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 Third Quarter Fiscal Year 2013 Financial Results
Irvine, Calif., May 2, 2013 – Lantronix, Inc. (the “Company”) (NASDAQ: LTRX), a leading global provider of smart M2M (machine-to-machine) connectivity solutions, today reported results for its third fiscal quarter ended March 31, 2013.
Financial Highlights
| § | Net revenue of $12.2 million |
| § | Gross profit as a percentage of net revenue of 46.2% |
| § | GAAP net loss of $(801,000), or ($0.05) per share |
| § | Non-GAAP net loss of $(388,000), or ($0.03) per share |
Operational Highlights
| § | 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. |
| § | In February 2013, the Company announced a distribution agreement with Berkshire Hathaway-owned Mouser Electronics to expand availability of Lantronix external and embedded device enablement solutions from the Americas to worldwide. |
Product Highlights
| § | In January 2013, the Company’s award-winning Lantronix xPrintServer® was showcased at Digital Experience in Las Vegas and MacWorld in San Francisco. |
| § | In February 2013, Lantronix announced that for the second year in a row, an xPrintServer® product received the MacObserver Editors’ Choice Award. |
| § | In February 2013, at the Embedded World conference in Nuremberg, Germany, the Company announced the introduction of the xPico™ Wi-Fi, a new wireless embedded connectivity solution. With a footprint of just under 4 cm2, the small module features a full IP stack, both client and access point functionality, advanced security features, and can operate in industrial environments. The Embedded World conference is the world’s largest global embedded technology conference. |
| § | In March 2013, Lantronix launched and began shipping the newest addition to its external analog sensor networking product family, the xSenso™ Controller. Designed specifically for use in rugged and harsh environments, the xSenso Controller’s analog and relay outputs provide the ability to take action by controlling industrial processes and equipment based on sensor readings and predefined thresholds to solve real-time problems. |
“During the third quarter of fiscal 2013, Lantronix continued to make progress on its strategic plan by further expanding the Company’s worldwide distribution and sales channels, introducing new products, and increasing awareness of our solutions in the marketplace through our enhanced marketing efforts,” said Lantronix CEO Kurt Busch. “These actions resulted in Lantronix achieving continued growth in new product revenues.”
Financial Results for the Third Quarter of Fiscal 2013 Ended March 31, 2013
Net revenue was $12.2 million for the third quarter of fiscal 2013, an increase of $30,000, compared to $12.1 million for the third quarter of fiscal 2012 and flat with the second quarter of fiscal 2013.
Gross profit as a percentage of net revenue was 46.2% for the third quarter of fiscal 2013, compared to 48.8% for the third quarter of fiscal 2012 and 49.6% for the second quarter of fiscal 2013. The decline in gross profit as a percentage of net revenue was primarily due to increased manufacturing costs.
Operating expenses were $6.4 million for the third quarter of fiscal 2013 compared to $5.9 million for the third quarter of fiscal 2012 and $6.4 million for the second quarter of fiscal 2013. The year-over-year change in operating expenses was primarily due to an increase in planned marketing activities to drive new product sales growth and brand awareness.
GAAP net loss for the third quarter of fiscal 2013 was ($801,000), or ($0.05) per share, compared to a GAAP net loss of ($41,000), or ($0.00) per share, for the third quarter of fiscal 2012 and a GAAP net loss of ($412,000), or ($0.03) per share, for the second quarter of fiscal 2013.
Non-GAAP net loss for the third quarter of fiscal 2013 was ($388,000), or ($0.03) per share compared to non-GAAP net income of $471,000 or $0.04 per share for the third quarter of fiscal 2012 and non-GAAP net income of $70,000, or $0.00 per share, for the second quarter of fiscal 2013.
Cash and cash equivalents as of March 31, 2013 were $7.2 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 $9.2 million as of March 31, 2013 to support buffer stock and new product launches. In addition, cash was used to make scheduled payments on our existing term loan and invest in capital assets to support product development and manufacturing.
Conference Call and Webcast
Lantronix will host a conference call and webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its third quarter fiscal year 2013 financial results. Those wishing to participate in the live call should dial 866-318-8620 (international dial-in 617-399-5139) using the passcode 11408138. A telephone replay of the call will be available through May 9, 2013 by dialing (888) 286-8010 (international dial-in 617-801-6888) and entering passcode 39420444.
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’ products have applications in every industry, including medical, security, industrial and building automation, transportation, retail/POS, financial, government, consumer electronics/appliances, IT/data center and pro-AV/signage. 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.
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 and xPrintServer are registered trademarks, and xPico and xSenso 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.
| LANTRONIX, INC. | ||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| (In thousands) | ||||
| March 31, | June 30, | |||||||
| 2013 | 2012 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 7,154 | $ | 11,374 | ||||
| Accounts receivable, net | 2,808 | 2,674 | ||||||
| Contract manufacturers' receivable | 529 | 622 | ||||||
| Inventories, net | 9,177 | 5,955 | ||||||
| Prepaid expenses and other current assets | 437 | 549 | ||||||
| Deferred tax assets | 657 | 657 | ||||||
| Total current assets | 20,762 | 21,831 | ||||||
| Property and equipment, net | 1,751 | 1,605 | ||||||
| Goodwill | 9,488 | 9,488 | ||||||
| Other assets | 81 | 87 | ||||||
| Total assets | $ | 32,082 | $ | 33,011 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 4,355 | $ | 3,563 | ||||
| Accrued payroll and related expenses | 1,580 | 2,100 | ||||||
| Warranty reserve | 226 | 232 | ||||||
| Short-term debt | 333 | 667 | ||||||
| Other current liabilities | 3,720 | 3,342 | ||||||
| Total current liabilities | 10,214 | 9,904 | ||||||
| Non-current liabilities: | ||||||||
| Long-term liabilities | 270 | 303 | ||||||
| Long-term capital lease obligations | 66 | 48 | ||||||
| Long-term debt | – | 167 | ||||||
| Deferred tax liabilities | 657 | 657 | ||||||
| Total non-current liabilities | 993 | 1,175 | ||||||
| Total liabilities | 11,207 | 11,079 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock | 1 | 1 | ||||||
| Additional paid-in capital | 203,663 | 203,049 | ||||||
| Accumulated deficit | (183,160 | ) | (181,517 | ) | ||||
| Accumulated other comprehensive income | 371 | 399 | ||||||
| Total stockholders' equity | 20,875 | 21,932 | ||||||
| Total liabilities and stockholders' equity | $ | 32,082 | $ | 33,011 | ||||
LANTRONIX, INC.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| March 31, | December 31, | March 31, | March 31, | |||||||||||||||||
| 2013 | 2012 | 2012 | 2013 | 2012 | ||||||||||||||||
| Net revenue (1) | $ | 12,164 | $ | 12,162 | $ | 12,134 | $ | 35,528 | $ | 33,770 | ||||||||||
| Cost of revenue | 6,547 | 6,130 | 6,215 | 18,407 | 17,508 | |||||||||||||||
| Gross profit | 5,617 | 6,032 | 5,919 | 17,121 | 16,262 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling, general and administrative | 4,685 | 4,719 | 4,087 | 13,672 | 13,492 | |||||||||||||||
| Research and development | 1,717 | 1,665 | 1,775 | 4,991 | 5,116 | |||||||||||||||
| Restructuring charges | – | – | 17 | – | 286 | |||||||||||||||
| Amortization of purchased intangible assets | – | – | 18 | – | 54 | |||||||||||||||
| Total operating expenses | 6,402 | 6,384 | 5,897 | 18,663 | 18,948 | |||||||||||||||
| Income (loss) from operations | (785 | ) | (352 | ) | 22 | (1,542 | ) | (2,686 | ) | |||||||||||
| Interest expense, net | (14 | ) | (16 | ) | (26 | ) | (45 | ) | (76 | ) | ||||||||||
| Other income (expense), net | 10 | (23 | ) | (13 | ) | (8 | ) | (50 | ) | |||||||||||
| Loss before income taxes | (789 | ) | (391 | ) | (17 | ) | (1,595 | ) | (2,812 | ) | ||||||||||
| Provision for income taxes | 12 | 21 | 24 | 48 | 50 | |||||||||||||||
| Net loss | $ | (801 | ) | $ | (412 | ) | $ | (41 | ) | $ | (1,643 | ) | $ | (2,862 | ) | |||||
| Net loss per share (basic and diluted) | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.00 | ) | $ | (0.11 | ) | $ | (0.27 | ) | |||||
| Weighted-average common shares (basic and diluted) | 14,580 | 14,578 | 10,585 | 14,572 | 10,576 | |||||||||||||||
| Net revenue from related parties | $ | 221 | $ | 381 | $ | 238 | $ | 894 | $ | 649 | ||||||||||
(1) Includes net revenue from related parties
LANTRONIX, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| March 31, | December 31, | March 31, | March 31, | |||||||||||||||||
| 2013 | 2012 | 2012 | 2013 | 2012 | ||||||||||||||||
| GAAP net loss | $ | (801 | ) | $ | (412 | ) | $ | (41 | ) | $ | (1,643 | ) | $ | (2,862 | ) | |||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Cost of revenue: | ||||||||||||||||||||
| Share-based compensation | 12 | 10 | 6 | 33 | 28 | |||||||||||||||
| Depreciation and amortization | 91 | 103 | 113 | 293 | 307 | |||||||||||||||
| Total adjustments to cost of revenue | 103 | 113 | 119 | 326 | 335 | |||||||||||||||
| Selling, general and adminstrative: | ||||||||||||||||||||
| Costs associated with the investigation | – | – | – | – | 108 | |||||||||||||||
| Consulting fees for former CEO and CFO | – | – | – | – | 153 | |||||||||||||||
| Share-based compensation | 138 | 141 | 123 | 425 | 317 | |||||||||||||||
| Employer portion of withholding taxes on stock grants | – | – | – | 1 | 2 | |||||||||||||||
| Depreciation and amortization | 100 | 110 | 105 | 326 | 353 | |||||||||||||||
| Total adjustments to selling, general and administrative | 238 | 251 | 228 | 752 | 933 | |||||||||||||||
| Research and development: | ||||||||||||||||||||
| Share-based compensation | 53 | 55 | 61 | 182 | 198 | |||||||||||||||
| Employer portion of withholding taxes on stock grants | – | – | – | 2 | 3 | |||||||||||||||
| Depreciation and amortization | 3 | 3 | 6 | 10 | 22 | |||||||||||||||
| Total adjustments to research and development | 56 | 58 | 67 | 194 | 223 | |||||||||||||||
| Restructuring charges | – | – | 17 | – | 286 | |||||||||||||||
| Amortization of purchased intangible assets | – | – | 18 | – | 54 | |||||||||||||||
| Total non-GAAP adjustments to operating expenses | 294 | 309 | 330 | 946 | 1,496 | |||||||||||||||
| Interest expense, net | 14 | 16 | 26 | 45 | 76 | |||||||||||||||
| Other income (expense), net | (10 | ) | 23 | 13 | 8 | 50 | ||||||||||||||
| Provision for income taxes | 12 | 21 | 24 | 48 | 50 | |||||||||||||||
| Total non-GAAP adjustments | 413 | 482 | 512 | 1,373 | 2,007 | |||||||||||||||
| Non-GAAP net income (loss) | $ | (388 | ) | $ | 70 | $ | 471 | $ | (270 | ) | $ | (855 | ) | |||||||
| Non-GAAP net income (loss) per share (diluted) | $ | (0.03 | ) | $ | 0.00 | $ | 0.04 | $ | (0.02 | ) | $ | (0.08 | ) | |||||||
| Denominator for GAAP net income (loss) per share (diluted) | 14,580 | 14,578 | 10,585 | 14,572 | 10,576 | |||||||||||||||
| Non-GAAP adjustment | – | 50 | 361 | – | – | |||||||||||||||
| Denominator for non-GAAP net income (loss) per share (diluted) | 14,580 | 14,628 | 10,946 | 14,572 | 10,576 | |||||||||||||||
| GAAP operating expenses | $ | 6,402 | $ | 6,384 | $ | 5,897 | $ | 18,663 | $ | 18,948 | ||||||||||
| Non-GAAP adjustments to operating expenses | (294 | ) | (309 | ) | (330 | ) | (946 | ) | (1,496 | ) | ||||||||||
| Non-GAAP operating expenses | $ | 6,108 | $ | 6,075 | $ | 5,567 | $ | 17,717 | $ | 17,452 | ||||||||||
LANTRONIX, INC.
Unaudited Net Revenues by Product Line and Region
(In thousands, except percentages)
| Three Months Ended March 31, | ||||||||||||||||||||||||
| % of Net | % of Net | Change | ||||||||||||||||||||||
| 2013 | Revenue | 2012 | Revenue | $ | % | |||||||||||||||||||
| Embedded device enablement | $ | 6,321 | 52.0% | $ | 6,267 | 51.6% | $ | 54 | 0.9% | |||||||||||||||
| External device enablement | 2,805 | 23.0% | 3,201 | 26.4% | (396 | ) | (12.4% | ) | ||||||||||||||||
| Device management | 3,038 | 25.0% | 2,666 | 22.0% | 372 | 14.0% | ||||||||||||||||||
| Net revenue | $ | 12,164 | 100.0% | $ | 12,134 | 100.0% | $ | 30 | 0.2% | |||||||||||||||
| Nine Months Ended March 31, | ||||||||||||||||||||||||
| % of Net | % of Net | Change | ||||||||||||||||||||||
| 2013 | Revenue | 2012 | Revenue | $ | % | |||||||||||||||||||
| Embedded enablement | $ | 17,655 | 49.7% | $ | 16,738 | 49.6% | $ | 917 | 5.5% | |||||||||||||||
| External enablement | 9,560 | 26.9% | 9,836 | 29.1% | (276 | ) | (2.8% | ) | ||||||||||||||||
| Device management | 8,313 | 23.4% | 7,196 | 21.3% | 1,117 | 15.5% | ||||||||||||||||||
| Net revenue | $ | 35,528 | 100.0% | $ | 33,770 | 100.0% | $ | 1,758 | 5.2% | |||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||
| % of Net | % of Net | Change | ||||||||||||||||||||||
| 2013 | Revenue | 2012 | Revenue | $ | % | |||||||||||||||||||
| Americas | $ | 6,501 | 53.4% | $ | 6,391 | 52.7% | $ | 110 | 1.7% | |||||||||||||||
| EMEA | 3,606 | 29.6% | 3,945 | 32.5% | (339 | ) | (8.6% | ) | ||||||||||||||||
| Asia Pacific | 2,057 | 17.0% | 1,798 | 14.8% | 259 | 14.4% | ||||||||||||||||||
| Net revenue | $ | 12,164 | 100.0% | $ | 12,134 | 100.0% | $ | 30 | 0.2% | |||||||||||||||
| Nine Months Ended March 31, | ||||||||||||||||||||||||
| % of Net | % of Net | Change | ||||||||||||||||||||||
| 2013 | Revenue | 2012 | Revenue | $ | % | |||||||||||||||||||
| Americas | $ | 19,309 | 54.3% | $ | 17,915 | 53.1% | $ | 1,394 | 7.8% | |||||||||||||||
| EMEA | 10,258 | 28.9% | 10,393 | 30.8% | (135 | ) | (1.3% | ) | ||||||||||||||||
| Asia Pacific | 5,961 | 16.8% | 5,462 | 16.1% | 499 | 9.1% | ||||||||||||||||||
| Net revenue | $ | 35,528 | 100.0% | $ | 33,770 | 100.0% | $ | 1,758 | 5.2% | |||||||||||||||