DAIO - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Data I/O Third Quarter Financial Results Conference Call. [Operator Instructions].

As a reminder, the conference is being recorded. And I'll now turn the meeting over to Peter Seltzberg with Darrow Associates. ahead. go Please

Peter Seltzberg

Joel welcome Financial and Anthony I/O third Corporation; Corporation President Officer and Thank Data of Conference to Call. XXXX I/O. and I/O Data Results CEO are Chief With quarter Operating and Financial you, of Data Hatlen, me Ambrose, today

to turn unduly completeness that With out under be forward-looking call update of I/O. changes CEO Anthony? statements time-to-time I/O to these new should in unknown I'd with of and may Commission, from from begin, other other orders, position, described those operations, I'd in risks, over President made pricing economic Securities expressed remind filings XX-Q of of any forward-looking results or press Forms concerning factors, to that upon call prediction statements. based ability and to of factors to conditions, Exchange SEC, that of risks other to and may the those accuracy to releases such The relied is we and including by XX-K conference or construed cause known any competitors future like as Data statements. upon. the and forward-looking These record deliveries releases and market not other activities performance financial be statements acceptance Anthony on no and which Before by statements, revenues uncertainties actual demand, market and the statements and timing the Data and and products, product events, other installations, way. implied of include like this the duty future Ambrose, communications. revenues, results are from of differ company's in to product conditions the levels and economic materially uncertainties which the involve

Anthony Ambrose

detail in to for Peter. Managed the I'd growth start to including you numbers. much, really -- XXXX's Then team great say Joel work Programming developments just outlook QX the areas. turn several the on wow. for like latest our I hard past call the quarter the and years. I'll results and Secure the our to of comment reflects and on Thank more automotive briefly over We very over had that third a out and

programming We automotive nearly highest our electronics automotive $XX.X our quarter results, have a and is third leadership and includes years. third by in years. of bookings OEMs I/O had really the bookings We The strongest Internet the our of the and high earnings at market automotive had centers, X-year high. in cash Things. of focus markets sector, XX revenue above margins and and in quarter XX gross a financial and revenue from the our that multiyear million. extending majority were XX%, Aided We Data strong of

Our focus years the of paying off are marketplace. investment in and

quarter, This were up and sales very the and Europe was sharply Americas business in the strong. PSVXXXX systems

previously This was major in at equipment. want in our the another Data versus at similar company order in end competition. received we presence. of where an situation is winning approach the I/O third Since quarter, the we a no the marketplace. had customer, automated where and a we previously-installed have very illustrates win systems the As they big order European us a advantages our for release, for highlighted the of we competitors' automated

I/O a future the to continue channel revenues and QX. were profitability very look look upon long-term hybrid too. cost remain Systems, we you The This driving powertrains. several you infotainment, back to we saw told the opportunities some Driver the engines long-term today, results on semiconductor trends Data targets electronics due our are business, points connected-car cost finally, gross intact. an increase companies, model, market many products and Earlier market of on control. our use growth end steady margin at Automotive delivered. electronics, and gross reports above And higher is electric ambitious products. probably automotive possible. per of were of due cost slightly Internet out the We'll and years factory reduction progress booming Looking the built and quarterly and Things, we've of QX's ago, increased for take large about We their Advanced technology. optimistic in instrumental our of XX market to favorable in adoption years use high of margins, car. multiyear applications, a Assist being content the is and our automotive take mix margin our and primarily semiconductor cluster are of growth includes and they in cost gross where and automation and

also lead programmable secure the and microcontrollers. in devices, in increase to creating great opportunity industry Our suppliers fantastic including hardware-based gives challenge growing elements of a silicon fundamental and they mission but other Things automotive solutions, here. The new more confluence market us of security secure The security is with of The a real Internet security. of the and we're investing is authentication the with generation OEMs new demanding to products, available responding are semiconductor memory massive and capture well lack markets flash industry face microcontrollers. for well

that mission is solution a the security IoT. democratize product. deploy full, true want to OEM an mean security has sure is opportunity What for their Our for hardware-based to every to customers we make

front announced this from on all Renesas decore deployed the suppliers for leading a a to with we're security-provisioning Maxim customers the the with their to and week first now We As announced this just QX, our earlier other programming support at We're ICs, leader of platform of of products devices. volume, suppliers for we cost-effective, partnering centric working time-to-time. SentriX provisioning, firmware high In Infineon to authentication security Germany. our provision as previously joining well, center in system global leading family and sizes. in more ICs, solutions support for develop on I've semiconductor say

establish As I've design key X here we to relationships the and meaningful phase indicated semiconductor as to development wins next before, months revenue to a XX follow. view with market

Ultimately, We to then secure this share we are plan. current today is microcontroller much our in a larger goal and have elements the market the microcontroller of to executing get secure market.

Finally, meetings I'd like share calendar to our list and you. events of industry extended investor with

At be new here third Roth see New We events. the in trade have day, Annual attending conferences Xth year annual attending the same at Hallum be Select some XX, York Capital York Conference, in to technology we'll be producttronic attending these November corporate in to been invited the November time, XX we Germany. Munich, and also City. love We'll you We'll through Alpha New November show, this the Craig also City. in access town XX XX

several have and an products. speaking outstanding security provisioning We booth engagements our featuring automotive and

more Los LD to XXth Needham these Growth X remarks, concludes Hatlen in events attending call We event, New forward York you and XX numbers in Angeles I'll will Joel discuss That briefings. now We and at Company my main industry the to look & XXth Annual City. Joel? Annual the Micro seeing the December over be the detail. pass to Conference, January in

Joel Hatlen

in to were XXXX. for million quarter day last Good second of Net $X.X million with $X.X the compared the $X.X everyone. XXXX period quarter Anthony. year you, sales of the million Thank in third and

of demand, increased centers, capital and primarily automated adapters electronics systems. adapters both Anthony revenues noted, Europe, Asia PSV the to earlier Order family than programming related for increased XX% compared revenues, third Revenues and in big as of of Total from programming and from a marginally with sales lower the third represented our XXXX. were automotive were revenues. OEMs International XXXX. quarter equipment quarter from year consumables Americas XX% drove sales of As quarter were of were approximately sales and robust of XX,XXX of in in XX% was quarter third XXXX. the in $X.X the XX% total million 'XX bookings Sales the while period.

backlog, quarter and million major quarter. of in of XXXX, been the at system end at As Deferred the at a revenues deferred percentages Anthony was of that revenue end in $X.X second quarter the systems the quarter. a The at $X.X we XX the all quarter XXXX, able translation. including said, to the third shipments quarter third million the in had haven't change million, to quarter, million, and $X.X in percentages X%. deferred the of Backlog X $X.X the of compared of December high of third million of order the million to the currency At growth versus end were variation $X.X to recognize XXXX. relate second revenue was of XX-year with revenue recognized in compared end $X.X

$X.X XX.X% in was with show the in product distributor a and $XXX,XXX sales mix, resulted technology our capacity of XX.X% included demonstrated better quarter. factory of activity. third a increase distribution during in in due incentive, again, along XXXX, well million a automotive-related our percentage delivery XXXX sales usually of For other Redmond are operating The trade was of Note was sales platform and in distribution both additional unfavorable Secure expenses same a innovations, more XXXX. compensation selling direct execution of and and with were sales as of third along with $X.X China, sales commission spending other in discount Managed the XX.X% The in to margin Once additional gross in channel XXXX of where and million primarily utilization, our variable manufacturing engineering direct of period in due the in primarily as R&D compared mix, expense. to which quarter the versus with cost that, are compared expenses, net marketing approximately volume, in quarter teams, sales to of and sales and quarter Operating favorable QX and operational $XXX,XXX channel excellence sales favorable factory result associated virtually increases Programming of XXXX. variances. primarily commissions, investment-free reduced fixed new third as to a increase which the

R&D the increase call, XXXX we level As during compared continue will conference higher of sequentially expected previous expense mentioned slightly. and to engineering to quarter's and are the

XXXX. of Equity commissions income the was margin U.S. in EBITDA, of operating was expense, item, total approximately 'XX -- per to $X.XX nor third expense in net per -- with EBITDA XXXX XXXX. and of discussion forward, XXXX $X.X diluted of XXXX and of return normal gross million GAAP, million before EBITDA, earnings interest, is $XXX,XXX the XXXX the on our mix, measures. less was compensation, and excluding quarter in Adjusted offset. a a Looking an quarter in or for Accounting third resulting non-GAAP the corresponding $X.XX $XXX,XXX of quarter press quarter of cents noncash lower, compared $XXX,XXX accordances third compensation respectively. quarter -- of third assumption income Please amortization, share fourth third in third XXXX quarter the quarter and in of lower to depreciation or sorry, of approximately $X.X $X.X a XXXX. compared equity taxes, net the release $XXX,XXX quarter million given XXXX Generally diluted was in the expected Principles, of and share financial compared third a I'm of to see to with more in In quarter Accepted reconciliation was these for channel actually third $XXX,XXX, and the be

as manage with continue million, in was future advantage -- to United XXXX, income. analyze usual, we The to operating million of tax We balance available company's million U.S. credit $XX as attributes. income carryforwards net XX, in these X States taxes to other net that offset continue subsidiaries. of position have take cash and well our September -- loss, the net in $XX.X States are foreign And with as carryforwards to $XX.X at of and will approximately United

The end the at cash XXXX. by Working by a from Anthony. this XXXX On debt-free $XX.X I million balance. year. third balance shares of of at second of retained of the from of year. Our to end last remains over second capital the the million September quarter, to end the happy I'll the X,XXX,XXX earnings point, company turn our up and up $X.X from beginning of increased and note, quarter outstanding the million positive the was XX, had the $X.X $X.X the million quarter call was to end the see return At and million of $X.X personal a from

Anthony Ambrose

Joel. much, Operator, from for very you up our we the don't why Thank at participants this questions open time. call

Operator

Penbrook And Robert Instructions]. first [Operator from Management. our Anderson question with

Robert Anderson

are congratulations for company the followed I in of truly you, because and I this time is especially know, being a company transformed. both you long really but order As think both to Anthony

be it a your as products, really at products X, as are thinking business commodity profit which time a and there devices. way, you comment Maxim unique superior deal of we and competing little look described that out hard other customers. have the margins a commented have for ago, then, competitors And was lot one of with. appeal integrated If business. useful, proprietary proprietary could you as years it Infineon Today, I would and X and Anyways, in look you're involved to you having thought Anthony, investors, firmware on and if be further authentication company with for the

nearly is I think understood. well this that's not

terms. So maybe explain if in you could layman's

Anthony Ambrose

kind for thank Bob, you And the words. Okay.

have what manufacturers fundamentally support our early quantities embed semiconductor order it we've level, demand well, trust, And that with Again, can customers complicated but semiconductor on calls, built So hardware-based true in embed the really that a as talked need that well that of security as for smaller security to trust become us about ramp the certificates, platform. design previous into i.e. forecast on at keys, and roots as fundamental parts we does, about can't you is production as Managed Programming process. talk allows can that no vapor minimum will, very process strategy roots provisioning SentriX around if before quantity. Secure of

those. different What want of special in keys, our it each that items gained all allows of technology with of lot and take may line to does, a of secure customers semiconductors. some one have to data into firmware that and Our regions to and SentriX add have allows associated different us learning knowledge may programming us provision securely we've and and business that keys certificates security

can that be So that be off changed and would memory locations they got special again. walled

customer their number one, they personalize this can the is secure to get device. benefit really that So can they The chain. two things, do supply

there you have always authorized. explicitly ICs of if the your can you've chain. than that's set And you a never control more what to authentication any is secured supply that secure sure control So micros, of or built product make

down can of get manage your notification can Bob, in lifecycle the it, This integrity it, look at The can is that to make the of one clone development change around, and it ultimately, in doing second copy product the you of use usually try benefit, access upgrade takedown that. cycle to firmware that no control it, and spoof passwords you over product. cycle. manufacturing And and when to all you the means someone hear hijacked those about things has firmware, your cycle the control infrastructure, sure Things get all Internet it, comes and without the weaponized control like the internet to taken someone and two your or one firmware, has like of a problems to things, things, security, altered

that leaders with So the all technology. providing to is, do trying SentriX with what are semiconductor working I'm we're great

which These can sure security just with So and this which announced we're these manufacturer's new and specifications support Renesas, provision in companies and we the have announced accordance Integrated, Maxim week. that to earlier with collaborating were we Infineon their I those base. to customer them previously make include parts devices

there. wanted So I your bit long-winded question It hope answered I little to... was but I a

Robert Anderson

find why as Could semiconductor it Instruments you. Texas would that firms in direction? can to very larger move Maxim work want with I and companies No, and made see Intel this excellent. That like clear was such a

Anthony Ambrose

work IC secure frankly, first or with, ship allow Our their we've microprocessor fundamental a -- line. because would with the be for those or us it that system, microcontroller we company. go to product technology into of secured they release, to has or The SentriX and as product any the anyone can line will embedded work actually authentication goal And with themselves. tires kick in and we and indicated it see each see secure

Operator

Management. Kanen David Kanen go with [Operator will Instructions]. to Wealth And

David Kanen

any core exceptionally a and the see Products you're for some I investing about which talking Managed well now we've and almost initiatives, Secure without the been revenue. time is year spending for business performing

explain for know years. size words next say, not me can our Let opportunity the of incrementality X and but me can you give than rather numbers, using core guidance to over the the If and you going if out numbers, any to I to you're business? the sketch

Anthony Ambrose

looking take putting we're it call into, do, strategic to secure what look few we a what I friendly the got to unit format, I for range is and that ICs, going just to the Yes, advanced Dave, specifically. in at be the completed do size investor we our opportunity Last look, market an But the of on opportunities microcontroller X some that planning we've a internal we're time and numbers cycle roughly at at was the look would chewing years look I that microcontrollers. we're out. billion authentication

won't Some billion of provision be we the a will by because available available semiconductor fraction X But directly be to that feel be will good to of that manufacturer. us it us.

work out to we we've Now and go have customers. each capture to different with architecture,

opportunity significantly on number do that's microcontrollers. it's the we of that our terms unique more highlighted, again, way space. doing why are as to investment share overall are share would to we're the that to see a that the a revenue. things that's we the -- SentriX, of than to everything SentriX really remember to goal So side, in in better in in we be get at the going there And platform. But process It's in substantially today take little that's what it. a look we get time And

dividends, core held paying technology, technology, all you technology also doing as as get consist that of SentriX. if those of programming However, the are enhanced things software for system our The businesses platform and and in extended are hand our the core business. there with well number of our we're that will,

David Kanen

mentioned the quarter tell then if particular ended, opportunity? that about you displaced Okay, just prepared you in us upon the there you could after the was What remarks, and where competitor. customer you can touch a

Anthony Ambrose

Data one much, highlighted for we And a the fourth but quarter too had quarter I/O same third -- the had hadn't different been not another we before from quarter. in booked They the customer, Yes, in We -- the reason. shift the of one we've region we Dave. that I just theme. different variety in buying just that third basic third

in round of acquiring decided and share. needs have Data new to that best their over last stability market purchases they best for see because customer with that We forward touch supply, the the a excellent to their going financial we years and is way like kept service. And I/O customers fit short high-performance, gain

Operator

Winston to with Pilot we Now go Art Advisors.

Arthur Winston

the Following switch -- who just you've over are conditions? I'm before. if just X this customers number of the just curious the size company other Or to like shout saying out, there beginning? question, it isolated XX to our a never XX at could Or over is months? next it's David

Anthony Ambrose

bought talked reason over otherwise, but the we previous it's winds will, always just number. is easy this have team Data I There people to never something from But we quantified I I talking to ability different won we our wanted sales make platform for you how learn real you these. different, it can, we a -- this we up and than customers. consumables the just have work that looking important and one try that a a you marker of just our are We'll one, show when -- that have have support far was customers come to cost, it I bit think at because we're another I/O little it give switch hopefully But switching better how described It's whole it's our to the Well, always that our we've I to universe that are before in highlight in I time about you continue things. factors, haven't if do host something to competitors. with because to our of much about. to before think bring at, was a I question. then

Arthur Winston

Okay. people in million Or rough hired, what of Change incremental in I short if these the you people direction of right of expenses high sense are for the of that and tempo, degree business in difficult is and kind and wonder you I incremental right and whether they time, a it to of any assume is the $X spending you people? have of such the will hire things simulate period together? a new come

Anthony Ambrose

I the I'm if just can incremental Joel, XXX% sure right there. you question premise is not the clarify think, of spend. the

Joel Hatlen

year is is a is, secure elements the XXX,XXX quarter other and this to correlation that So is about spending. quarter in in there additional there. of outsourced additional But spending there managed some There ago's to compensation there R&D most direct is R&D, in there variable NRLE but... compared the and

Anthony Ambrose

core. also And

Joel Hatlen

yes. core, And

projects Managed number have the We Programming. the on they're a and working technology, in LumenX of core programming benefits will that and particular, the core Secure

Anthony Ambrose

Yes.

is and... be not So also address XXX% in directly, in there, the elements question some could in onetime not we there could consulting can there. think Arthur, some could -- how investment. a your to and And Managed variable you're Programming. Secure There assumulate R&D people saying some XXX% I but to There be in it's cost a be compensation there increase fix it's

Arthur Winston

gone right way you And think are hired, for people you new... the the about the it in you've and track, the do you

Anthony Ambrose

here, a let programming you great say in sharp, about managers in the I to team that think the with months. a at talking XX skill we've delivering and so. I'm first and that see on hired past things to say placing excited our us we I an get always things. shows And product -- Extremely opportunity it really new -- talk about bringing about are them demanding won't call anymore to this a and about very like showcase when but we we'll a customer center on programming trade year. in that. like set We

So the channel. stay to tuned

Operator

[Operator Instructions].

this at no time, please so continue. have additional We questions

Anthony Ambrose

like additional call no this there everyone close participating. the If questions thank operator. for I'd and at is to time, Right,

Operator

teleconference you. may using participation service, Teleconference for will the gentlemen, you for We conclude this Executive Ladies thank today. disconnect. Thank for and now AT&T and your and you

Data I/O (DAIO) 26 Oct 172017 Q3 Earnings call transcript