DAIO - Earnings call transcript Q3 2019

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Operator

Good day, and welcome to the Data I/O Corporation Third Quarter 2019 Financial Results Conference Call and Webcast. All participants will be in a listen-only mode.

[Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jordan Darrow. ahead. go Please

Jordan Darrow

and welcome XXXX and are Data Corporation of I/O I/O Ambrose, and Operating Thank Financial Chief results to conference quarter Officer Corporation; Data of financial and I/O. today Hatlen, call. third Chief President Officer you, Data CEO the Joel With Anthony me

tax concerning implied a be new to construed and of economic from may results operations, other actual those events partnerships or position, by markets, are I'd uncertainties or Before that other differ made revenues, we risks, statements, as like statements factors, begin, known releases, in such future statements prediction estimated involve statements. reform, impact and to future may cause any from results performance of which conditions, you industry which and forward-looking remind this product conference materially call that unknown financial expressed

ability including the installations, These of and levels factors and risks, revenues competitors orders, economic other in Securities of deliveries market XX-K Exchange and XX-Q record the activities uncertainties described from product conditions company's demand, upon as by on and and with other in include market communications. Forms products, changes of releases press other and Commission, to and based new acceptance to filings time-to-time timing pricing the those

under The accuracy is update relied duty no and forward-looking I/O completeness of Data to statements. forward-looking of statements unduly should not upon. be any these

call to like I/O. the now over Anthony would turn of I and that, Data Ambrose, to With President CEO

Anthony Ambrose

market. Hatlen specific detail I'll it start our Well, the and on outlook XXXX then thank commenting numbers. third turn by overall results I'll Joel our on for you to much, quarter on over more Jordan. very And

in brutal best of and very From September pick-up was orders continuing summer, in quarter times quarter. of an October. worst in a saw meaningful we absolutely much Third times,

solid saw our We exciting products traction development a also on several and new platform. on completed SentriX

Adjusted low-level This $XXX,XXX. a quarterly we our our bookings. million a loss of compensation EBITDA to excludes $X.X $XXX,XXX, $X.X million was in of equity revenues were since revenue and which QX, first XXXX. had led In loss negative

a were challenging results but we back anticipated for August internal were of and particularly XQ September. minimal some backlog We ground with bookings, forecasts. weak and The below July made new in these quarter months our entered

much levels the also Octobers better depressed the of than summertime.

created havoc Softness supply customers. on wreaking and chain in at tensions freezing investments automotive been uncertainty CapEx international tariffs the by global have of and many trade our

last mentioned CapEx the quarter, since XXXX. I environment As this worst is

mid will recover between XXXX. sector the of year when fully very and Forecast of QX this

revenue in the now do the we we and not of cycle. hope we better quantitative guidance, than feel did seen give While the summertime bottom we've

the several navigate to plus Since through were quarter, in variable market job them. years, spending the of we've third excellent controlling cycles we been spending We and past discretionary through as down understand designed. an did XX how

As focused profitability. our efficiencies we remain on in continued on improvements

from Our equipment sales revenue contracts software helped dropped service sales in recurring sharply. and margins as for consumerable cushion adapters maintenance

conditions we sectors as units Despite to and the market to the reverse and market course invest market best the when very we grow At stayed supported of for grows. third solutions the the XXX and quarter, best resume the in core ensures the to field, we share future. position over course were growth continued globally. these This PSV have short-term end take

introducing ultra-fast Earlier of into enhancements platform. supports. first This the and multiple our per to new well device this performance platforms the third entry the In quarter, as is ever week, segment parts PSVXXXX we announced platforms market XXXX existing with up the our as we to delivered hour.

This programming new allows our and serve applications end-of-line lower total customers. much a for of delivers pursue programming. enhanced versus new faster much is to performance us Our cost customers

that and effective cost is programming members. to applications approach PSVXXXX perfect our more PSVXXXX, the flexible and family and the Our PSVXXXX, much with PSVXXXX this compared makes end-of-line complement traditional

Earlier we & device XXXX Tech programming category Mexico Forum. a Software for in Expo of Technology our the the Award also Application received at Guadalajara this SMTA month, Job Composer

Job creation from job seamlessly configuration location for Composer for manage streamlines the programming. and customers and process and a the Software local to Our to design compilation a final control production central site transfer job

important This floors creation optimize talk connected all about saves when allows car the in autonomous across human is aid error cars, job the of infotainment This to and and significant enterprise. time factory like automation in and reduces the process. This us especially other applications. we

as number We of quarter supported QX well. centric platform wins, security customers, Key continue strides increasing deployment make sales our the funnel. and matrix device overall design our with performance in in third to great a include type

Our since last of and from as the they the have more we seeing our number process. year platform same are partners customer engaged the with the doubled devices experienced presales on and XXXX enclosing deals period supported get increased

spending. protect filings spending patent upon encouraging unique SentriX and to-date property our to even manage investment will our increasing been we have also as elsewhere. numerous results We've intellectual patents Based be we platform tightly our awarded additional

intent major solutions biannual new Productronica: show manufacturing Next showcase at our month, electronics the in Munich, we to products security Germany. and

showcase to We our perhaps engagements speaking a plan have latest surprise or announced three products and demonstrate even and two.

Data us I/O the please in the Productronica join free and show. Munich for badge to are you contact If at area,

Chief to like Joel? Officer it our I'd Joel details Operating the to more Hatlen, over provide to quarter. that, Financial With Chief on and turn Officer

Joel Hatlen

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

the in quarter to-date. event well Anthony as bookings as his cycle the and remarks third the October for addressed down discussed

basis, total the net compared revenue geographic as period. sales sales approximately of XX% XXXX international XX% the quarter the in represented third for On of with

of for equipment XX% the consumables of XX% capital full-year XXXX. compared adapters sales and revenue during XX%. the Total XXXX Year year-to-date and were XX% were and quarter of in to respectably

percentage third quarter XX.X% to of XXXX. the in quarter and gross quarter XXXX the as third second of of of a the compared was in For margin XX% as XX.X% XXXX, sales

a Third that quarter the fixed gross by is reduced and inefficiency volume to percentage as the due sales volume. of sales related margin reduction to cost reduced

continue the the gross we margin model mid-to-upper For XXs. percentages full-year, to in

-- our continue manageable. the third cause nine this gross the but impacted has gross have been Tariffs as Tariffs outlook be percentage in month points uncertainty mark, should to to X.X XX%. margin At a by been at quarter. and in margins of sales continue

prior measures expenses the variable is compensation. stock-based as expense to Operating sales the reduction. contributed and the year quarter well prior incentive related also lower as significantly change periods. to commissions to compared primarily compensation down in The were both were Cost control including

industrial to development our other R&D as programming continue market well actively in the initiatives engage our addressing key We for automotive as and in SentriX initiatives sectors. and platform platform

At loss quarter of or of loss we're or compared practices $XXX,XXX $X.XX In of next $X.XX in share $X.X a at quarters operating management emphasizing XXXX. the U.S. third income modelling the per time, expenses net expectation ongoing XXXX net the the $XXX,XXX up deluded of increased million. accordance with per are were same we SentriX with approximately third spending, GAAP, expense with quarter a related in to share

$X.X million XXth million of compared third the was at XXXX of compared Backlog quarter September in $X.X June of million XXXX. at and were Bookings with million the of $X XXXX $X.X XXXX. quarter the to second million XXth, third quarter in $X.X XXXX

September million $X.X I/O orders. in due the quarter the $X.X the compared to Data With increase of had quarter. end deferred end the at the late of million third revenue to at second

of XXXX. September XXth condition with of $XX.X cash financial remains strong at million I/O's Data

to As not quarter. note mentioned, the had Anthony quarter we XX,XXX buy $XXX,XXX the a even is that though we did money repurchase to used cash the loss in and to in It burn we in stock, important quarter third back shares. spend

XX of Cash better the DSO, quarter improvement third days, of collection quarter. second closed of from Outstanding XX the the end higher at slightly On expected Sales Days than at the end days an the quarter. was second just the receivables from measure end or at

million due Networking loss had quarter, as to from quarter the outstanding of no buyback. third share debt, have XXXX. at well end the to end million September X,XXX,XXX of finally shares as was the company capital down $XX.X second continues the primarily again The XXth at the $XX.X these at we

return remarks, call the my back to I'll Anthony. concludes That

Anthony Ambrose

Thank Micro I/O, Conference we'll LD we like it just open remind you I scheduled. for in XXth before Jordan you on get Los know with And participating Data to and much, to Darrow you Q&A, Angeles the up be in like December Joel. investors please let and very talk that if year we'll this

With that please. start I'd operator the process, Q&A like to

Operator

comes Thank Please from question [Operator Jaeson ahead. Instructions] from first Lake Street. you. go Schmidt Your

Jaeson Schmidt

year-to-date between are figures clarification. equipment in I for Hi want XX% QX just XX%. questions. was Were and well? those taking the guys, the to Joel, that thanks adapters as and split split start with or the my

Joel Hatlen

last quarter the on a then was that but split. compared there I'm year the was to And years for figures. sorry, total being

Jaeson Schmidt

Okay, thank then, the like all, at out, orders in. months. it know up have never of here just the extends couple too you. comment has you over past improved you picking if And nature far play I Could been sandbox visibility on sounds it of just the

visibility overall additional any But be helpful. would on color

Anthony Ambrose

I'll brutal pickup Anthony September this about September. October a Jason, July August actually we a absolutely and that there bit than been we did the in sure take Yes see Whence one. and is is talked and little better were

more getting happen but like people. quarter customers What think just happening, some things absolutely visibility froze of simply the a not and it September in because we're that I of were looks sure like towards orders our needed it is them. released end simply October lot the second feels I'm And

more I that so, happening. of And a think of it's case

it. as is I we've much think pretty had always visibility

we are they're people be a local Although, people equipment. to engaged tend purchasing might with the the is be with that holding when corporate level, reality the when held back or back made at not being we're actively engaged typically buying decisions

on goes because So, situation, put economic the kibosh spending. to CFOs when top a like you the visibility inherently down have

Jaeson Schmidt

the that Now, then, back one me sense. from makes jump I'll the in queue. And last and just

revenue that platform. the number about timetable about models? noted on doubled there. customer should Sorry of meaningfully the SentriX to You How think we the engagements their contributing

Anthony Ambrose

business. pretty with see be to But closed meaningful. and is we I'll this anxious this talk year happy Yes, that to not more quote-and-quote sales for what it's or consistent we're sell channels happen how our next in out like about, figuring year. That'll

market As can to it our get grow, means supports faster. customers

So, all SentriX. mentioned, happening I excited very things we those as be continue are to about and

Jaeson Schmidt

guys. Okay, thanks a log

Operator

go Instructions] next Please from Thank question Robert Your from Anderson comes you. Penbrook. ahead. [Operator

Robert Anderson

Good afternoon, gentlemen.

Anthony Ambrose

Hi, Bob.

Joel Hatlen

Hello.

Robert Anderson

hi. Yes, part question. two A

the You've completed authorized stock buybacks.

So, then, was anticipate the the the end October, question? what backlog end stock backlog new a you did buyback, initiating at of at you mention the September. And first do of

Anthony Ambrose

typically just I second out let I It's October, have first. me in of the we backlog meaningful. first won't backlog give a month actually question be quarter don’t till terribly answer the get sure not numbers So and that of end don’t number a Bob, tomorrow. I'm

those We October. did and The in in in recognized see acceleration be is an fulfilled time order get QX. anticipation September

And shortly. doing another so, buyback, the buyback. we'd And that's the we'll I what that don’t be then, first just anticipate the completed question expect. on we buyback

We We'll just with soon. things met but that on time on that don’t Board. any eye keeping always yesterday changing the anticipate

Robert Anderson

you. thank Okay,

Operator

you. Thank

Please Your comes Arthur Winston Advisors. go ahead. next question from from Pilot

Arthur Winston

guys. Hi, curious to other? to that as opposed was Why you as decide I Tony, SentriX. on to increased what just some now spending prompted

Anthony Ambrose

in completed new things adding We While strategic number areas, traction, we're we're to looking partially part some platform. our at review. that demonstrated just internal the the of to interesting and a

try here and look we very opportunities time where when the a best And growth which new the do the we product. the exciting just XXXX are our we on at market. that, is is take a handler opinion in This three-year completed

done significant our We for our that. is gets product that as showcasing be handlers. programmers, our in well, most platforms So, had the R&D a of on the other enhancements that for into earnest. and number We'll cycle now of sales on releases

there that And if continue I the done. our on to so, that looking ahead is been certain we that in is to core R&D opinion security, world the the others. think moving side, part And of is segments reinforce forward you're world moving on largely business, SentriX the

the them quickly as planning. Namely, here thought that happening and call that in new is our is in detail some was had very earnings And opportunities. IoT It's describe process but we little the it additional a too on to doing automotive strategic well. early

Arthur Winston

terms of has Are they you revenue time terms know play sales thing in Is to of that on the this enough to really one after premature how modals, in on far to the it going. way. to recurring models did this sales going along follow keep

Anthony Ambrose

have certainly No, We question. own I think internal model. good that's our a

that more a SentriX platform with we'll as security service indicated, models We've I've SentriX primarily. investors. described provide principle sharing to As be that deployment our the

as for figure that able reasons helps a told I would competitors you The something know pretty as reasons internal to the easily do market out both out on for they my unfortunately And which how well I reasons. number that's specific of works of terms that to be call. if

a So, cards for we'll keep best little those now. the close that to

Arthur Winston

guess disappointing Okay. if least not but but then the This that me please is disappointed board pass on you buy of is at a one a question. here? backs you question not back know could by you sure It's quite not the the company off

Anthony Ambrose

Yes.

thanks, Okay Art.

Operator

Thank you.

go comes Your [ph]. Jeremy Web-Car next from ahead. Please Lavine question from [ph]

Jeremy Lavine

of my and I I've if you these on in, only positions I what doing, said Gentlemen, the my and short as Bosses "Well, said doing." involved of failings to that would don’t don’t sector really the because we're curve, grade Bosses that went I your in other life, extremely the interested what have was held in you're sectors I

And lot of that price special a quarter-after-quarter dismal. the in been and interested get if would awards secular make is up from I get trouble nice but wherever you achievements issue you only are mean Mexico problem. have and you in share we I where the It's really shareholders there and that's is a products or because which say can

That out figure why another not Mexico out going So, that shine would the of company to you ramp out expectations, have enhancement a down to maybe by $XXX an beat would strategic sales, nature. then unexpected been make and million it's through to an you possibly of given that the not figure how award producing have on do but this review results. down something you've going

that Because a you in grading is don’t that, curve. the if grade curve really and companies on do your I on invest company

Anthony Ambrose

you very much. thank Okay,

Let's move to the next question.

Operator

from Your comes Instructions] from next [Operator Robert question Please you. ahead. Thank Anderson go Penbrook.

Robert Anderson

Anthony, comment. a I would echo that's the thought that

be And you end-of-line is and a chips question would I'm on my PSVXXXX. by equipment? code little Teradyne done about the that --. Now confused, is the talked So as about putting such

Anthony Ambrose

you're so few is SMT words, down in line. program Yes, can approach technically. right is and equipment test when as I/O's parts ways discussed other In before program products we their ethical. different you -- a in we've prior Data components also which the placement primary to

whether they're when that or call can and equipment an piece can also a You it's of on generically dedicated a SMT test. parts program you programming line program panelized we programming end-of-line

be I the XXXX. to programming brings replacement with pieces served was specifically type market. and pretty referring more and the to get dedicated of into of that expensive some inflexible of our we're able equipment, they capabilities on tend to somewhat business That

Robert Anderson

moves It and So, off volumes then takes was it right. your to type I equipment Teradyne equipment?

Anthony Ambrose

Correct.

Robert Anderson

I alright. Okay, understand didn’t then.

equipment? your what's install now Now of on SentriX SentriX, base

Anthony Ambrose

have We systems five globally. to deploy

Robert Anderson

Great, I'm okay. you. set, all thank

Anthony Ambrose

Thanks, Bob.

Operator

Thank you.

comes question Vishal next ahead. Your Mill. go Please

Vishal Mill

would on that almost core the now. if clarify you Vishal. your board burn Oh the share this on the balancesheet the strategic much and to continue could what is the million is buyback. hi reason why second, more defined no be read And cash But cash $XX about even there's Anthony, - you not

expect But pick-up, investment an Thank you much from do or the the burn two that that's cash you reason cash part have you. question. to

Anthony Ambrose

years. buyback, Well, buyback is share question completed I we've had that's in a the we $X share million the six largest think just

very capital are clear been we've returning think I to So, that shareholders. we

all in United the $XX million The not is States.

in a fund on Germany. and in Okay, the we At the United operations down in cycle business. have States same in only time, to we're the not but China

is and the we've think doing believe alternatives a cash what frankly we by now. we're number served best at right doing that looked I So, of

Vishal Mill

you. thank Okay,

Operator

question the like concludes Ambrose session. This turn answer conference over would and closing for back I remarks. you. Anthony our to Thank

Anthony Ambrose

we'll you Well very operator, like question. And point, thank close at that much. everyone the a asked I'd to call. thank this

Data I/O (DAIO) 4 Nov 192019 Q3 Earnings call transcript