
|
$0.19
|
|
Diluted
earnings(loss) per share
|
$(0.06)
|
$0.08
|
$(0.14)
|
$0.19
|
|
Weighted-average
basic shares
|
8,212
|
8,431
|
8,247
|
8,378
|
|
Weighted-average
diluted shares
|
8,212
|
8,509
|
8,247
|
8,514
|
6
.
DATA I/O CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(UNAUDITED)
|
|
December 31,
2019
|
December 31,
2018
|
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash
and cash equivalents
|
$13,936
|
$18,343
|
|
Trade
accounts receivable, net of allowance for
|
|
|
|
doubtful
accounts of $80 and $75, respectively
|
4,099
|
3,771
|
|
Inventories
|
5,020
|
5,185
|
|
Other
current assets
|
924
|
621
|
|
TOTAL
CURRENT ASSETS
|
23,979
|
27,920
|
|
|
|
|
|
Property,
plant and equipment – net
|
1,668
|
1,985
|
|
Income
tax receivable
|
640
|
598
|
|
Other
assets
|
1,994
|
220
|
|
TOTAL
ASSETS
|
$28,281
|
$30,723
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts
payable
|
$1,151
|
$1,755
|
|
Accrued
compensation
|
1,541
|
2,872
|
|
Deferred
revenue
|
1,387
|
1,392
|
|
Other
accrued liabilities
|
1,372
|
789
|
|
Income
taxes payable
|
31
|
47
|
|
TOTAL
CURRENT LIABILITIES
|
5,482
|
6,855
|
|
|
|
|
|
Operating
lease liabilities
|
1,178
|
-
|
|
Long-term
other payables
|
91
|
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, 8,212,748 shares as of December 31,
|
|
|
|
2019
and 8,338,628 shares as of December 31, 2018
|
18,748
|
19,254
|
|
Accumulated
earnings
|
2,508
|
3,695
|
|
Accumulated
other comprehensive income
|
274
|
408
|
|
TOTAL
STOCKHOLDERS’ EQUITY
|
21,530
|
23,357
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$28,281
|
$30,723
|
7
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE RECONCILIATION
|
|
Three Months
EndedDecember 31,
|
Twelve Months
EndedDecember 31,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
(in
thousands)
|
|
|
|
|
|
Net
Income(loss)
|
$(496)
|
$648
|
$(1,187)
|
$1,606
|
|
Interest
(income)
|
(6)
|
(11)
|
(53)
|
(37)
|
|
Taxes
|
(21)
|
24
|
31
|
291
|
|
Depreciation
and amortization
|
196
|
219
|
868
|
955
|
|
EBITDA
earnings(loss)
|
$(327)
|
$880
|
$(341)
|
$2,815
|
|
|
|
|
|
|
|
Equity
compensation
|
260
|
298
|
1,171
|
1,230
|
|
Adjusted EBITDA
earnings(loss),
|
|
|
|
|
|
excluding
equity compensation
|
$(67)
|
$1,178
|
$830
|
$4,045
|
8