LTRX
$3.08
Lantronix
$.13
4.41%
Earnings Details
2nd Quarter December 2016
Thursday, January 26, 2017 4:16:27 PM
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Summary

Lantronix (LTRX) Recent Earnings

Lantronix (LTRX) reported breakeven results for the 2nd Quarter December 2016 on revenue of $11.2 million. The consensus estimate was a loss of $0.05 per share. Revenue grew 17.6% on a year-over-year basis.

Lantronix Inc designs, develops, markets and sells networking and communications products. The Company provides solutions that enable machines, devices and sensors to be securely accessed, managed and controlled.

Results
Reported Earnings
$0.00
Earnings Whisper
-
Consensus Estimate
($0.05)
Reported Revenue
$11.2 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Lantronix Reports $11.2M in Net Revenue for the Second Quarter of Fiscal 2017

Lantronix, Inc. (LTRX) a global provider of secure data access and management solutions for Internet of Things (IoT) and information technology (IT) assets, today reported results for the second quarter of its fiscal year 2017 ended December 31, 2016.

Financial Highlights for Second Fiscal Quarter

-- Net revenue of $11.2 million

-- Gross profit margin of 51.8%

-- GAAP net income of $41,000

-- Non-GAAP net income of $444,000

-- Cash and cash equivalents of $6.7 million

Operational and Product Highlights:

Net revenue for the second quarter of fiscal 2017 increased 18% from the same period in fiscal 2016 and 3% from the first quarter of fiscal 2017.

Sales of the company’s IoT products grew by 17% during the second quarter of fiscal 2017 compared with the same period in fiscal 2016.

Sales of the company’s IT Management products grew by 72% during the second quarter of fiscal 2017 compared with the same period in fiscal 2016.

In October, the company launched the SGX 5150, a high performance wireless IoT device gateway. Featuring Lantronix TruPort(R) Security, industrial-grade design and multiple device connectivity interfaces, SGX 5150 allows OEMs and systems integrators to establish IoT connectivity for virtually any device.

This week, the company introduced a technology preview of its MACH10(TM) software platform. MACH10(TM) is a multi-dimensional management software platform designed specifically to enable IoT OEMs (original equipment manufacturers) to quickly and profitably deliver web-scale IoT applications and services.

"I’m pleased to report that our continued momentum contributed to 18% year-over-year topline growth and allowed us to achieve modest GAAP profitability, as well as our fourth consecutive quarter of non-GAAP net income," said Jeffrey Benck, Lantronix president and CEO. "We’ve had a strong first half of fiscal 2017, as many of the operational improvements we’ve made over the last year started to bear fruit. With the recent announcement of our MACH10 technology, we are adding a key solution to our IoT product portfolio that can help us solve a bigger part of the challenges that manufacturers face in building smarter, connected machines."

Financial Results for the Second Quarter of Fiscal Year 2017

Net revenue was $11.2 million for the second quarter of fiscal 2017, compared with $9.5 million for the second quarter of fiscal 2016, and $10.9 million for the first quarter of fiscal 2017.

Gross profit margin was 51.8% for the second quarter of fiscal 2017, compared to 48.1% for the second quarter of fiscal 2016, and 52.1% for the first quarter of fiscal 2017.

Operating expenses were $5.7 million for the second quarter of fiscal 2017, compared with $5.5 million for the second quarter of fiscal 2016, and $5.8 million for the first quarter of fiscal 2017.

GAAP net income for the second quarter of fiscal 2017 was $41,000, or $0.00 per share, compared with GAAP net loss of $928,000, or $0.06 per share, for the second quarter of fiscal 2016, and GAAP net loss of $104,000, or $0.01 per share, for the first quarter of fiscal 2017.

Non-GAAP net income for the second quarter of fiscal 2017 was $444,000, compared with non-GAAP net loss of $196,000 for the second quarter of fiscal 2016, and non-GAAP net income of $265,000 for the first quarter of fiscal 2017. For additional information regarding the company’s 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 2017 second quarter results. 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 Fiscal Year 2017 Second Quarter 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 February 2, 2017 by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 10099548.

About Lantronix

Lantronix, Inc. is a global provider of secure data access and management solutions for Internet of Things (IoT) and information technology (IT) assets. Our mission is to be the leading supplier of IoT gateways that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people.

With more than two decades of experience in creating robust machine to machine (M2M) technologies, Lantronix is an innovator in enabling our customers to build new business models and realize the possibilities of the Internet of Things. Our connectivity solutions are deployed inside millions of machines serving a wide range of industries, including data center, medical, security, industrial, transportation, retail, financial, environmental and government.

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. 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) non-GAAP adjustments to operating expenses, (ii) interest income (expense), (iii) other income (expense), (iv) income tax provision (benefit), and (v) severance and restructuring charges.

Forward-Looking Statements

This news release contains forward-looking statements, including statements concerning our sales expansion efforts, 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. 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.

(C) 2017 Lantronix, Inc. All rights reserved. Lantronix and TruPort are registered trademarks, and MACH10 is a trademark, of Lantronix, Inc. All other trademarks and trade names are the property of their respective holders.

LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31,
June 30,
2016
2016
Assets
Current assets:
Cash and cash equivalents
$
6,698
$
5,962
Accounts receivable, net
2,866
3,164
Inventories, net
7,614
6,584
Contract manufacturers’ receivable
366
369
Prepaid expenses and other current assets
566
580
Total current assets
18,110
16,659
Property and equipment, net
1,402
1,569
Goodwill
9,488
9,488
Other assets
47
63
Total assets
$
29,047
$
27,779
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
2,280
$
2,721
Accrued payroll and related expenses
2,833
1,817
Warranty reserve
153
138
Other current liabilities
3,235
2,922
Total current liabilities
8,501
7,598
Long-term capital lease obligations
87
116
Other non-current liabilities
353
347
Total liabilities
8,941
8,061
Commitments and contingencies
Stockholders’ equity:
Common stock
2
2
Additional paid-in capital
209,754
209,297
Accumulated deficit
(190,021 )
(189,952 )
Accumulated other comprehensive income
371
371
Total stockholders’ equity
20,106
19,718
Total liabilities and stockholders’ equity
$
29,047
$
27,779
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,
2016
2016
2015
2016
2015
Net revenue (1)
$
11,222
$
10,940
$
9,540
$
22,162
$
20,113
Cost of revenue
5,410
5,240
4,951
10,650
10,457
Gross profit
5,812
5,700
4,589
11,512
9,656
Operating expenses:
Selling, general and administrative
3,873
3,842
3,814
7,715
7,539
Research and development
1,873
1,945
1,716
3,818
3,387
Total operating expenses
5,746
5,787
5,530
11,533
10,926
Income (loss) from operations
66
(87
)
(941
)
(21
)
(1,270 )
Interest expense, net
(6
)
(7
)
(9
)
(13
)
(15
)
Other income (expense), net
4
(3
)
28
1
47
Income (loss) before income taxes
64
(97
)
(922
)
(33
)
(1,238 )
Provision for income taxes
23
7
6
30
21
Net income (loss)
$
41
$
(104
)
$
(928
)
$
(63
)
$
(1,259 )
Net income (loss) per share (basic)
$
0.00
$
(0.01
)
$
(0.06
)
$
(0.00
)
$
(0.08
)
Net income (loss) per share (diluted)
$
0.00
$
(0.01
)
$
(0.06
)
$
(0.00
)
$
(0.08
)
Weighted-average common shares (basic)
17,347
17,254
15,160
17,300
15,131
Weighted-average common shares (diluted)
17,703
17,254
15,160
17,300
15,131
Net revenue from related parties
$
-
$
-
$
45
$
-
$
113
(1)
Includes net revenue from related parties
LANTRONIX, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(In thousands)
Three Months Ended
Six Months Ended
December 31,
September 30,
December 31,
December 31,
2016
2016
2015
2016
2015
GAAP net income (loss)
$
41
$
(104
)
$
(928
)
$
(63
)
$
(1,259 )
Non-GAAP adjustments:
Cost of revenue:
Share-based compensation
13
11
20
24
38
Depreciation and amortization
84
89
127
173
273
Total adjustments to cost of revenue
97
100
147
197
311
Selling, general and administrative:
Share-based compensation
162
149
182
311
353
Employer portion of withholding taxes on stock grants
5
-
2
5
4
Depreciation and amortization
56
54
65
110
116
Total adjustments to selling, general and administrative
223
203
249
426
473
Research and development:
Share-based compensation
45
41
50
86
94
Depreciation and amortization
13
8
13
21
34
Total adjustments to research and development
58
49
63
107
128
Severance charges
-
-
286
-
286
Total non-GAAP adjustments to operating expenses
281
252
598
533
887
Interest expense, net
6
7
9
13
15
Other income (expense), net
(4
)
3
(28
)
(1
)
(47
)
Provision for income taxes
23
7
6
30
21
Total non-GAAP adjustments
403
369
732
772
1,187
Non-GAAP net income (loss)
$
444
$
265
$
(196
)
$
709
$
(72
)
GAAP operating expenses
$
5,746
$
5,787
$
5,530
$
11,533
$
10,926
Non-GAAP adjustments to operating expenses
(281
)
(252
)
(598
)
(533
)
(887
)
Non-GAAP operating expenses
$
5,465
$
5,535
$
4,932
$
11,000
$
10,039
LANTRONIX, INC.
UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
(In thousands)
Three Months Ended
Six Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2016
2016
2015
2016
2015
IoT
$
8,304
$
7,869
$
7,086
$
16,173
$
14,969
IT Management
2,265
2,437
1,318
4,702
2,666
Other
653
634
1,136
1,287
2,478
$
11,222
$
10,940
$
9,540
$
22,162
$
20,113
Three Months Ended
Six Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2016
2016
2015
2016
2015
Americas
$
6,453
$
6,166
$
5,203
$
12,619
$
10,312
EMEA
3,122
3,101
2,820
6,223
6,641
Asia Pacific Japan
1,647
1,673
1,517
3,320
3,160
$
11,222
$
10,940
$
9,540
$
22,162
$
20,113
Investor Relations Contacts:
Jeremy Whitaker
Chief Financial Officer
949-453-3990
E.E. Wang
Director, Corporate Marketing and Investor Relations
investors@lantronix.com
949-614-5879

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