September 02, 2010 16:05 ET
Lantronix Reports Fiscal 2010 Fourth Quarter and Full Year Financial Results
Eighth Consecutive Quarter of Non-GAAP Profitability; Cash Increases $762,000 to $10.1 Million During the Fourth Quarter
IRVINE, CA--(Marketwire - September 2, 2010) - Lantronix, Inc. (NASDAQ: LTRX), a leading
provider of secure, remote management, device networking and data center
management technologies, today reported financial results for its fiscal
2010 fourth quarter and full year ended June 30, 2010.
Financial Highlights for the Fourth Fiscal Quarter
-- Net revenue of $11.8 million, an increase of 4% year-over-year.
-- GAAP net loss of $509,000, or ($0.05) per share.
-- Non-GAAP net income of $169,000, or $0.02 per share.
-- Eighth consecutive quarter of non-GAAP net income.
-- Cash and cash equivalents increased to $10.1 million at June 30, 2010.
Jerry Chase, president and CEO, said, "We made substantial progress in
fiscal 2010 and are pleased with our positive results and momentum.
Shipments in the fourth quarter came in at their highest levels in six
quarters, contributing to the substantial improvement in our cash balance
at quarter end. We saw continued positive sales momentum across many of our
products and geographies during the quarter and are excited with the
increasing market traction we are generating with our new products and
services."
"During fiscal 2010, we invested in new products and marketing capabilities
to maximize our opportunities in the growing medical device connectivity
market. We believe our value-added solutions uniquely position us to
benefit from growth in this exciting vertical."
Recent Non-Financial Highlights
-- Announced the launch of AccessMyDevice.com, a new Internet-based,
enterprise-grade subscription service enabling secure remote access
behind firewalls to virtually any device from a web browser.
-- Announced new investments and initiatives to drive increased sales
within the growing medical device connectivity market, including the
appointment of a new vice president of marketing, the addition of sales
professionals in the U.S. and Europe, a comprehensive global rebranding
effort, and a new solutions-focused website.
-- United Oil, a large fueling station services company serving Shell,
Exxon, Mobil, ConocoPhillips and United Oil-branded stations throughout
the U.S., selected Lantronix' ManageLinx® solution using VIP Access
enabled EDS1100s to remotely access gasoline storage tanks for data
collection and analysis, initially for 70 Shell stations in Southern
California.
-- Perinata, a newly-launched IT services company, selected ManageLinx®
to provide secure access to firewall-protected devices via the
Internet, enabling its new business model to provide robust IT services
from remote locations.
-- Launched MatchPort® NR, the newest addition to the Company's
MatchPort family of device servers that enables customers to easily
configure their products for wired or wireless connectivity with the
swap of a module, significantly shortening development time.
-- XLHost and netdirekt, data center and server hosting companies,
selected Spider to provide secure keyboard, video, mouse (KVM) server
management over the internet.
-- STARA Technologies selected WiPort® for its cutting edge Mosquito
automated guidance unit. Mosquito is a precision-guided aerial delivery
system that precisely delivers blood plasma, batteries, ammunition,
ground-based sensors and MREs (meals ready to eat) to Special
Operations Forces and other troops on the battlefield.
Financial Results for the Fiscal Fourth Quarter Ended June 30, 2010
Net revenue was $11.8 million, an increase of 4%, compared to $11.4 million
for the fourth fiscal quarter of 2009.
Gross profit margin increased to 50.8%, compared to 49.4% for the fiscal
fourth quarter of 2009. The increase in gross profit margin percent
primarily reflects a decrease in inventory and warranty reserve expenses,
offset by an increase in freight costs due to expedite charges relating to
component and product shortages.
GAAP operating expenses were $6.5 million, an increase of $331,000,
compared to $6.1 million for the fourth fiscal quarter of 2009.
Approximately $400,000 of the increase was attributable to the Company
discontinuing its corporate-wide furlough program for the fourth fiscal
quarter of 2010.
-- Selling, general and administrative expense was $4.8 million, an
increase of $208,000, compared to $4.5 million for the fourth fiscal
quarter of 2009. The increase was primarily due to the Company
discontinuing its corporate-wide furlough program for the fourth
fiscal quarter of 2010 and severance related charges.
-- Research and development expense was $1.7 million, an increase of
$231,000, compared to $1.5 million for the fourth fiscal quarter of
2009. The increase was primarily due to the Company discontinuing its
corporate-wide furlough program for the fourth fiscal quarter of 2010.
Non-GAAP operating expenses were $5.9 million, compared to $5.4 million for
the fourth fiscal quarter of 2009.
GAAP net loss was $509,000, or ($0.05) per share, compared to GAAP net loss
of $553,000, or ($0.05) per share, for the fourth fiscal quarter of 2009.
Non-GAAP net income was $169,000, or $0.02 per share, compared to non-GAAP
net income of $326,000, or $0.03 per share, for the fourth fiscal quarter
of 2009.
Financial Results for the Fiscal Year Ended June 30, 2010
Net revenue was $46.4 million for fiscal 2010, a decrease of 5.6%, compared
to $49.1 million for fiscal 2009.
Gross profit margin was 52.0%, compared to 52.2% for fiscal 2009. The
decrease in gross profit margin percent reflects product mix and increased
freight costs due to expedite charges relating to component and product
shortages.
GAAP operating expenses were $25.4 million, a decrease of $838,000,
compared to $26.3 million for fiscal 2009.
-- Selling, general and administrative expense was $19.0 million, a
decrease of $482,000, compared to $19.5 million for fiscal 2009. The
decrease was due to personnel-related and facilities-related expenses,
marketing expenses, professional fees and outside services due to cost
cutting efforts.
-- Research and development expense was $6.3 million, an increase of
$450,000, compared to $5.9 million for fiscal 2009. The increase was
due to personnel-related expenses, facilities-related expenses, and
outside services for engineering projects.
Non-GAAP operating expenses were $22.8 million, a decrease of $167,000,
compared to $23.0 million for fiscal 2009.
GAAP net loss was $1.5 million, or ($0.15) per share, compared to GAAP net
loss of $780,000, or ($0.08) per share, for fiscal 2009.
Non-GAAP net income was $1.6 million, or $0.15 per share, compared to
non-GAAP net income of $2.9 million, or $0.28 per share, for fiscal 2009.
Balance Sheet Summary
Cash and cash equivalents were $10.1 million as of June 30, 2010, an
increase of $938,000, compared to $9.1 million as of June 30, 2009.
Total receivables, which include accounts receivable, net, and contract
manufacturers' receivable, were $2.4 million as of June 30, 2010, compared
to $2.5 million as of June 30, 2009.
Net Inventory was $6.9 million as of June 30, 2010, compared to $6.5
million as of June 30, 2009.
Accounts payable were $6.5 million as of June 30, 2010, compared to $5.6
million as of June 30, 2009. The increase was due to the timing of
inventory receipts during the quarter as inventory is the primary driver of
accounts payable.
Working capital was $7.6 million as of June 30, 2010, compared to $8.1
million as of June 30, 2009.
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, depreciation and
amortization, litigation settlement, and restructuring charges, 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.
Non-GAAP net income (loss) consists of net income (loss) excluding
share-based compensation and related payroll taxes, depreciation and
amortization, litigation settlement, restructuring charges, 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.
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 fiscal 2010 fourth quarter and
year-end financial results. Those wishing to participate in the live call
should dial 800-599-9829 (International dial-in 617-847-8703) using the
passcode 14137881. 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 24165699 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. Its 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 security, industrial and
building automation, medical, 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
quarters ended March 31, 2010, December 31, 2009 and September 30, 2009 and
our Annual Report on Form 10-K for the year ended June 30, 2009. 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 Consolidated Balance Sheets
(In thousands, except share and per share data)
June 30, June 30,
2010 2009
-------------- --------------
Assets
Current Assets:
Cash and cash equivalents $ 10,075 $ 9,137
Accounts receivable (net of allowance for
doubtful accounts of $93 and $130 at June
30, 2010 and 2009, respectively) 1,342 1,851
Inventories, net 6,873 6,479
Contract manufacturers' receivable 1,015 655
Prepaid expenses and other current assets 515 529
Deferred tax asset 567 675
-------------- --------------
Total current assets 20,387 19,326
Property and equipment, net 2,392 2,230
Goodwill 9,488 9,488
Purchased intangible assets, net 155 265
Other assets 135 122
-------------- --------------
Total assets $ 32,557 $ 31,431
============== ==============
Liabilities and stockholders' equity
Current Liabilities:
Accounts payable $ 6,545 $ 5,626
Accrued payroll and related expenses 1,568 1,414
Warranty reserve 183 224
Restructuring reserve - 76
Short-term debt 667 667
Other current liabilities 3,776 3,221
-------------- --------------
Total current liabilities 12,739 11,228
Non-Current Liabilities:
Long-term liabilities 646 117
Long-term capital lease obligations 153 309
Long-term debt 111 778
Deferred tax liability 567 675
-------------- --------------
Total non-current liabilities 1,477 1,879
-------------- --------------
Total liabilities 14,216 13,107
-------------- --------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value;
5,000,000 shares authorized;
none issued and outstanding - -
Common stock, $0.0001 par value;
200,000,000 shares authorized;
10,322,597 and 10,090,087 shares issued
and outstanding at - -
June 30, 2010 and 2009, respectively 1 1
Additional paid-in capital 191,147 189,584
Accumulated deficit (173,206) (171,687)
Accumulated other comprehensive income 399 426
-------------- --------------
Total stockholders' equity 18,341 18,324
-------------- --------------
Total liabilities and stockholders'
equity $ 32,557 $ 31,431
============== ==============
LANTRONIX, INC.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Years Ended
June 30, June 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Net revenue (1) $ 11,819 $ 11,395 $ 46,375 $ 49,147
Cost of revenue 5,819 5,762 22,257 23,478
--------- --------- --------- ---------
Gross profit 6,000 5,633 24,118 25,669
--------- --------- --------- ---------
Operating expenses:
Selling, general and
administrative 4,756 4,548 19,035 19,517
Research and development 1,700 1,469 6,338 5,888
Restructuring charges - 108 - 806
Amortization of purchased
intangible assets 18 18 72 72
--------- --------- --------- ---------
Total operating expenses 6,474 6,143 25,445 26,283
--------- --------- --------- ---------
Loss from operations (474) (510) (1,327) (614)
Interest expense, net (31) (52) (149) (186)
Other income (expense), net (11) (24) (19) 19
--------- --------- --------- ---------
Loss before income taxes (516) (586) (1,495) (781)
Provision (benefit) for income
taxes (7) (33) 24 (1)
--------- --------- --------- ---------
Net loss $ (509) $ (553) $ (1,519) $ (780)
========= ========= ========= =========
Net loss per share (basic and
diluted) $ (0.05) $ (0.05) $ (0.15) $ (0.08)
========= ========= ========= =========
Weighted average shares (basic
and diluted) 10,321 10,090 10,276 10,081
========= ========= ========= =========
(1) Includes net revenue from
related parties $ 161 $ 158 $ 642 $ 962
========= ========= ========= =========
LANTRONIX, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands)
Three Months Ended Years Ended
June 30, June 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
GAAP net loss $ (509) $ (553) $ (1,519) $ (780)
Non-GAAP adjustments:
Cost of revenues:
Share-based compensation 13 14 43 63
Employer portion of
withholding taxes on stock
grants - - 3 -
Depreciation and
amortization 76 45 264 171
--------- --------- --------- ---------
Total adjustments to cost of
revenues 89 59 310 234
--------- --------- --------- ---------
Selling, general and
administrative:
Share-based compensation 272 359 1,380 1,315
Employer portion of
withholding taxes on stock
grants - - 13 -
Depreciation and
amortization 164 142 625 565
--------- --------- --------- ---------
Total adjustments to
selling, general and
administrative 436 501 2,018 1,880
--------- --------- --------- ---------
Research and development:
Share-based compensation 89 134 478 488
Employer portion of
withholding taxes on stock
grants - - 21 -
Depreciation and
amortization 11 16 56 70
--------- --------- --------- ---------
Total adjustments to
research and development 100 150 555 558
--------- --------- --------- ---------
Restructuring charge - 108 - 806
Amortization of purchased
intangible assets 18 18 72 72
--------- --------- --------- ---------
Total non-GAAP adjustments to
operating expenses 554 777 2,645 3,316
--------- --------- --------- ---------
Interest expense, net 31 52 149 186
Other (income) expense, net 11 24 19 (19)
Provision (benefit) for income
taxes (7) (33) 24 (1)
--------- --------- --------- ---------
Total non-GAAP adjustments 678 879 3,147 3,716
--------- --------- --------- ---------
Non-GAAP net income (loss) $ 169 $ 326 $ 1,628 $ 2,936
========= ========= ========= =========
Non-GAAP net income per share
(basic and diluted) $ 0.02 $ 0.03 $ 0.15 $ 0.28
========= ========= ========= =========
Denominator for GAAP net income
per share (basic and diluted) 10,321 10,090 10,276 10,081
Non-GAAP adjustment 666 476 549 353
--------- --------- --------- ---------
Denominator for non-GAAP net
income per share (basic and
diluted) 10,987 10,566 10,825 10,434
========= ========= ========= =========
GAAP operating expenses $ 6,474 $ 6,143 $ 25,445 $ 26,283
Non-GAAP adjustments to
operating expenses (554) (777) (2,645) (3,316)
--------- --------- --------- ---------
Non-GAAP operating expenses $ 5,920 $ 5,366 $ 22,800 $ 22,967
========= ========= ========= =========
LANTRONIX, INC.
Unaudited Consolidated Net Revenue by Product Line
(In thousands)
Years Ended June 30,
-------------------------------------- Change
% of Net % of Net -----------------
2010 Revenue 2009 Revenue $ %
--------- -------- --------- -------- -------- -------
(In thousands, except percentages)
Device
enablement $ 37,096 80.0% $ 39,945 81.2% $ (2,849) (7.1%)
Device
management 8,384 18.1% 7,397 15.1% 987 13.3%
--------- -------- --------- -------- -------- -------
Device
networking 45,480 98.1% 47,342 96.3% (1,862) (3.9%)
Non-core 895 1.9% 1,805 3.7% (910) (50.4%)
--------- -------- --------- -------- -------- -------
Net revenue $ 46,375 100.0% $ 49,147 100.0% $ (2,772) (5.6%)
========= ======== ========= ======== ======== =======
Quarters Ended June 30,
-------------------------------------- Change
% of Net % of Net -----------------
2010 Revenue 2009 Revenue $ %
--------- ------- -------- ------- ------- -------
(In thousands, except percentages)
Device
enablement $ 9,557 80.9% $ 9,540 83.7% $ 17 0.2%
Device
management 2,103 17.8% 1,569 13.8% 534 34.0%
--------- ------- -------- ------- ------- -------
Device
networking 11,660 98.7% 11,109 97.5% 551 5.0%
Non-core 159 1.3% 286 2.5% (127) (44.4%)
--------- ------- -------- ------- ------- -------
Net revenue $ 11,819 100.0% $ 11,395 100.0% $ 424 3.7%
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