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Lantronix Reports Second Quarter Fiscal 2020 Results

  • Second Quarter Net Revenue was $13.2 Million, Up 9% from the Prior Year and Up 4% Sequentially
  • GAAP EPS, Inclusive of Acquisition and Restructuring Expenses was ($0.06) per share
  • Non-GAAP EPS was $0.03 per share
  • Closed the Acquisition of Intrinsyc Technologies Corporation on January 16, 2020

IRVINE, Calif., Feb. 12, 2020 (GLOBE NEWSWIRE) -- Lantronix, Inc. (LTRX), a global provider of secure data access and management solutions for the industrial Internet of Things (IoT) today reported results for the second quarter of fiscal 2020 that ended December 31, 2019.

Net revenue totaled $13.2 million, up 9% year over year and 4% sequentially.

GAAP EPS was ($0.06), compared to $0.01 in the year-ago quarter and ($0.11) in the prior quarter and included expenses related to the acquisitions of Maestro and Intrinsyc Technologies Corporation. 

Non-GAAP EPS was $0.03, compared to $0.03 in the year-ago second quarter and $0.00 in the prior fiscal quarter.

Business Outlook

For the third quarter of fiscal 2020, Lantronix expects net revenue of $18 million plus or minus 10% and non-GAAP EPS between $0.02 and $0.06.

For Fiscal 2020, Lantronix expects net revenue growth between 30% to 35% and non-GAAP EPS growth between 0% to 10%.

“We are executing on the transformation of Lantronix,” said Paul Pickle, president and CEO of Lantronix.  “With the recently announced closure of the Intrinsyc Technologies acquisition, we have further expanded our capabilities within the IoT value stack, and we are quickly becoming a value-added IoT solutions supplier to our customers. We remain focused on revenue growth and as we look to the remainder of the fiscal year, our attention is turning to integration and the realization of efficiencies of scale for the benefit of our shareholders.”

Conference Call and Webcast
Lantronix will host an investor conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its results for the second quarter of fiscal 2020 that ended December 31, 2019. To access the live conference call, investors should dial 1-844-802-2442 (US) or 1-412-317-5135 (international) and indicate that they are participating in the Lantronix Q2 FY 2020 call. The webcast will be available simultaneously via the investor relations section of the Company’s website at www.lantronix.com.

Investors can access a replay of the conference call starting at approximately 5:00 p.m. Pacific Time today at www.lantronix.com. A telephonic replay will also be available through March 12, 2020, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 10139087.

About Lantronix 
Lantronix, Inc. is a global provider of hardware and software solutions for the Internet of Things (IoT) and Out-of-Band Management (OOBM). Lantronix enables its customers to provide intelligent, reliable, and secure IoT and OOBM solutions while accelerating time to market. Lantronix’s solutions dramatically simplify the creation, development, deployment, and management of IoT projects while providing quality, reliability and security across hardware, software, and solutions.

With three decades of proven experience in creating robust machine-to-machine (M2M) technologies and OOBM solutions, Lantronix is an innovator in enabling its customers to build new business models, leverage greater efficiencies and realize the possibilities of the Internet of Things. Lantronix’s solutions are deployed inside millions of machines at data centers, offices, and remote sites serving a wide range of industries, including energy, agriculture, medical, security, manufacturing, distribution, transportation, retail, financial, environmental, and government.

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. 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. 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 of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP 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 net income (loss) consists of net income (loss) excluding (i) share-based compensation and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv) other income (expense), (v) income tax provision (benefit), (vi) severance and restructuring charges, (vii) acquisition related costs, (viii) impairment of long-lived assets, (viiii) amortization of purchased intangibles, and (x) amortization of manufacturing profit in acquired inventory.

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.

Guidance on earnings per share growth is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially significant to Lantronix’s ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without unreasonable effort.

Forward-Looking Statements

This news release contains forward-looking statements, including statements concerning our acquisition activity and the expected benefits therefrom, operational synergies, our product development efforts, and our projected operating and financial performance. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition, results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this news release. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: our ability to continue to generate revenue from products sold into mature markets; our ability to develop, market, and sell new products; our ability to succeed with our new software offerings; fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenues due to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our ability to accurately forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delays in the supply of, or quality control issues with, certain materials or components; difficulties associated with the delivery, quality or cost of our products from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and international operations; the impact of any public health epidemics (including the coronavirus outbreak) on our employees, supply and distribution chains, and the global economy; difficulties associated with our distributors or resellers; intense competition in our industry and resultant downward price pressure; rises in inventory levels and inventory obsolescence; undetected software or hardware errors or defects in our products; cybersecurity risks; our ability to obtain appropriate industry certifications or approvals from governmental regulatory bodies; changes in applicable U.S. and foreign government laws, regulations, and tariffs; our ability to successfully implement our acquisitions strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties; our ability to protect patents and other proprietary rights and avoid infringement of others’ proprietary technology rights; the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; our ability to attract and retain qualified management; and any additional factors included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2019, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, as well as in our other public filings with the SEC. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of the NASDAQ Stock Market, LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.

Lantronix Investor Relations Contact:
Jeremy Whitaker
Chief Financial Officer
investors@lantronix.com

© 2020 Lantronix, Inc. All rights reserved. Lantronix and XPort are registered trademarks, and ConsoleFlow is a trademark, of Lantronix, Inc.



LANTRONIX, INC.  
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS  
 (In thousands)  
           
      December 31,       June 30,    
      2019       2019    
Assets          
Current assets:          
Cash and cash equivalents   $ 9,347     $ 18,282    
Restricted cash     6,000       -    
Accounts receivable, net     9,379       7,388    
Inventories, net     11,024       10,509    
Contract manufacturers' receivable     373       1,324    
Prepaid expenses and other current assets     1,307       687    
Total current assets     37,430       38,190    
Property and equipment, net     1,412       1,199    
Goodwill     12,458       9,488    
Intangible assets, net     1,615       -    
Other assets     2,040       67    
Total assets   $ 54,955     $ 48,944    
           
Liabilities and stockholders' equity          
Current liabilities:          
Accounts payable   $ 5,065     $ 4,716    
Accrued payroll and related expenses     2,248       2,060    
Warranty reserve     89       116    
Short-term debt, net     1,472       -    
Other current liabilities     5,248       4,580    
Total current liabilities     14,122       11,472    
Long-term debt, net     4,418       -    
Other non-current liabilities     1,137       206    
Total liabilities     19,677       11,678    
           
Commitments and contingencies          
           
Stockholders' equity:          
Common stock     2       2    
Additional paid-in capital     228,107       226,274    
Accumulated deficit     (193,202 )     (189,381 )  
Accumulated other comprehensive income   371       371    
Total stockholders' equity     35,278       37,266    
Total liabilities and stockholders' equity   $ 54,955     $ 48,944    
           



LANTRONIX, INC.  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share data)  
                       
                       
    Three Months Ended    Six Months Ended
    December 31,   September 30,   December 31,   December 31,
     2019     2019     2018     2019       2018    
Net revenue   $ 13,228     $ 12,741     $ 12,114   $ 25,969     $ 24,393    
Cost of revenue     6,451       6,546       5,453     12,997       10,952    
Gross profit     6,777       6,195       6,661     12,972       13,441    
Operating expenses:                      
Selling, general and administrative     4,871       4,473       4,159     9,344       8,430    
Research and development     2,336       2,621       2,279     4,957       4,494    
Restructuring, severance and related charges     354       749       -     1,103       323    
Acquisition-related costs     353       643       -     996       -    
Amortization of purchased intangible assets     151       144       -     295       -    
Total operating expenses     8,065       8,630       6,438     16,695       13,247    
Income (loss) from operations     (1,288 )     (2,435 )     223     (3,723 )     194    
Interest income (expense), net     (16 )     56       60     40       56    
Other income (expense), net     (10 )     (43 )     8     (53 )     (2 )  
Income (loss) before income taxes     (1,314 )     (2,422 )     291     (3,736 )     248    
Provision for income taxes     37       48       14     85       54    
Net income (loss)   $ (1,351 )   $ (2,470 )   $ 277   $ (3,821 )   $ 194    
Net income (loss) per share - basic   $ (0.06 )   $ (0.11 )   $ 0.01   $ (0.17 )   $ 0.01    
Net income (loss) per share - diluted   $ (0.06 )   $ (0.11 )   $ 0.01   $ (0.17 )   $ 0.01    
Weighted-average common shares - basic     23,145       22,913       22,091     23,029       20,721    
Weighted-average common shares - diluted     23,145       22,913       23,442     23,029       22,263    
                       



LANTRONIX, INC.  
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS  
(In thousands, except per share data )  
                       
    Three Months Ended   Six Months Ended
    December 31,   September 30,
  December 31,   December 31,
    2019   2019   2018   2019   2018  
                       
GAAP net income (loss)   $ (1,351 )   $ (2,470 )   $ 277     $ (3,821 )   $ 194    
Non-GAAP adjustments:                      
Cost of revenue:                      
Share-based compensation     48       24       23       72       40    
Employer portion of withholding taxes on stock grants     -       1       -       1       -    
Depreciation and amortization     73       67       45       140       93    
Total adjustments to cost of revenue     121       92       68       213       133    
Selling, general and administrative:                      
Share-based compensation     777       459       337       1,236       737    
Employer portion of withholding taxes on stock grants     1       5       2       6       8    
Depreciation and amortization     53       54       48       107       94    
Total adjustments to selling, general and administrative     831       518       387       1,349       839    
Research and development:                      
Share-based compensation     113       95       91       208       152    
Employer portion of withholding taxes on stock grants     1       4       -       5       -    
Depreciation and amortization     30       26       21       56       32    
Total adjustments to research and development     144       125       112       269       184    
Restructuring, severance and related charges     354       749       -       1,103       323    
Acquisition related costs     353       643       -       996       -    
Amortization of purchased intangible assets     151       144       -       295       -    
Amortization of manufacturing profit in acquired inventory     -       171       -       171       -    
Total non-GAAP adjustments to operating expenses     1,833       2,350       499       4,183       1,346    
Interest (income) expense, net     16       (56 )     (60 )     (40 )     (56 )  
Other (income) expense, net     10       43       (8 )     53       2    
Provision for income taxes     37       48       14       85       54    
Total non-GAAP adjustments     2,017       2,477       513       4,494       1,479    
Non-GAAP net income   $ 666     $ 7     $ 790     $ 673     $ 1,673    
                       
                       
Non-GAAP net income per share - diluted   $ 0.03     $ 0.00     $ 0.03     $ 0.03     $ 0.07    
                       
Denominator for GAAP net income (loss) per share - diluted     23,145       22,913       23,442       23,029       22,263    
Non-GAAP adjustment     1,848       1,834       824       1,791       701    
Denominator for non-GAAP net income per share - diluted     24,993       24,747       24,266       24,820       22,964    
                       
GAAP operating expenses   $ 8,065     $ 8,630     $ 6,438     $ 16,695     $ 13,247    
Non-GAAP adjustments to operating expenses     (1,833 )     (2,350 )     (499 )     (4,183 )     (1,346 )  
Non-GAAP operating expenses   $ 6,232     $ 6,280     $ 5,939     $ 12,512     $ 11,901    
                       



LANTRONIX, INC.  
UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION  
(In thousands)  
                     
  Three Months Ended   Six Months Ended  
  December 31, 2019   September 30, 2019   December 31, 2018   December 31, 2019   December 31, 2018  
IoT $ 11,180   $ 10,221   $ 9,070   $ 21,401   $ 18,037  
IT Management   1,832     2,301     2,888     4,133     5,989  
Other   216     219     156     435     367  
  $ 13,228   $ 12,741   $ 12,114   $ 25,969   $ 24,393  
                     
                     
  Three Months Ended   Six Months Ended  
  December 31, 2019   September 30, 2019   December 31, 2018   December 31, 2019   December 31, 2018  
Americas $ 5,840   $ 5,764   $ 6,182   $ 11,604   $ 13,096  
EMEA   4,362     4,521     4,080     8,883     7,600  
Asia Pacific Japan   3,026     2,456     1,852     5,482     3,697  
  $ 13,228   $ 12,741   $ 12,114   $ 25,969   $ 24,393