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Data I/O Reports Second Quarter 2017 Results

Revenue Grows 57%; Bookings Increase 75%; Advancements in Next Generation SentriX(TM) Managed and Secure Programming Technology to Democratize IoT Security

/EINPresswire.com/ -- REDMOND, WA--(Marketwired - July 27, 2017) - Data I/O Corporation (NASDAQ: DAIO), the leading global provider of advanced data and security programming and IP management solutions for flash-memory, flash based microcontrollers and other intelligent devices, today announced financial results for the second quarter ended June 30, 2017.

Second Quarter 2017 Highlights (on year-over-year basis unless noted)

  • Net sales of $9.1 million, a 17-year high
  • Total bookings of $10.1 million, a 17-year high
  • Gross margin as a percentage of sales of 56.9%, up from 53.2% in 2Q16
  • Net income of $1.2 million or $0.14 diluted earnings per share, up from $444,000 or $0.06 diluted earnings per share in 2Q16
  • Adjusted EBITDA*, excluding equity compensation, of $1.7 million, up from $789,000 in 2Q16
  • Backlog of $4.7 million at end of quarter, compared with $4.9 million at March 31, 2017 and $3.2 million at December 31, 2016
  • Deferred revenue of $2.8 million, including 3 systems
  • Cash and securities of $12.0 million at June 30, 2017, compared with $10.5 million at March 31, 2017 and $11.6 million at December 31, 2016
  • Progress for SentriX™ Managed and Secure Programming Platform
    • Additional Secure Elements enablement orders received
    • Leadership team bolstered
    • On track for system release in second half of 2017

Management Comments

"Our second quarter financial and operating performances were outstanding," said Anthony Ambrose, President and CEO of Data I/O Corporation. "Building upon the progress achieved in the first quarter, revenue and bookings in the second quarter reached the highest level in 17 years. During the second quarter, we shipped our 150th PSV family system, extending our global market share leadership.

"The turnaround strategy we started over 4 years ago has delivered our best quarter since the year 2000. We are delivering operational excellence across the board: sales, engineering, service and operations all drove our performance.

"Automotive electronics were over 50% of bookings in the first half of 2017, continuing a multiyear growth trend. We booked multiple systems from an international automotive electronics company, and shipped 2 systems to them in the second quarter. Reflecting our growing base of installed systems, revenue from adapters in the second quarter increased 72% from the prior year period to $2.1 million, or 23% of consolidated revenue.

"While we continue to experience high demand and interest in our product platforms, our second quarter bookings of $10.1 million were unusually strong. Second quarter bookings are likely to be the peak level for the year due to unprecedented demand in the first half of 2017 and our seasonal sales funnel.

"We improved overall profitability while increasing investment in research and development for our Managed and Secure Programming ("MSP") technology and automotive targeted products. In June, we announced organizational changes that significantly strengthen our management team to enable us to better address our new opportunities from MSP. Through our continued work on the MSP platform, we are developing the technologies behind a new generation of security solutions for authentication devices, secure elements and secure microcontrollers. The mission of Data I/O's MSP platform is to enable a democratization of security capabilities for OEMs globally."

Financial Results

Net sales in the second quarter of 2017 were $9.1 million, compared with $5.8 million in the second quarter of 2016.

For the 2017 second quarter, gross margin as a percentage of sales was 56.9%, compared to 53.2% in the second quarter of 2016. The improvement in gross margin as a percentage of sales for the second quarter compared to the same period in 2016 was primarily due to higher order volume and favorable product mix, particularly from demand for the PSV family of products by automotive electronics and programming center customers.

Net income in the second quarter of 2017 was $1.2 million, or $0.14 per diluted share, compared with net income of $444,000, or $0.06 per diluted share, in the second quarter of 2016.

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") was $1.5 million in the second quarter of 2017, compared to $584,000 in the second quarter of 2016. Adjusted EBITDA, excluding equity compensation, was $1.7 million in the second quarter of 2017, compared to $789,000 in the second quarter of 2016.

Bookings in the second quarter of 2017 reached the highest level in 17 years at $10.1 million, compared to $5.7 million in the second quarter of 2016 and $8.4 million in the first quarter of 2017. Backlog at June 30, 2017 was $4.7 million as compared to $4.9 million at March 31, 2017 and $3.2 million at December 31, 2016. Deferred revenue doubled to $2.8M at June 30, 2017, up from $1.4 million at March 31, 2017.

Spending in the second quarter was up approximately $1.2 million from the same period of 2016. Approximately $600,000 of the increase was SG&A variable costs related to the increased level of business activity. Approximately $600,000 of the increase reflects additional spending on research and development to support new product development for the SentriX platform, the ConneX™ factory automation software, LumenX™ programmer features and enhancements to other products. The majority of this was personnel related, including additional headcount in engineering. The Company continues to invest to support automotive demands in the near term and security opportunities in future years.

The Company's operating leverage continues to produce meaningful incremental profitability with revenue growth, which is partially offset by spending on the new Managed and Secure Programming platform. Data I/O's financial condition remains strong with a cash position of $12.0 million and working capital of $16.9 million at June 30, 2017. The Company continues to have no debt.

Conference Call Information

A conference call discussing the second quarter ended June 30, 2017 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 (612) 234-9959, passcode: DAIO. A replay will be made available approximately one hour after the conclusion of the call. To access the replay, please dial (320) 365-3844, access code: 426476. 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 http://www.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, industrial/Internet-of-Things, wireless, consumer electronics, medical and military/aerospace markets. Today, our customers manufacture tens of millions of products each year using Data I/O programming solutions to reliably, securely, and cost-effectively deliver their Intellectual Property into programmable devices. Our expertise in programmable integrated circuits, global supply chain processes, and IP management and protection helps bring innovative new products to life. These solutions are backed by a global network of Data I/O support and service providers, assuring success for our customers.

Learn more at www.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.

 
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(UNAUDITED)
     
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2017   2016   2017   2016
                 
Net Sales   $9,135   $5,801   $16,359   $10,414
Cost of goods sold   3,933   2,713   6,990   4,798
  Gross margin   5,202   3,088   9,369   5,616
Operating expenses:                
  Research and development   1,771   1,172   3,316   2,297
  Selling, general and administrative   2,163   1,525   3,981   3,103
    Total operating expenses   3,934   2,697   7,297   5,400
    Operating income   1,268   391   2,072   216
Non-operating income (expense):                
  Interest income   6   11   13   23
  Gain on sale of assets   80   -   291   -
  Foreign currency transaction gain (loss)   (62)   49   (92)   45
  Total non-operating income   24   60   212   68
Income before income taxes   1,292   451   2,284   284
Income tax (expense)   (86)   (7)   (99)   (8)
Net income   $1,206   $444   $2,185   $276
                 
                 
  Basic earnings per share   $0.15   $0.06   $0.27   $0.03
  Diluted earnings per share   $0.14   $0.06   $0.26   $0.03
  Weighted-average basic shares   8,104   7,942   8,067   7,944
  Weighted-average diluted shares   8,408   8,039   8,367   8,033
                 
   
DATA I/O CORPORATION  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share data)  
(UNAUDITED)  
             
    June 30,
2017
    December 31,
2016
 
                 
ASSETS                
CURRENT ASSETS:                
  Cash and cash equivalents   $ 12,033     $ 11,571  
  Trade accounts receivable, net of allowance for doubtful accounts of $133 and $96, respectively     7,233       4,725  
  Inventories     4,855       4,059  
  Other current assets     621       483  
    TOTAL CURRENT ASSETS     24,742       20,838  
                 
Property, plant and equipment - net     1,990       1,875  
Other assets     44       63  
    TOTAL ASSETS   $ 26,776     $ 22,776  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
CURRENT LIABILITIES:                
  Accounts payable   $ 1,676     $ 1,428  
  Accrued compensation     2,502       2,208  
  Deferred revenue     2,791       1,926  
  Other accrued liabilities     825       667  
  Income taxes payable     86       36  
    TOTAL CURRENT LIABILITIES     7,880       6,265  
                 
Long-term other payables     464       479  
                 
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, 8,172,491 shares as of June 30, 2017 and 8,015,746 shares as of December 31, 2016     19,065       19,204  
Accumulated (deficit)     (1,175 )     (3,360 )
Accumulated other comprehensive income     542       188  
    TOTAL STOCKHOLDERS' EQUITY     18,432       16,032  
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 26,776     $ 22,776  
                     
             
NON-GAAP FINANCIAL MEASURE RECONCILIATION            
             
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2017     2016     2017     2016  
(in thousands)                                
Net Income   $ 1,206     $ 444     $ 2,185     $ 276  
  Interest (income)     (6 )     (11 )     (13 )     (23 )
  Taxes     86       7       99       8  
  Depreciation and amortization     165       144       328       272  
EBITDA earnings   $ 1,451     $ 584     $ 2,599     $ 533  
                                 
  Equity compensation     270       205       367       300  
Adjusted EBITDA earnings,                                
  excluding equity compensation   $ 1,721     $ 789     $ 2,966     $ 833  
                                 
*Adjusted EBITDA is a non-GAAP financial measure. A reconciliation is provided in the tables of this press release.  

Joel Hatlen
Chief Operating and Financial Officer
Data I/O Corporation 6645 185th Ave. NE, Suite 100
Redmond, WA 98052
(425) 881-6444

Darrow Associates, Inc.
Jordan Darrow
(512) 551-9296
Email contact

Distribution channels: Electronics Industry, Technology