Irvine, Calif., August 29, 2012 – Lantronix, Inc. (the “company”) (NASDAQ: LTRX), a leading global provider of smart M2M connectivity solutions, today reported results for its fourth quarter and fiscal year ended June 30, 2012.
“In eight months Lantronix launched an unprecedented seven new products into production, improved gross margins from 46.1% for the fourth fiscal quarter of 2011 to 50.7% for the fourth fiscal quarter of 2012, and achieved two consecutive quarters of non-GAAP net income” said CEO Kurt Busch. “We achieved these goals while bringing expenses in line with revenues and improving the company’s balance sheet.”
“While we are proud of the accomplishments the company has achieved during fiscal 2012, our focus remains on continuing to execute on our product development strategy and to push forward toward achieving long-term growth and profitability for our shareholders.”
Financial Results for the Fourth Quarter of Fiscal 2012 Ended June 30, 2012
Net revenue was $11.6 million for the fourth quarter of fiscal 2012, a decrease of $416,000 or 4%, compared to $12.0 million for the fourth quarter of fiscal 2011 and a decrease of $522,000 or 4%, compared to $12.1 million for the third quarter of fiscal 2012. The year-over-year decrease in net revenue was primarily due to decreases in the company’s device enablement product lines which were partially offset by a net increase in sales of device management products. The sequential decrease in net revenue was primarily due to lower sales of our device enablement products in Europe.
Gross profit as a percentage of net revenue (“gross margin”) was 50.7% for the fourth quarter of fiscal 2012, compared to 46.1% for the fourth quarter of fiscal 2011 and 48.8% for the third quarter of fiscal 2012. The year-over-year increase in gross margin was primarily the result of a reduction in charges related to inventory reserves and manufacturing overhead.
GAAP operating expenses for the fourth quarter of fiscal 2012 were $6.0 million, a decrease of $3.1 million or 34%, compared to $9.1 million for the fourth quarter of fiscal 2011 and an increase of $89,000 or 2%, compared to $5.9 million for the third quarter of fiscal 2012.
Non-GAAP operating expenses for the fourth quarter of fiscal 2012 were $5.7 million, a decrease of $445,000 or 7%, compared with $6.1 million for the fourth quarter of fiscal 2011, and an increase of $98,000 or 2%, compared to $5.6 million for the third quarter of fiscal 2012.
GAAP net loss for the fourth quarter of fiscal 2012 was $(178,000), or ($0.01) per share, compared to a GAAP net loss of $(3.6 million), or ($0.34) per share, for the fourth quarter of fiscal 2011 and a GAAP net loss of $(41,000), or ($0.00) per share, for the third quarter of fiscal 2012.
Non-GAAP net income for the fourth quarter of fiscal 2012 was $351,000, or $0.03 per share compared to non-GAAP net loss of $(433,000) or $(0.04) per share for the fourth quarter of fiscal 2011 and a non-GAAP net income of $471,000, or $0.04 per share, for the third quarter of fiscal 2012.
Financial Results for the Fiscal Year ended June 30, 2012
Net revenue was $45.4 million for the fiscal year ended June 30, 2012, compared to $49.3 million for the fiscal year ended June 30, 2011.
Gross profit as a percentage of net revenue was 48.8% for the twelve months ended June 30, 2012, compared with 49.5% for the twelve months ended June 30, 2011.
GAAP operating expenses for the fiscal year ended June 30, 2012 were $24.9 million, compared to $29.5 million for the fiscal year ended June 30, 2011.
Non-GAAP operating expenses for the twelve months ended June 30, 2012 were $23.1 million, compared to $23.6 million for the twelve months ended June 30, 2011.
GAAP net loss for the fiscal year ended June 30, 2012 was $(3.0) million, or ($0.27) per share, compared to $(5.3) million, or ($0.51) per share, for the fiscal year ended June 30, 2011.
Non-GAAP net loss for the twelve months ended June 30, 2012 was $(504,000) or ($0.04) per share, compared to non-GAAP net income of $1.3 million, or $0.12 per share, for the twelve months ended June 30, 2011.
Balance Sheet Summary
Cash and cash equivalents were $11.4 million as of June 30, 2012, compared to $5.8 million as of June 30, 2011. In April and May of 2012, the company closed two transactions involving the sale of its common stock that generated aggregate net proceeds of approximately $9.5 million.
Accounts receivable were $2.7 million as of June 30, 2012, compared to $2.9 million as of June 30, 2011.
Net inventories were $6.0 million as of June 30, 2012, compared to $9.2 million as of June 30, 2011.
Accounts payable were $3.6 million as of June 30, 2012, compared to $8.4 million as of June 30, 2011.
Working capital was $11.9 million as of June 30, 2012, compared to $5.2 million as of June 30, 2011.
Annual Discussion of Company Target Model
The company reaffirmed the target financial model previously disclosed in its Form 8-K filed with the Securities and Exchange Commission on April 25, 2012.
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 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. Management believes that non-GAAP operating expenses, 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 and to gain an understanding of our comparative operating performance. In addition, certain stockholders have expressed an interest in seeing financial performance measures, which exclude the impact of certain matters such as decisions relating to the restructuring, which while important, are not central to the core operations of the Company’s business.
Non-GAAP operating expenses consist of operating expenses excluding share-based compensation and related payroll taxes, depreciation and amortization, restructuring charges, costs associated with the contested proxy, costs associated with the 2011 independent investigation of certain allegations by a director of Lantronix, and consulting fees for former named executive officers.
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.
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 fourth quarter and fiscal year 2012 financial results. Those wishing to participate in the live call should dial 866-383-8119(international dial-in 617-597-5344) using the passcode 26633893. A telephone replay of the call will be available through September 5, 2012 by dialing (888) 286-8010 (international dial-in 617-801-6888) and entering passcode65476087.
Lantronix, Inc. (NASDAQ: LTRX) is a global leader of secure communication technologies that simplify access and communication with and between virtually any electronic device. Our smart connectivity solutions enable sharing data between devices and applications to 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 and securely connect electronic equipment via networks and the Internet. Founded in 1989, Lantronix serves some of the largest medical, security, industrial and building automation, 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. The Lantronix blog, https://www.lantronix.com/blog, features industry discussion and updates.
This news release contains forward-looking statements, including statements concerning our future business plans, future financial position, future results of operations and future product development strategies and schedules. 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: our ability to raise additional capital when and to the extent necessary; 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; our ability to implement the planned cost reduction program; 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 Annual Report on Form 10-K for the year ended June 30, 2011 and our Quarterly Reports on Form 10-Q for the quarters ended September 30, 2011, December 31, 2011, and March 31, 2012. 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. If the Company does update or correct one or more of these forward-looking statements, investors and others should not conclude that the Company will make additional updates or corrections.
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Investor Relations Contacts:
Chief Financial Officer
E.E. Wang Lukowski
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