Exhibit 99.1
LANTRONIX REPORTS RESULTS FOR THE SECOND FISCAL QUARTER ENDED DECEMBER 31, 2009
5th Consecutive Quarter of Positive Cash Flow from Operations
IRVINE, Calif., February 4, 2010 -- Lantronix, Inc. (NASDAQ: LTRX), global provider of secure, network-enabling technologies, today announced financial results for the second fiscal quarter ended December 31, 2009.
Financial Highlights for the Second Fiscal Quarter of 2010
| · | Fifth consecutive quarter of positive cash flow from operations; |
| · | Sequential quarterly revenue growth of 5%; |
| · | GAAP net loss of $375,000 and positive non-GAAP income of $496,000; and |
| · | Sixth consecutive quarter of non-GAAP net income. |
“While our revenue performance continued to be impacted by the current economy, we are pleased to report sequential revenue growth of 5%, our 6th consecutive quarter of non-GAAP profitability, 5th consecutive quarter of positive cash flow from operations, and a solid product portfolio and pipeline,” said Jerry Chase President and CEO. “With a solid executive team in place and new products such as XPortPro and SpiderDuo coming on-line, we are optimistic about our momentum and growth potential in 2010.”
Non-Financial Highlights
| · | Reverse stock split enabling the per share trading price of the Company's common stock to satisfy the minimum bid price requirement for our continued listing on Nasdaq. |
| · | Released ManageLinx 2.0, the latest version of the Company's secure, remote access solution. ManageLinx provides access to firewall-protected devices via the Internet. |
| · | Relocated corporate headquarters to a new facility in Irvine, California that will reduce facilities costs. |
| · | On February 9, we will announce the specifics of a design contest based on our recently launched XPort® Pro™, the newest addition to Lantronix’ popular XPort® family of embedded Ethernet networking and compute modules used in millions of devices worldwide. |
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Financial Results for the Second Fiscal Quarter ended December 31, 2009
Net revenue was $11.5 million for the second fiscal quarter of 2010, a decrease of $1.4 million or 11%, compared to $12.9 million for the second fiscal quarter of 2009. On a sequential basis, this was an increase of $524,000 or 5%, compared to $11.0 million for the first fiscal quarter of 2010.
Gross profit margin was 52.7% for the second fiscal quarter of 2010, compared to 53.9% for the second fiscal quarter of 2009. The decrease in gross profit margin percent was primarily attributable to product mix, increased freight costs, and employee severance.
GAAP operating expenses were $6.4 million for the second fiscal quarter of 2010, a decrease of $627,000 or 9%, compared to $7.0 million for the second fiscal quarter of 2009. Selling, general and administrative expense was $4.9 million for the second fiscal quarter of 2010, a decrease of $460,000 or 9%, compared to $5.3 million for the second fiscal quarter of 2009. Research and development expense was $1.5 million for the second fiscal quarter of 2010, a decrease of $39,000 or 3%, compared to $1.5 million for the second fiscal quarter of 2009. Restructuring charges were $128,000 for the second fiscal quarter of 2009.
Non-GAAP operating expenses were $5.6 million for the second fiscal quarter of 2010, a decrease of $373,000 or 6%, compared to $6.0 million for the second fiscal quarter of 2009.
GAAP net loss was $375,000, or ($0.04) per share, for the second fiscal quarter of 2010, compared to GAAP net loss of $148,000, or ($0.01) per share, for the second fiscal quarter of 2009.
Non-GAAP net income was $496,000, or $0.05 per share, for the second fiscal quarter of 2010, compared to non-GAAP net income of $1.0 million, or $0.10 per share, for the second fiscal quarter of 2009.
Financial Results for the Six Months ended December 31, 2009
Net revenue was $22.4 million for the six months ended December 31, 2009, a decrease of $4.7 million or 17%, compared to $27.1 million for the six months ended December 31, 2008.
Gross profit margin was 52.5% for the six months ended December 31, 2009, compared to 53.4% for the six months ended December 31, 2008. The decrease in gross profit margin percent was primarily attributable to product mix, increased freight costs, and employee severance.
GAAP operating expenses were $12.5 million for the six months ended December 31, 2009, a decrease of $1.8 million or 13%, compared to $14.3 million for the six months ended December 31, 2008. Selling, general and administrative expense was $9.5 million for the six months ended December 31, 2009, a decrease of $1.0 million or 10%, compared to $10.5 million for the six months ended December 31, 2008. Research and development expense was $3.0 million for the six months ended December 31, 2009, a decrease of $57,000 or 2%, compared to $3.1 million for the six months ended December 31, 2008. Restructuring charges were $721,000 for the six months ended December 31, 2008.
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Non-GAAP operating expenses were $11.0 million for the six months ended December 31, 2009, a decrease of $1.3 million or 10%, compared to $12.3 million for the six months ended December 31, 2008.
GAAP net loss was $874,000, or ($0.09) per share, for the six months ended December 31, 2009, compared to GAAP net income of $36,000, or $0.00 per share, for the six months ended December 31, 2008.
Non-GAAP net income was $907,000, or $0.08 per share, for the six months ended December 31, 2009, compared to non-GAAP net income of $2.3 million, or $0.23 per share, for the six months ended December 31, 2008.
Balance Sheet Summary
Cash and cash equivalents were $9.4 million as of December 31, 2009, an increase of $242,000, compared to $9.1 million as of June 30, 2009
Total receivables, which include accounts receivable, net, and contract manufacturers’ receivable, were $2.8 million as of December 31, 2009, an increase of $282,000, compared to $2.5 million as of June 30, 2009.
Inventories, net, were $6.6 million as of December 31, 2009, an increase of $127,000, compared to $6.5 million as of June 30, 2009.
Accounts payable were $7.6 million as of December 31, 2009, an increase of $2.0 million, compared to $5.6 million as of June 30, 2009. The increase in accounts payable was due to the timing of incoming inventory, a significant portion of which arrived during December 2009.
Working capital was $7.1 million as of December 31, 2009, a decrease of $289,000, compared to $7.4 million as of June 30, 2009.
Discussion of Non-GAAP Financial Measures
Lantronix believes that the presentation of non-GAAP financial information 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.
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Non-GAAP operating expenses consist of operating expenses excluding share-based compensation and related payroll taxes, depreciation and amortization, litigation settlement, and restructuring charges, as well as charges and gains that are driven primarily by discrete events that management does not consider to be directly related to the company's core operating performance.
Non-GAAP net income (loss) consists of net income (loss) excluding share-based compensation and related payroll taxes, depreciation and amortization, litigation settlement, restructuring charges, interest income (expense), other income (expense), income tax provision (benefit), as well as charges and gains that are driven primarily by discrete events that management does not consider to be directly related to the Company's core operating performance.
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 is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.
Conference Call and Webcast
The Company will report financial results for the second fiscal quarter ended December 31, 2009, after the market close on Thursday, February 4, 2010. Following the press release, management will conduct a conference call with simultaneous audio webcast at 5:00 p.m. EDT. President and Chief Executive Officer Jerry Chase and Chief Financial Officer Reagan Sakai will discuss the second fiscal quarter's results and answer questions.
Interested parties may participate in the live conference call by dialing 866-578-5784 (international dial-in 617-213-8056) and entering passcode 7959-6105, prior to the initiation of the call. The live webcast of the conference call may be accessed by visiting: About Us> Investor Relations> Presentations from the Lantronix web site at http://www.lantronix.com.
A telephonic replay of the conference call will be available through March 4, 2010 by dialing 888-286-8010 (international dial-in 617-801-6888) and entering passcode 1125-9142. The webcast will be archived on the Company's web site for twelve months.
About Lantronix
Lantronix, Inc. (NASDAQ: LTRX) is a global leader of secure communication technologies that simplify remote access, management and control of any electronic device. Its solutions 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 connect and control electronic equipment via the Internet; provide secure remote access to firewall-protected equipment; and enable remote management of IT equipment over the Internet. Founded in 1989, Lantronix serves some of the largest security, industrial and building automation, medical, 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
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This news release contains forward-looking statements, including statements concerning our future business plans. 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: 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; 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 and our Annual Report on Form 10-K for the year ended June 30, 2009. 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.
Investor Relations Contact:
Lantronix, Inc.
Reagan Y. Sakai, Chief Financial Officer
(949) 453-3990
– Tables to Follow –
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| LANTRONIX, INC. | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| December 31, | June 30, | |||||||
| 2009 | 2009 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 9,379 | $ | 9,137 | ||||
| Accounts receivable, net | 1,762 | 1,851 | ||||||
| Contract manufacturers' receivable | 1,026 | 655 | ||||||
| Inventories, net | 6,606 | 6,479 | ||||||
| Prepaid expenses and other current assets | 847 | 529 | ||||||
| Total current assets | 19,620 | 18,651 | ||||||
| Property and equipment, net | 2,660 | 2,230 | ||||||
| Goodwill | 9,488 | 9,488 | ||||||
| Purchased intangible assets, net | 203 | 265 | ||||||
| Other assets | 128 | 122 | ||||||
| Total assets | $ | 32,099 | $ | 30,756 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 7,583 | $ | 5,626 | ||||
| Accrued payroll and related expenses | 950 | 1,414 | ||||||
| Warranty reserve | 224 | 224 | ||||||
| Restructuring reserve | - | 76 | ||||||
| Short-term debt | 667 | 667 | ||||||
| Other current liabilities | 3,062 | 3,221 | ||||||
| Total current liabilities | 12,486 | 11,228 | ||||||
| Non-current liabilities: | ||||||||
| Long-term liabilities | 662 | 117 | ||||||
| Long-term capital lease obligations | 222 | 309 | ||||||
| Long-term debt | 444 | 778 | ||||||
| Total non-current liabilities | 1,328 | 1,204 | ||||||
| Total liabilities | 13,814 | 12,432 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock | 1 | 1 | ||||||
| Additional paid-in capital | 190,397 | 189,584 | ||||||
| Accumulated deficit | (172,561 | ) | (171,687 | ) | ||||
| Accumulated other comprehensive income | 448 | 426 | ||||||
| Total stockholders' equity | 18,285 | 18,324 | ||||||
| Total liabilities and stockholders' equity | $ | 32,099 | $ | 30,756 | ||||
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| LANTRONIX, INC. | ||||||||||||||||
| Unaudited Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Net revenue (1) | $ | 11,478 | $ | 12,885 | $ | 22,432 | $ | 27,097 | ||||||||
| Cost of revenue | 5,429 | 5,942 | 10,666 | 12,630 | ||||||||||||
| Gross profit | 6,049 | 6,943 | 11,766 | 14,467 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 4,855 | 5,315 | 9,475 | 10,523 | ||||||||||||
| Research and development | 1,510 | 1,549 | 2,995 | 3,052 | ||||||||||||
| Restructuring charges | - | 128 | - | 721 | ||||||||||||
| Amortization of purchased intangible assets | 18 | 18 | 36 | 36 | ||||||||||||
| Total operating expenses | 6,383 | 7,010 | 12,506 | 14,332 | ||||||||||||
| Income (loss) from operations | (334 | ) | (67 | ) | (740 | ) | 135 | |||||||||
| Interest expense, net | (42 | ) | (57 | ) | (89 | ) | (83 | ) | ||||||||
| Other income (expense), net | 11 | (16 | ) | (25 | ) | 6 | ||||||||||
| Income (loss) before income taxes | (365 | ) | (140 | ) | (854 | ) | 58 | |||||||||
| Provision for income taxes | 10 | 8 | 20 | 22 | ||||||||||||
| Net income (loss) | $ | (375 | ) | $ | (148 | ) | $ | (874 | ) | $ | 36 | |||||
| Net income (loss) per share (basic) | $ | (0.04 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | 0.00 | |||||
| Net income (loss) per share (diluted) | $ | (0.04 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | 0.00 | |||||
| Weighted-average shares (basic) | 10,301 | 10,084 | 10,234 | 10,073 | ||||||||||||
| Weighted-average shares (diluted) | 10,301 | 10,084 | 10,234 | 10,107 | ||||||||||||
| (1) Includes net revenue from related party | $ | 142 | $ | 306 | $ | 267 | $ | 560 | ||||||||
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| LANTRONIX, INC. | ||||||||||||||||
| Unaudited Reconciliation of Non-GAAP Adjustments | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| GAAP net income (loss) | $ | (375 | ) | $ | (148 | ) | $ | (874 | ) | $ | 36 | |||||
| Non-GAAP adjustments: | ||||||||||||||||
| Cost of revenues: | ||||||||||||||||
| Share-based compensation | 10 | 35 | 19 | 47 | ||||||||||||
| Employer portion of withholding taxes on stock grants | - | - | 3 | - | ||||||||||||
| Depreciation and amortization | 64 | 41 | 118 | 83 | ||||||||||||
| Total adjustments to cost of revenues | 74 | 76 | 140 | 130 | ||||||||||||
| Selling, general and adminstrative: | ||||||||||||||||
| Share-based compensation | 428 | 485 | 851 | 714 | ||||||||||||
| Employer portion of withholding taxes on stock grants | - | - | 13 | - | ||||||||||||
| Depreciation and amortization | 148 | 140 | 281 | 270 | ||||||||||||
| Total adjustments to selling, general and administrative | 576 | 625 | 1,145 | 984 | ||||||||||||
| Research and development: | ||||||||||||||||
| Share-based compensation | 146 | 221 | 273 | 303 | ||||||||||||
| Employer portion of withholding taxes on stock grants | - | - | 21 | - | ||||||||||||
| Depreciation and amortization | 16 | 18 | 32 | 36 | ||||||||||||
| Total adjustments to research and development | 162 | 239 | 326 | 339 | ||||||||||||
| Restructuring charge | - | 128 | - | 721 | ||||||||||||
| Amortization of purchased intangible assets | 18 | 18 | 36 | 36 | ||||||||||||
| Total non-GAAP adjustments to operating expenses | 756 | 1,010 | 1,507 | 2,080 | ||||||||||||
| Interest expense, net | 42 | 57 | 89 | 83 | ||||||||||||
| Other income (expense), net | (11 | ) | 16 | 25 | (6 | ) | ||||||||||
| Provision for income taxes | 10 | 8 | 20 | 22 | ||||||||||||
| Total non-GAAP adjustments | 871 | 1,167 | 1,781 | 2,309 | ||||||||||||
| Non-GAAP net income | $ | 496 | $ | 1,019 | $ | 907 | $ | 2,345 | ||||||||
| Non-GAAP net income per share (diluted) | $ | 0.05 | $ | 0.10 | $ | 0.08 | $ | 0.23 | ||||||||
| Denominator for GAAP net income per share (diluted) | 10,301 | 10,084 | 10,234 | 10,107 | ||||||||||||
| Non-GAAP adjustment | 554 | 448 | 529 | 217 | ||||||||||||
| Denominator for non-GAAP net income per share (diluted) | 10,855 | 10,531 | 10,763 | 10,324 | ||||||||||||
| GAAP operating expenses | $ | 6,383 | $ | 7,010 | $ | 12,506 | $ | 14,332 | ||||||||
| Non-GAAP adjustments to operating expenses | (756 | ) | (1,010 | ) | (1,507 | ) | (2,080 | ) | ||||||||
| Non-GAAP operating expenses | $ | 5,627 | $ | 6,000 | $ | 10,999 | $ | 12,252 | ||||||||
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| LANTRONIX, INC. | ||||||||||||||||||||||||
| Unaudited Net Revenues by Product Line | ||||||||||||||||||||||||
| (In thousands, except percentages) | ||||||||||||||||||||||||
| Three Months Ended December 31, | ||||||||||||||||||||||||
| % of Net | % of Net | Change | ||||||||||||||||||||||
| 2009 | Revenue | 2008 | Revenue | $ | % | |||||||||||||||||||
| Device enablement | $ | 9,255 | 80.6% | $ | 10,115 | 78.5% | $ | (860 | ) | (8.5%) | ||||||||||||||
| Device management | 1,899 | 16.5% | 2,241 | 17.4% | (342 | ) | (15.3%) | |||||||||||||||||
| Device networking | 11,154 | 97.1% | 12,356 | 95.9% | (1,202 | ) | (9.7%) | |||||||||||||||||
| Non-core | 324 | 2.9% | 529 | 4.1% | (205 | ) | (38.8%) | |||||||||||||||||
| Net revenue | $ | 11,478 | 100.0% | $ | 12,885 | 100.0% | $ | (1,407 | ) | (10.9%) | ||||||||||||||
| Six Months Ended December 31, | ||||||||||||||||||||||||
| % of Net | % of Net | Change | ||||||||||||||||||||||
| 2009 | Revenue | 2008 | Revenue | % | ||||||||||||||||||||
| Device enablement | $ | 17,995 | 80.2% | $ | 21,668 | 80.0% | $ | (3,673 | ) | (17.0%) | ||||||||||||||
| Device management | 3,902 | 17.4% | 4,219 | 15.6% | (317 | ) | (7.5%) | |||||||||||||||||
| Device networking | 21,897 | 97.6% | 25,887 | 95.6% | (3,990 | ) | (15.4%) | |||||||||||||||||
| Non-core | 535 | 2.4% | 1,210 | 4.4% | (675 | ) | (55.8%) | |||||||||||||||||
| Net revenue | $ | 22,432 | 100.0% | $ | 27,097 | 100.0% | $ | (4,665 | ) | (17.2%) | ||||||||||||||
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