Lantronix Reports Fiscal 2015 Financial Results
IRVINE, CA -- (Marketwired) -- 08/20/15 -- Lantronix, Inc. (the "Company") (NASDAQ: LTRX), a specialized networking company providing smart IoT and M2M solutions, today reported results for its fourth quarter and fiscal year ended June 30, 2015.
Financial Highlights for Fiscal Year 2015
- Net revenue of $42.9 million
- New Product revenue growth of 48%
- Gross profit margin of 47.3%
- GAAP net loss of $2.8 million or $0.19 per share
- Non-GAAP net loss of $767,000 or $0.05 per share
- Cash and cash equivalents of $5.0 million
"During fiscal 2015, we continued to execute on the fundamental elements of our strategy, delivering 48% growth in New Product sales, expanding our sales and marketing efforts worldwide, and developing and launching smart IoT solutions," said Kurt Busch, Lantronix president and CEO. "At the same time, our results for the year were impacted by continued decline in sales of Legacy Products and weakness in capital spending for some large customers that affected total revenue."
Busch continued: "During fiscal 2016, we expect more customers to move into production with our new IoT Modules and an increase in customer adoption of our SLC 8000, SLB and other new Enterprise Solutions products. While the decline in our Legacy Products continues to be challenging, we have seen substantial sales growth and significant opportunities from our New Product offerings, and we believe that staying focused on our core strategy will deliver long-term revenue growth and enhanced value for our shareholders."
Operational and Product Highlights for Fiscal Year 2015:
- Began volume sales of SLC" 8000, the industry's first modular console manager for secure out-of-band management for today's data centers and test labs.
- Began volume production shipments of the xPico and xPico� Wi-Fi IoT modules. These modules are being used in wide variety of applications from consumer to data center to industrial.
- Received Apple AirPrint certification for the xPrintServer, the only print server appliance to support printing from both Apple iOS and Android mobile devices. The new xPrintServer Office is now being sold through the Apple Online Store.
- Announced Python support for the PremierWave� family of intelligent gateways. Python is a dynamic object oriented programming language that is rapidly becoming a standard for creating and deploying industrial IoT applications.
- Launched the PremierWave SE 1000, a high performance, programmable Ethernet-based system-on-module (SOM). The new SOM enables rapid development and deployment of industrial IoT applications with enterprise-grade security and device cloud connectivity.
Financial Results for Fiscal Year 2015
Net revenue was $42.9 million for fiscal 2015, a decrease of $1.6 million, compared with $44.5 million for fiscal 2014. The decrease in net revenue was primarily due to a 10% decline in Legacy Product sales and weakness in capital spending for some large customers. The decline in net revenue was partially offset by 48% growth in New Products.
New Product revenue was $6.8 million for fiscal 2015, an increase of $2.2 million, compared with $4.6 million for fiscal 2014. New Products are defined as products that have been released since the start of the second quarter of the fiscal year ended June 30, 2012.
Gross profit margin was 47.3% for fiscal 2015, compared to 50.0% for fiscal 2014. Gross profit as a percentage of revenue was lower primarily due to charges for excess and obsolete inventories.
Operating expenses were $23.0 million for fiscal 2015, compared with $23.1 million for fiscal 2014.
GAAP net loss for fiscal 2015 was $2.8 million or $0.19 per share, compared with GAAP net loss of $933,000, or $0.06 per share for fiscal 2014.
Non-GAAP net loss for fiscal 2015 was $767,000 or $0.05 per share, compared with non-GAAP net income of $948,000 or $0.06 per share for fiscal 2014. For additional information regarding our non-GAAP results, see "Discussion of Non-GAAP Financial Measures" below.
Cash and cash equivalents were $5.0 million as of June 30, 2015, a decrease of $1.3 million, compared with $6.3 million as of June 30, 2014.
Financial Results for the Fourth Quarter of Fiscal Year 2015
Net revenue was $10.2 million for the fourth quarter of fiscal 2015, a decrease of $871,000, compared with $11.1 million for the fourth quarter of fiscal 2014, and a decrease of $213,000, compared with $10.4 million for the third quarter of fiscal 2015. The year-over-year and sequential decreases in net revenue were primarily due to a decline in Legacy Product sales. The year-over-year decline in Legacy Products was partially offset by 24% growth in New Product revenue.
New Product revenue was $1.7 million for the fourth quarter of fiscal 2015, compared with $1.4 million for the fourth quarter of fiscal 2014, and an increase of $95,000, compared with $1.7 million for the third quarter of fiscal 2015.
Gross profit as a percentage of net revenue was 47.1% for the fourth quarter of fiscal 2015, compared with 50.1% for the fourth quarter of fiscal 2014, and 45.1% for the third quarter of fiscal 2015. Gross profit as a percentage of revenue was lower primarily due to charges for excess and obsolete inventories. We continue to target a long-term gross margin target in the range of 49% to 51%.
Operating expenses were $5.8 million for the fourth quarter of fiscal 2015, compared with $5.8 million for the fourth quarter of fiscal 2014 and $5.5 million for the third quarter of fiscal 2015. The sequential increase in operating expenses was primarily due to severance and related charges of $230,000.
GAAP net loss for the fourth quarter of fiscal 2015 was $1.0 million or $0.07 per share, compared with GAAP net loss of $213,000 or $0.01 per share for the fourth quarter of fiscal 2014, and GAAP net loss of $839,000 or $0.06 per share for the third quarter of fiscal 2015.
Non-GAAP net loss for the fourth quarter of fiscal 2015 was $575,000 or $0.04 per share, compared with non-GAAP net income of $206,000 or $0.01 per share for the fourth quarter of fiscal 2014 and non-GAAP net loss of $357,000 or $0.02 per share for the third fiscal of fiscal 2015. For additional information regarding our non-GAAP results, see "Discussion of Non-GAAP Financial Measures" below.
Conference Call and Webcast
Lantronix will host an investor conference call with a simultaneous audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its fiscal 2015 results. To access the live conference call, investors should dial 1-888-243-4451 (US) or 1-412-542-4135 (international) and indicate that they are participating in the Lantronix Fourth Quarter and FY 2015 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 August 27, 2015 by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 10070671.
About Lantronix
Lantronix, Inc. (NASDAQ: LTRX) is a specialized networking company providing M2M (machine to machine) and IoT (Internet of Things) solutions. Our products deliver secure connectivity, device management and mobility for today's increasingly connected world. By networking and managing devices and machines that have never before been connected, we enable our customers to realize the possibilities of the Internet of Things. Founded in 1989, Lantronix pioneers robust, intelligent and easy to deploy solutions for mission critical applications in a wide range of industries, including data center, medical, security, industrial, transportation, retail, financial and government. Lantronix is headquartered in Irvine, California, with offices in Europe, Asia and Japan. For more information, visit www.lantronix.com.
Learn more at the Lantronix blog, www.lantronix.com/blog, featuring industry discussion and updates. To follow Lantronix on Twitter, please visit www.twitter.com/Lantronix. View our video library on YouTube at www.youtube.com/user/LantronixInc or connect with us on LinkedIn at www.linkedin.com/company/lantronix.
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 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. Management believes that 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 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 sales expansion efforts, our relationships with certain customers, 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. Some of the risks and uncertainties that may cause actual results to differ from those expressed or implied in the forward-looking statements are described in "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, as well as in our other 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.
� 2015 Lantronix, Inc. All rights reserved. Lantronix, PremierWave, xPico, and xPrintServer are registered trademarks, and SLC and SLB are trademarks, of Lantronix, Inc. All other trademarks and trade names are the property of their respective holders.
LANTRONIX, INC.
Unaudited Consolidated Balance Sheets
(In thousands, except share and par value data)
June 30, June 30,
2015 2014
--------- ---------
Assets
Current Assets:
Cash and cash equivalents $ 4,989 $ 6,264
Accounts receivable (net of allowance for doubtful
accounts of $45 and $34 at June 30, 2015 and 2014,
respectively) 2,658 3,631
Inventories, net 9,503 8,404
Contract manufacturers' receivable 369 359
Prepaid expenses and other current assets 400 524
--------- ---------
Total current assets 17,919 19,182
Property and equipment, net 1,471 1,487
Goodwill 9,488 9,488
Deferred tax assets 442 400
Other assets 93 125
--------- ---------
Total assets $ 29,413 $ 30,682
========= =========
Liabilities and stockholders' equity
Current Liabilities:
Accounts payable $ 3,633 $ 4,547
Line of credit 700 -
Accrued payroll and related expenses 1,685 1,863
Warranty reserve 163 150
Deferred tax liabilities 442 400
Other current liabilities 3,849 3,418
--------- ---------
Total current liabilities 10,472 10,378
Long-term capital lease obligations 152 7
Other non-current liabilities 80 131
--------- ---------
Total liabilities 10,704 10,516
--------- ---------
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000,000 shares
authorized; none issued and outstanding - -
Common stock, $0.0001 par value; 100,000,000 shares
authorized; 15,089,720 and 14,787,158 shares issued
and outstanding at June 30, 2015 and 2014,
respectively 2 1
Additional paid-in capital 206,326 205,013
Accumulated deficit (187,990) (185,219)
Accumulated other comprehensive income 371 371
--------- ---------
Total stockholders' equity 18,709 20,166
--------- ---------
Total liabilities and stockholders' equity $ 29,413 $ 30,682
========= =========
LANTRONIX, INC.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Years Ended
-------------------------------
June 30, March 31, June 30, June 30,
--------------------
2015 2015 2014 2015 2014
--------- --------- --------- --------- ---------
Net revenue (1) $ 10,231 $ 10,444 $ 11,102 $ 42,946 $ 44,546
Cost of revenue 5,411 5,735 5,543 22,648 22,261
--------- --------- --------- --------- ---------
Gross profit 4,820 4,709 5,559 20,298 22,285
--------- --------- --------- --------- ---------
Operating expenses:
Selling, general
and administrative 4,060 3,914 4,097 16,041 16,355
Research and
development 1,778 1,619 1,665 6,923 6,746
--------- --------- --------- --------- ---------
Total operating
expenses 5,838 5,533 5,762 22,964 23,101
--------- --------- --------- --------- ---------
Loss from operations (1,018) (824) (203) (2,666) (816)
Interest expense, net (5) (4) (6) (17) (28)
Other income
(expense), net (5) (5) 2 (30) (28)
--------- --------- --------- --------- ---------
Loss before income
taxes (1,028) (833) (207) (2,713) (872)
Provision for income
taxes 10 6 6 58 61
--------- --------- --------- --------- ---------
Net loss $ (1,038) $ (839) $ (213) $ (2,771) $ (933)
========= ========= ========= ========= =========
Net loss per share
(basic and diluted) $ (0.07) $ (0.06) $ (0.01) $ (0.19) $ (0.06)
========= ========= ========= ========= =========
Weighted average
shares (basic and
diluted) 15,012 14,942 14,707 14,904 14,657
========= ========= ========= ========= =========
Net revenue from
related parties $ 79 $ 28 $ 72 $ 298 $ 524
========= ========= ========= ========= =========
(1) Includes net
revenue from related
parties
LANTRONIX, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share data)
Three Months Ended Years Ended
-----------------------------
June 30, March 31, June 30, June 30,
----------------
2015 2015 2014 2015 2014
-------- --------- -------- ------- -------
GAAP net loss $ (1,038) $ (839) $ (213) $(2,771) $ (933)
Non-GAAP adjustments:
Cost of revenue:
Share-based
compensation 16 17 10 69 45
Depreciation and
amortization 140 143 109 571 472
-------- --------- -------- ------- -------
Total adjustment to
costs of revenue 156 160 119 640 517
-------- --------- -------- ------- -------
Selling, general and
administrative:
Share-based
compensation 187 189 145 745 606
Depreciation and
amortization 37 52 69 217 355
-------- --------- -------- ------- -------
Total adjustments to
selling, general and
administrative 224 241 214 962 961
-------- --------- -------- ------- -------
Research and
development:
Share-based
compensation 42 44 52 201 218
Employer portion of
withholding taxes
on stock grants - - - 6 -
Depreciation and
amortization 21 22 24 90 68
-------- --------- -------- ------- -------
Total adjustments to
research and
development 63 66 76 297 286
-------- --------- -------- ------- -------
Total non-GAAP
adjustments to
operating expenses 287 307 290 1,259 1,247
-------- --------- -------- ------- -------
Interest expense, net 5 4 6 17 28
Other (income) expense,
net 5 5 (2) 30 28
Provision for income
taxes 10 6 6 58 61
-------- --------- -------- ------- -------
Total Non-GAAP adjustments 463 482 419 2,004 1,881
-------- --------- -------- ------- -------
Non-GAAP net income (loss) $ (575) $ (357) $ 206 $ (767) $ 948
======== ========= ======== ======= =======
Non-GAAP net income (loss)
per share (diluted) $ (0.04) $ (0.02) $ 0.01 $ (0.05) $ 0.06
======== ========= ======== ======= =======
Denominator for GAAP net
income (loss) per share
(diluted) 15,012 14,942 14,707 14,904 14,657
Non-GAAP adjustment - - 413 - 253
-------- --------- -------- ------- -------
Denominator for non-GAAP
net income (loss) per
share (diluted) 15,012 14,942 15,120 14,904 14,910
======== ========= ======== ======= =======
GAAP operating expenses $ 5,838 $ 5,533 $ 5,762 $22,964 $23,101
Non-GAAP adjustments to
operating expenses (287) (307) (290) (1,259) (1,247)
-------- --------- -------- ------- -------
Non-GAAP operating expenses $ 5,551 $ 5,226 $ 5,472 $21,705 $21,854
======== ========= ======== ======= =======
LANTRONIX, INC.
Unaudited Net Revenues by Product Line and Region
(In thousands)
Three Months Ended
-------------------------------------------------------
June 30, 2015 March 31, 2015
--------------------------- ---------------------------
IoT Enterprise IoT Enterprise
Modules* Solutions Total Modules* Solutions Total
-------- ---------- ------- -------- ---------- -------
New Products $ 318 $ 1,429 $ 1,747 $ 495 $ 1,157 $ 1,652
Legacy Products 4,757 3,727 8,484 4,734 4,058 8,792
-------- ---------- ------- -------- ---------- -------
$ 5,075 $ 5,156 $10,231 $ 5,229 $ 5,215 $10,444
======== ========== ======= ======== ========== =======
Three Months Ended
-------------------------------------------------------
June 30, 2015 March 31, 2015
--------------------------- ---------------------------
IoT Enterprise IoT Enterprise
Modules* Solutions Total Modules* Solutions Total
-------- ---------- ------- -------- ---------- -------
Americas $ 2,133 $ 3,469 $ 5,602 $ 1,978 $ 3,407 $ 5,385
EMEA 1,915 1,097 3,012 2,151 1,172 3,323
Asia Pacific 518 288 806 493 307 800
Japan 509 302 811 607 329 936
-------- ---------- ------- -------- ---------- -------
$ 5,075 $ 5,156 $10,231 $ 5,229 $ 5,215 $10,444
======== ========== ======= ======== ========== =======
Three Months Ended
----------------------------
June 30, 2014
---------------------------
IoT Enterprise
Modules* Solutions Total
-------- ---------- -------
New Products $ 126 $ 1,282 $ 1,408
Legacy Products 5,303 4,391 9,694
-------- ---------- -------
$ 5,429 $ 5,673 $11,102
======== ========== =======
Three Months Ended
----------------------------
June 30, 2014
---------------------------
IoT Enterprise
Modules* Solutions Total
-------- ---------- -------
Americas $ 2,186 $ 4,160 $ 6,346
EMEA 2,150 1,019 3,169
Asia Pacific 488 257 745
Japan 605 237 842
-------- ---------- -------
$ 5,429 $ 5,673 $11,102
======== ========== =======
Year Ended June 30,
---------------------------
2015
---------------------------
IoT Enterprise
Modules* Solutions Total
-------- ---------- -------
New Products $ 1,288 $ 5,474 $ 6,762
Legacy Products 19,942 16,242 36,184
-------- ---------- -------
$ 21,230 $ 21,716 $42,946
======== ========== =======
Year Ended June 30,
---------------------------
2015
---------------------------
IoT Enterprise
Modules* Solutions Total
-------- ---------- -------
Americas $ 8,491 $ 14,688 $23,179
EMEA 8,389 4,544 12,933
Asia Pacific 2,178 1,256 3,434
Japan 2,172 1,228 3,400
-------- ---------- -------
$ 21,230 $ 21,716 $42,946
======== ========== =======
Year Ended June 30,
----------------------------
2014
---------------------------
IoT Enterprise
Modules* Solutions Total
-------- ---------- -------
New Products $ 691 $ 3,867 $ 4,558
Legacy Products 20,743 19,245 39,988
-------- ---------- -------
$ 21,434 $ 23,112 $44,546
======== ========== =======
Year Ended June 30,
----------------------------
2014
---------------------------
IoT Enterprise
Modules* Solutions Total
-------- ---------- -------
Americas $ 8,191 $ 15,625 $23,816
EMEA 8,334 4,874 13,208
Asia Pacific 2,412 1,408 3,820
Japan 2,497 1,205 3,702
-------- ---------- -------
$ 21,434 $ 23,112 $44,546
======== ========== =======
* Previously referred to as OEM Modules
Investor Relations Contacts: Jeremy Whitaker Chief Financial Officer 949-453-3990 E.E. Wang [email protected] 949-614-5879
Source: Lantronix, Inc.