Fifth Consecutive Year of Profitability
Driven by Leadership in Automotive Electronics
Data I/O Corporation (NASDAQ: DAIO), the leading global provider
of advanced data and security programming solutions for flash,
flash-memory based intelligent devices and microcontrollers, today
announced financial results for the fourth quarter and year ended
December 31, 2018.
Fourth Quarter 2018 Highlights
- Net sales of $7.9 million; bookings of
$6.5 million
- Gross margin as a percentage of sales
of 58.2%
- Net income of $648,000 or $0.08 diluted
earnings per share
- Adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA)*, excluding equity
compensation, of $1.2 million
- Cash & Equivalents of $18.3
million; no debt
- Won multiple industry awards for
technology, products, and service
- Automotive electronics and advanced
programming leadership
- Automotive represented 60% of bookings
for the year
- Released Lumen®X version 1.6 to support
doubling of programming download speed and Dynamic Data
Injection
- Released SentriX® Scripting Interface
Upgrade for more advanced security provisioning
- Repurchased 102,000 shares as part of a
$2 million buyback program authorized in October 2018
Full Year 2018 Highlights
- Net sales of $29.2 million; bookings of
$27.0 million
- Gross margin as a percentage of sales
of 59.4%
- Net income of $1.6 million or $0.19
diluted earnings per share
- Ended year with 12 partners and 4
system deployments for SentriX system
*Adjusted EBITDA is a non-GAAP financial measure. A
reconciliation is provided in the tables of this press release.
Management Comments
Commenting on the fourth quarter and year ended December 31,
2018, Anthony Ambrose, President and CEO of Data I/O Corporation,
said, “2018 was a solid year for Data I/O as we strengthened the
Company’s position as the global leader in programming and security
provisioning solutions, and delivered our 5th consecutive year of
profitability.
“In 2018 we extended our leadership in automotive electronics
programming technologies. Automotive customers represented 60% of
our total bookings for the year, up from 54% in 2017. Our PSV
family of high speed programming systems, which is ideal for
automotive electronics, is capturing market share as we won several
new sites and marquee customers. In 2018, we celebrated the sale of
our 200th PSV system. Separately, the industry celebrated Data I/O,
honoring our programming innovations with three industry awards in
the past few months alone. We also expanded and extended our
SentriX platform for IoT security. We announced several new
partnerships and deployments, and planted the seeds for the longer
term industry transition to security.
“In 2018 we continued to drive operational excellence across our
organization to manage our expenses and effectively drive
profitability. Our gross profit as a percentage of sales was higher
for the year, despite lower revenues. We attribute much of this
performance to continued business process improvement and focus on
manufacturing efficiencies. Beyond investing in the business to
capitalize on the many growth opportunities ahead of us, we are
simultaneously returning capital to shareholders. During the fourth
quarter we repurchased approximately 102,000 shares valued at
$536,000 as part of a $2 million buyback program. At the end of the
year, we maintained our strong balance sheet with $18.3 million in
cash and no debt.
“Our formula for long term profitable growth and success is
unchanged. We continue to invest in our technology platforms to
address the secular growth for automotive electronics and meet the
emerging demands for a secure IoT. In 2019, we are focused on the
UFS Flash memory transition in automotive infotainment and Advanced
Driver Assist Systems (ADAS) enhancing performance, expanding our
SentriX device supports while bringing early customers to revenue,
maintaining our commitment to operational excellence, and being
excellent stewards of capital.”
Financial Results
Net sales in the fourth quarter of 2018 were $7.9 million, as
compared with $8.1 million in the fourth quarter of 2017, and $6.5
million in the third quarter of 2018. The year-over-year decline in
sales was a result of cyclical demand during 2017, particularly
from programming center customers, while the increase from the
third quarter reflects growth driven in large part by demand from
the automotive electronics industry. For all of 2018, net sales
were $29.2 million, down 14.4% from $34.1 million in 2017.
For the 2018 fourth quarter, gross margin as a percentage of
sales was 58.2%, as compared to 58.5% in the fourth quarter of
2017. The fourth quarter 2018 level is at the higher end of the
Company’s anticipated target due to a favorable channel and product
mix and currency impacts. Cost reduction and manufacturing efforts
to improve factory utilization also contributed to the strength of
gross margins. Data I/O has realized the benefits of these
initiatives throughout 2018, although certain tariffs and commodity
prices have partially mitigated the overall impact. For all of
2018, gross margin was 59.4%, compared to 58.9% for the prior
year.
Total operating expenses in the fourth quarter of 2018 were $3.8
million, up from $3.6 million in the 2017 period, and slightly up
from $3.7 million in the third quarter of 2018. Spending on
research and development (“R&D”) to support the Company’s two
primary technology platforms was $1.8 million which is flat as
compared with both the fourth quarter of 2017 and the third quarter
of 2018. Selling, general and administrative expenses of $2.0
million in the fourth quarter of 2018 were up from $1.9 million in
the third quarter of 2018 and $1.8 million in the year earlier
period. The Company continues to actively engage in market
development and R&D initiatives for its SentriX platform while
emphasizing ongoing expense management practices. Total operating
expenses for all of 2018 were $15.6 million, up 4% from $15.0
million in 2017 due to higher marketing expenses and R&D,
partially offset by reduced variable compensation.
Operating income was $744,000 for the fourth quarter of 2018, up
from $404,000 for the third quarter of 2018 and down from $1.2
million in the fourth quarter of 2017. For the full year, operating
income was $1.7 million in 2018 as compared with $5.0 million for
2017.
Net income in the fourth quarter of 2018 was $648,000, or $0.08
per diluted share, compared with net income of $342,000, or $0.04
per diluted share, in the third quarter of 2018, and $1.5 million,
or $0.18 per diluted share, in the fourth quarter of 2017. Included
in non-operating income is a currency loss of $98,000 for the
fourth quarter of 2018, a currency gain of $108,000 for the third
quarter of 2018, and a currency loss of $123,000 in the fourth
quarter of 2017. Included in fourth quarter 2017 net income is a
one-time net benefit recorded as a result of the Tax Cuts and Jobs
Act of 2017 of $531,000. For the year, net income in 2018 was $1.6
million, or $0.19 per diluted share, as compared with net income in
2017 of $5.4 million, or $0.65 per diluted share. Gains on sales of
non-core internet domain assets contributed non-operating income of
$366,000 in 2017, while 2018 gain was $19,000.
Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) was $881,000 in the fourth quarter of 2018, compared to
$742,000 in the third quarter of 2018 and $1.2 million in the prior
year period. Adjusted EBITDA, excluding equity compensation, was
$1.2 million in the fourth quarter of 2018, compared to $1.0
million in the third quarter of 2018 and $1.4 million in the prior
year period. For all of 2018, EBITDA was $2.8 million, compared to
$6.0 million for 2017, while Adjusted EBITDA, excluding equity
compensation, was $4.0 million in 2018 compared to $6.7 million in
2017.
Bookings in the fourth quarter of 2018 were $6.5 million,
compared to $7.6 million in the fourth quarter of 2017 and $7.0
million in the third quarter of 2018. Bookings for all of 2018 were
$27.0 million, down from $34.3 million in 2017 and up from bookings
of $26.9 million in 2016. Backlog at December 31, 2018 was $1.9
million, as compared with $4.0 million at December 31, 2017.
Data I/O’s financial condition remains strong with cash of $18.3
million at December 31, 2018, down from $18.9 million at September
30, 2018, and $18.5 million at December 31, 2017. Cash at the end
of the fourth quarter reflects part of the $2 million share
repurchase program authorized in October 2018. Accounts receivable
of $3.8 million at December 31, 2018 increased by $1 million from
$2.8 million at September 30, 2018 and was flat as compared with
the end of the prior year. Net working capital at the end of 2018
was $21.1 million, up from $20.6 million at September 30, 2018, and
$19.5 million at December 31, 2017. The Company continues to have
no debt.
Conference Call Information
A conference call discussing the fourth quarter ended December
31, 2018, 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 10128659. The
conference call will also be simultaneously webcast over the
Internet; visit the News and Events section of the Data I/O
Corporation website at 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 markets. Today, our customers
manufacture hundreds of millions of products each year using Data
I/O 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, assuring success for our customers.
Learn more at dataio.com
Forward Looking Statement and Non-GAAP financial
measures
Statements in this news release concerning economic outlook,
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, 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 -
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts)
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31, 2018
2017 2018 2017 Net Sales $7,857
$8,096 $29,224 $34,051 Cost of goods sold 3,284 3,363
11,868 13,992 Gross margin 4,573 4,733 17,356 20,059
Operating expenses: Research and development 1,811 1,766 7,361
6,896 Selling, general and administrative 2,018 1,816
8,257 8,116 Total operating expenses 3,829
3,582 15,618 15,012 Operating income 744 1,151
1,738 5,047 Non-operating income (expense): Interest income 11 10
37 29 Gain on sale of assets 15 3 19 366 Foreign currency
transaction gain (loss) (98 ) (123 ) 103 (281 ) Total
non-operating income (72 ) (110 ) 159 114 Income
before income taxes 672 1,041 1,897 5,161 Income tax (expense)
benefit (24 ) 495 (291 ) 288 Net income $648
$1,536 $1,606 $5,449 Basic
earnings per share $0.08 $0.19 $0.19 $0.67 Diluted earnings per
share $0.08 $0.18 $0.19 $0.65 Weighted-average basic shares 8,431
8,260 8,378 8,149 Weighted-average diluted shares 8,509 8,542 8,514
8,436
DATA I/O CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share
data)
(UNAUDITED)
December 31, December 31, 2018
2017 ASSETS CURRENT ASSETS: Cash and cash
equivalents $18,343 $18,541 Trade accounts receivable, net of
allowance for doubtful accounts of $75 and $73, respectively 3,771
3,769 Inventories 5,185 4,168 Other current assets 621 708 TOTAL
CURRENT ASSETS 27,920 27,186 Property, plant and equipment –
net 1,985 2,458 Income tax receivable 598 598 Other assets 220 45
TOTAL ASSETS $30,723 $30,287
LIABILITIES AND
STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable
$1,755 $1,301 Accrued compensation 2,872 3,536 Deferred revenue
1,392 1,787 Other accrued liabilities 789 858 Income taxes payable
47 218 TOTAL CURRENT LIABILITIES 6,855 7,700 Long-term other
payables 511 527 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, 8,338,628 shares as of December 31,
2018 and 8,276,813 shares as of December 31, 2017 19,254 18,989
Accumulated earnings 3,695 2,089 Accumulated other comprehensive
income 408 982 TOTAL STOCKHOLDERS’ EQUITY 23,357 22,060 TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY $30,723 $30,287
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended Twelve Months Ended
December 31, December 31, 2018
2017 2018 2017 (in thousands) Net
Income $648 $1,536 $1,606 $5,449 Interest (income) (11 ) (10 ) (37
) (29 ) Taxes 24 (495 ) 291 (288 ) Depreciation and amortization
220 188 956 822 EBITDA earnings $881
$1,219 $2,816 $5,954 Equity compensation 297 174
1,230 714
Adjusted EBITDA earnings, excluding equity
compensation
$1,178 $1,393 $4,046 $6,668
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version on businesswire.com: https://www.businesswire.com/news/home/20190221005866/en/
Joel HatlenChief Operating and Financial OfficerData I/O
Corporation6645 185th Ave. NE, Suite 100Redmond, WA 98052(425)
881-6444Darrow Associates, Inc.Jordan Darrow(512)
551-9296jdarrow@darrowir.com
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