IRVINE, CA--(Marketwire - February 03, 2011) - Lantronix, Inc. (NASDAQ: LTRX), a leading global
provider of smart connectivity solutions that enable business and
technology professionals to access any device, anywhere, anytime, today
reported financial results for its fiscal 2011 second quarter ended
December 31, 2010.
Recent Highlights
-- Net revenue of $12.7 million, an increase of 11% year-over-year and 4%
sequentially.
-- GAAP net loss improved sequentially to ($579,000), or ($0.06) per share
compared to ($678,000) or ($0.07) per share in the previous quarter.
-- Non-GAAP net income increased sequentially to $603,000, or $0.06 per
share compared to $417,000 or $0.04 per share in the previous quarter.
-- Tenth consecutive quarter of non-GAAP net income.
-- Cash and cash equivalents increased to $10.6 million at December 31,
2010.
-- Integrated AccessMyDevice VIP Access™ software agent with Texas
Instruments' Sitara line of microprocessors to provide secure remote
access for OEMs' embedded designs.
-- Co-sponsored white paper and webinar with HIMSS Analytics, a wholly
owned not-for-profit subsidiary of the Healthcare Information and
Management Systems Society (HIMSS): Medical Devices Landscape:
Current and Future Adoption, Integration with EMRs, and Connectivity
Jerry Chase, president and CEO, said, "Our revenue growth in the second
quarter reflects growth in both our core business and our new generation of
products which continue to gain increasing traction in the market. We are
excited about the positive momentum generated by our new products, and we
expect this momentum to continue with more new product launches later this
month."
Financial Results for the Second Fiscal Quarter Ended December 31, 2010
Net revenue was $12.7 million, an 11% increase compared to net revenue of
$11.5 million for the second fiscal quarter of 2010. Revenue from new
products such as SpiderDuo, XPortPro and EDS 1100/2100 increased to
$569,000 compared to $300,000 for the first fiscal quarter of 2011 and
$214,000 for the fourth fiscal quarter of 2010. As part of an ongoing
corporate initiative to optimize our sales distribution channel, the
Company renegotiated our agreement with a direct customer that removed
stock rotation and price protection terms, which allows the Company to
recognize revenue upon shipment as opposed to a sell-through basis. The
result was recognition of approximately $342,000 of net revenue during the
quarter. As part of this same initiative, we removed stock rotation and
price protection terms from certain low volume direct customers and
redirected them to master distributors, which allows the Company to
recognize revenue upon shipment as opposed to a sell-through basis. The
result was the recognition of approximately $297,000 of net revenue during
the quarter.
Gross profit margin was 49.4%, compared to 52.7% for the second fiscal
quarter of 2010. The decrease in gross profit margin was due to product
mix, increased reserves for excess and obsolete inventory related to an
end-of-life product, an increase in warranty reserves, and an increase in
freight costs related to an increase in the volume of inventory receipts
during the quarter.
GAAP operating expenses were $6.8 million, an increase of $420,000,
compared to $6.4 million for the second fiscal quarter of 2010. GAAP
operating expenses were negatively impacted by approximately $372,000 in
legal and consulting expenses related to the Company's contested proxy that
was settled in November of 2010.
-- Selling, general and administrative expense was $5.1 million, an
increase of $233,000, compared to $4.9 million for the second fiscal
quarter of 2010. The increase was primarily due to legal and consulting
expenses of approximately $372,000 related to the Company's contested
proxy, which was settled in November of 2010, and an increase in
payroll costs, offset by a decrease in advertising and marketing
expense. Although payroll costs were higher during the quarter, they
reflect a return to normal levels following the suspension of a
company-wide furlough program that was in effect during the year ago
quarter.
-- Research and development expense was $1.7 million, an increase of
$187,000, compared to $1.5 million for the second fiscal quarter of
2010. The increase was due to expenses related to development projects
for upcoming product releases and an increase in payroll costs.
Although payroll costs were higher during the quarter, they reflect a
return to normal levels following the suspension of a company-wide
furlough program that was in effect during the year ago quarter.
Non-GAAP operating expenses were $5.8 million, compared to $5.6 million for
the second fiscal quarter of 2010.
GAAP net loss was ($579,000), or ($0.06) per share, compared to a GAAP net
loss of ($375,000), or ($0.04) per share, for the second fiscal quarter of
2010. The GAAP net loss in the second fiscal quarter of 2011 was negatively
impacted by approximately $372,000 in legal and consulting expenses related
to the Company's contested proxy that was settled in November of 2010.
Non-GAAP net income was $603,000, or $0.06 per share, compared to non-GAAP
net income of $495,000, or $0.05 per share, for the second fiscal quarter
of 2010.
Financial Results for the Six Months ended December 31, 2010
Net revenue was $24.9 million, an 11% increase compared to $22.4 million
for the six months ended December 31, 2009. Revenue from new products such
as SpiderDuo, XPortPro and EDS 1100/2100 increased to $868,000 compared to
$85,000 for the six months ended December 31, 2009. As part of an ongoing
corporate initiative to optimize our sales distribution channel, the
Company renegotiated our agreement with a direct customer that removed
stock rotation and price protection terms, which allows the Company to
recognize revenue upon shipment as opposed to a sell-through basis. The
result was recognition of approximately $342,000 of net revenue during the
second fiscal quarter of 2011. As part of this same initiative, we removed
stock rotation and price protection terms from certain low volume direct
customers and redirected them to master distributors, which allows the
Company to recognize revenue upon shipment as opposed to a sell-through
basis. The result was the recognition of approximately $297,000 of net
revenue during the second fiscal quarter of 2011.
Gross profit margin was 50.2%, compared to 52.5% for the six months ended
December 31, 2009. The decrease in gross profit margin reflects product
mix and increased freight costs due to expedite charges relating to
component and product shortages as well as an increase in the volume of
inventory receipts.
GAAP operating expenses were $13.7 million, compared to $12.5 million for
the six months ended December 31, 2009. GAAP operating expenses were
negatively impacted by approximately $561,000 in legal and consulting
expenses related to the Company's contested proxy.
-- Selling, general and administrative expense was $10.1 million, an
increase of $666,000, compared to $9.5 million for the six months
ended December 31, 2010. The increase was primarily due to legal and
consulting expenses of approximately $561,000 related to the Company's
contested proxy and an increase in payroll costs. Although payroll
costs were higher during the period, they reflect a return to normal
levels following the suspension of a company-wide furlough program
that was in effect during the year ago period.
-- Research and development expense was $3.5 million, an increase of
$525,000, compared to $3.0 million for the six months ended
December 31, 2009. The increase was due to expenses related to
development projects for upcoming product releases and an increase
in payroll costs. Although payroll costs were higher during the
period, they reflect a return to normal levels following the
suspension of a company-wide furlough program that was in effect
during the year ago period.
Non-GAAP operating expenses were $11.7 million, an increase of $689,000,
compared to $11.0 million for the six months ended December 31, 2009.
GAAP net loss was ($1.3 million), or ($0.12) per share, compared to a GAAP
net loss of ($874,000), or ($0.09) per share, for the six months ended
December 31, 2009. The GAAP net loss for the six-month period was
negatively impacted by approximately $561,000 in legal and consulting
expenses related to the Company's contested proxy.
Non-GAAP net income was $1.0 million, or $0.09 per share, compared to
non-GAAP net income of $907,000, or $0.08 per share, for the six months
ended December 31, 2009.
Balance Sheet Summary
Cash and cash equivalents were $10.6 million as of December 31, 2010, an
increase of $570,000, compared to $10.1 million as of June 30, 2010.
Total receivables, which include accounts receivable, net, and contract
manufacturers' receivable, were $3.5 million as of December 31, 2010,
compared to $2.4 million as of June 30, 2010. The increase in accounts
receivable is a result of the increase in revenue.
Net Inventory was $9.6 million as of December 31, 2010, an increase of $2.7
million, compared to $6.9 million as of June 30, 2010. The increase was
attributable to a buildup of finished goods and strategic components to
ensure timely delivery and enhance customer satisfaction.
Accounts payable were $9.8 million as of December 31, 2010, compared to
$6.5 million as of June 30, 2010. The increase was primarily due to the
increase in inventory during the quarter as inventory is the primary driver
of accounts payable.
Working capital was $8.6 million as of December 31, 2010, compared to $7.6
million as of June 30, 2010.
Discussion of Non-GAAP Financial Measures
Lantronix believes that the presentation of non-GAAP financial information
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.
Non-GAAP operating expenses consist of operating expenses excluding
share-based compensation and related payroll taxes and depreciation and
amortization, as well as charges and gains that are driven primarily by
discrete events that management does not consider to be directly related to
the company's core operating performance, such as the costs associated with
the contested proxy during the first and second quarters of fiscal 2011.
Non-GAAP net income (loss) consists of net income (loss) excluding share-
based compensation and related payroll taxes, depreciation and
amortization, interest income (expense), other income (expense), income tax
provision (benefit), as well as charges and gains that are driven primarily
by discrete events that management does not consider to be directly related
to the Company's core operating performance, such as the costs associated
with the contested proxy during the first and second quarters of fiscal
2011.
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 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 second quarter fiscal 2011
financial results. Those wishing to participate in the live call should
dial 866-783-2139 (International dial-in 857-350-1598) using the passcode
92079586. A telephone replay of the call will be available for one week
beginning approximately one hour after the call's conclusion by dialing
(888) 286-8010 and entering 85982809 followed by the "#" key when prompted
for a code. To access the live webcast of the call, go to the Investor
Relations section of Lantronix's website at www.lantronix.com. The webcast
will be archived on the Company's web site for twelve months.
About Lantronix
Lantronix, Inc. (NASDAQ: LTRX) is a global leader of secure communication
technologies that simplify remote access, management and control of any
electronic device. Our solutions 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 connect and control electronic equipment via the
Internet, provide secure remote access to firewall-protected equipment, and
enable remote management of IT equipment over 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, Calif. For
more information, visit www.lantronix.com.
This news release contains forward-looking statements, including statements
concerning our future business plans. 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; government and industry standards; 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 SEC filings, including our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2010 and our Annual Report on Form 10-K for the
year ended June 30, 2010. 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.
LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, June 30,
2010 2010
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 10,645 $ 10,075
Accounts receivable, net 1,970 1,342
Contract manufacturers' receivable 1,488 1,015
Inventories, net 9,586 6,873
Prepaid expenses and other current assets 366 515
Deferred tax assets 542 542
------------ ------------
Total current assets 24,597 20,362
Property and equipment, net 2,094 2,392
Goodwill 9,488 9,488
Purchased intangible assets, net 109 155
Other assets 167 135
------------ ------------
Total assets $ 36,455 $ 32,532
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 9,756 $ 6,545
Accrued payroll and related expenses 1,288 1,568
Warranty reserve 209 183
Short-term debt 667 667
Other current liabilities 4,123 3,776
------------ ------------
Total current liabilities 16,043 12,739
------------ ------------
Non-current liabilities:
Long-term liabilities 591 646
Long-term capital lease obligations 91 153
Long-term debt 1,167 111
Deferred tax liabilities 542 542
------------ ------------
Total non-current liabilities 2,391 1,452
------------ ------------
Total liabilities 18,434 14,191
------------ ------------
Commitments and contingencies
Stockholders' equity:
Common stock 1 1
Additional paid-in capital 192,084 191,147
Accumulated deficit (174,463) (173,206)
Accumulated other comprehensive income 399 399
------------ ------------
Total stockholders' equity 18,021 18,341
------------ ------------
Total liabilities and stockholders'
equity $ 36,455 $ 32,532
============ ============
LANTRONIX, INC.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
Net revenue (1) $ 12,719 $ 11,478 $ 24,911 $ 22,432
Cost of revenue 6,441 5,429 12,406 10,666
-------- -------- -------- --------
Gross profit 6,278 6,049 12,505 11,766
-------- -------- -------- --------
Operating expenses:
Selling, general and
administrative 5,088 4,855 10,141 9,475
Research and development 1,697 1,510 3,520 2,995
Amortization of purchased
intangible assets 18 18 36 36
-------- -------- -------- --------
Total operating expenses 6,803 6,383 13,697 12,506
-------- -------- -------- --------
Loss from operations (525) (334) (1,192) (740)
Interest expense, net (36) (42) (58) (89)
Other income (expense), net (5) 11 24 (25)
-------- -------- -------- --------
Loss before income taxes (566) (365) (1,226) (854)
Provision for income taxes 13 10 31 20
-------- -------- -------- --------
Net loss $ (579) $ (375) $ (1,257) $ (874)
======== ======== ======== ========
Net loss per share (basic and
diluted) $ (0.06) $ (0.04) $ (0.12) $ (0.09)
======== ======== ======== ========
Weighted-average shares (basic and
diluted) 10,429 10,301 10,389 10,234
======== ======== ======== ========
Net revenue from related parties $ 212 $ 142 $ 453 $ 267
======== ======== ======== ========
(1) Includes net revenue from related parties
LANTRONIX, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
------------------- ------------------
2010 2009 2010 2009
-------- -------- -------- --------
GAAP net loss $ (579) $ (375) $ (1,257) $ (874)
Non-GAAP adjustments:
Cost of revenues:
Share-based compensation 9 10 35 19
Employer portion of
withholding taxes on stock
grants - - 2 3
Depreciation and
amortization 84 64 169 118
-------- -------- -------- --------
Total adjustments to cost of
revenues 93 74 206 140
-------- -------- -------- --------
Selling, general and
adminstrative:
Costs associated with the
contested proxy 372 - 561 -
Share-based compensation 382 426 790 851
Employer portion of
withholding taxes on stock
grants - 2 12 13
Depreciation and
amortization 167 148 333 281
-------- -------- -------- --------
Total adjustments to selling,
general and administrative 921 576 1,696 1,145
-------- -------- -------- --------
Research and development:
Share-based compensation 85 142 236 273
Employer portion of
withholding taxes on stock
grants - 3 18 21
Depreciation and
amortization 11 16 23 32
-------- -------- -------- --------
Total adjustments to research
and development 96 161 277 326
-------- -------- -------- --------
Amortization of purchased
intangible assets 18 18 36 36
-------- -------- -------- --------
Total non-GAAP adjustments to
operating expenses 1,035 755 2,009 1,507
-------- -------- -------- --------
Interest expense, net 36 42 58 89
Other income (expense), net 5 (11) (24) 25
Provision for income taxes 13 10 31 20
-------- -------- -------- --------
Total non-GAAP adjustments 1,182 870 2,280 1,781
-------- -------- -------- --------
Non-GAAP net income $ 603 $ 495 $ 1,023 $ 907
======== ======== ======== ========
Non-GAAP net income per share
(diluted) $ 0.06 $ 0.05 $ 0.09 $ 0.08
======== ======== ======== ========
Denominator for GAAP net income per
share (diluted) 10,429 10,301 10,389 10,234
Non-GAAP adjustment 373 554 467 529
-------- -------- -------- --------
Denominator for non-GAAP net income
per share (diluted) 10,802 10,855 10,856 10,763
======== ======== ======== ========
GAAP operating expenses $ 6,803 $ 6,383 $ 13,697 $ 12,506
Non-GAAP adjustments to operating
expenses (1,035) (755) (2,009) (1,507)
-------- -------- -------- --------
Non-GAAP operating expenses $ 5,768 $ 5,628 $ 11,688 $ 10,999
======== ======== ======== ========
LANTRONIX, INC.
Unaudited Net Revenues by Product Line
(In thousands, except percentages)
Three Months Ended December 31,
------------------------------------- Change
% of Net % of Net -----------------
2010 Revenue 2009 Revenue $ %
-------- -------- -------- -------- -------- -------
Device enablement $ 10,469 82.3% $ 9,255 80.6% $ 1,214 13.1%
Device management 2,076 16.3% 1,899 16.5% 177 9.3%
-------- -------- -------- -------- --------
Device
networking 12,545 98.6% 11,154 97.2% 1,391 12.5%
Non-core 174 1.4% 324 2.8% (150) (46.3%)
-------- -------- -------- -------- --------
Net revenue $ 12,719 100.0% $ 11,478 100.0% $ 1,241 10.8%
======== ======== ======== ======== ========
Six Months Ended December 31,
------------------------------------- Change
% of Net % of Net -----------------
2010 Revenue 2009 Revenue $ %
-------- -------- -------- -------- -------- -------
Device enablement $ 20,352 81.7% $ 17,995 80.2% $ 2,357 13.1%
Device management 4,234 17.0% 3,902 17.4% 332 8.5%
-------- -------- -------- -------- --------
Device
networking 24,586 98.7% 21,897 97.6% 2,689 12.3%
Non-core 325 1.3% 535 2.4% (210) (39.3%)
-------- -------- -------- -------- --------
Net revenue $ 24,911 100.0% $ 22,432 100.0% $ 2,479 11.1%
======== ======== ======== ======== ========
