Revenue Growth of 25% Year-to-date Despite
Challenging Business Conditions Late in Third Quarter
Data I/O Corporation (NASDAQ:DAIO), the leading global provider
of advanced security and data deployment solutions for
microcontrollers, security ICs and memory devices, today announced
financial results for the third quarter ended September 30,
2023.
Third Quarter 2023 Highlights
- Net sales of $6.6 million; bookings of $5.3 million
- Quarter-end backlog of $2.5 million
- Gross margin as a percentage of sales of 53.7%
- Net loss of ($53,000) or ($0.01) per share
- Adjusted EBITDA* of $402,000
- Cash & Equivalents of $11.9 million; no debt
- Automotive Electronics represented 63% of year-to-date 2023
bookings
- 4 new customer wins, including a major SentriX® security
provisioning customer in solar energy
*Adjusted EBITDA is a non-GAAP financial measure. A
reconciliation is provided in the tables of this press release.
Management Comments
Commenting on the third quarter ended September 30, 2023,
Anthony Ambrose, President and CEO of Data I/O Corporation, said,
“The third quarter was a decidedly mixed quarter. We won some
exciting deals and saw strength in adapter bookings, but system
bookings were soft as customers deferred capital purchasing
decisions. Capital equipment purchasing may have been delayed amid
a significantly rising interest rate environment, the United Auto
Workers strike in the U.S. commencing on September 15, and
geopolitical uncertainty. China continues to improve but is still
well below 2022 levels. We have seen bookings strength early in
October, and we are encouraged by automotive electronics demand at
this point in the fourth quarter.
“We added 4 new customers in the third quarter, including a
major new EV factory and solar energy customer through a partner.
This demonstrates that our continued R&D investments support
our leadership position in the industry. Solar has been a strong
industrial market for us this year, both for PSV systems and now
SentriX products. SentriX is making progress globally as a leading
technology platform for securing firmware for connected devices in
a variety of vertical markets, including AI, EV, data centers,
utilities, industrial and now, solar.
“The Automotive Electronics sector represented 63% of bookings
in the third quarter, consistent with the amount year-to-date. EVs
continue to take market share in terms of total vehicles sold
globally which is a catalyst for Data I/O as we stand as the clear
leader in EV vehicle programming worldwide. Electronic content for
each EV is estimated to be 2-3 times that of standard ICE vehicles
and programming requirements continue to require higher speeds and
more complexity. Long term, the industry expects automotive silicon
growth to remain strong at 10-15% growth per year through this
decade.
“Total operating expenses in the third quarter were marginally
higher than the same period of the prior year as R&D spending
slightly increased and SG&A costs were essentially flat. Third
quarter operating expenses came in lower than the second quarter
due to reduced channel expenses on lower sales volume and focused
spending controls. We performed well in the third quarter despite
challenging conditions. Our results demonstrate the resiliency of
our operating model while controlling expenses and expanding our
customer base.
“We remain positive on our outlook and continue to look for new
and innovative ways to share the Data I/O story with the investment
community. We will discuss our progress, views and insights through
our next fireside chat series and also with the use of the Webull
Corporate Connect Service platform to enhance communications with
tech-savvy retail investors.”
Financial Results
Net sales in the third quarter 2023 were $6.6 million as
compared with $7.2 million in the third quarter 2022. The decrease
from the prior year period primarily reflects reduced systems
demand late in the third quarter, and comparison to a favorable
post-lockdown recovery one year ago. Third quarter 2023 bookings
were $5.3 million, down from $7.6 million in the second quarter and
down from $7.1 million in the third quarter 2022. Asia showed
moderately improved order flow as overall demand continues to
reflect economic recovery in China. Sales funnel activity in the
Americas and Europe remained active but orders placed toward the
end of the quarter were lower than anticipated, although an
acceleration is happening in October. Automotive electronics
represented 63% of year-to-date bookings compared to 61% for all of
2022. Backlog at the end of third quarter 2023 was $2.5 million,
and the Company ended the period with deferred revenue of $1.3
million.
Gross margin as a percentage of sales was 53.7% in the third
quarter 2023, as compared to 57.0% in the same period of the prior
year. The difference in gross margin as a percentage of sales
reflects lower sales volume on relatively fixed costs relating to
the Company’s manufacturing and services platforms.
Total operating expenses in the third quarter 2023 of $3.6
million were moderately higher by $184,000 as compared to $3.4
million in the third quarter of the prior year. R&D expenses
were $1.6 million in the third quarter 2023 compared to $1.4
million in the third quarter of the prior year reflecting ongoing
investment in the Company’s technology platform to support
continued and future growth. Selling, general and administrative
(“SG&A”) expenses were $2.0 million in the third quarter 2023
and unchanged from $2.0 million in the third quarter of the prior
year. Third quarter 2023 operating expenses were $626,000, 15%
lower than second quarter 2023 of $4.2 million, due to lower sales
related incentive compensation, improved operational efficiencies
and focused cost management.
Net loss in the third quarter 2023 was ($53,000), or ($0.01) per
share, compared with net income of $847,000, or $0.10 per share, in
the third quarter 2022. Included in net loss is a foreign currency
transaction loss of ($15,000) for the third quarter 2023 compared
to a gain of $307,000 for the third quarter 2022. Also included in
net loss is income tax expense for foreign subsidiaries of $16,000
for the third quarter 2023 and $181,000 expense for the third
quarter 2022.
Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”), which excludes equity
compensation, was $402,000 in the third quarter 2023, compared to
Adjusted EBITDA of $1,431,000 in the third quarter 2022.
Year-to-date Adjusted EBITDA is $1.8 million in 2023, compared to
$435,000 in 2022.
Data I/O’s balance sheet remained strong with cash at the end of
the third quarter 2023 of $11.9 million, up from $11.5 million on
December 31, 2022. The increase in cash from December 31, 2022
primarily reflects year-to-date operating profitability and
increased net interest income. Data I/O had net working capital of
$18.1 million on September 30, 2023, up from $17.6 million on
December 31, 2022. The Company continues to have no debt.
Financial Outlook
The Company provided a financial outlook for 2023 upon reporting
year end 2022 results. The third quarter 2023 financial results
affirm its long-term growth prospects and operating discipline. For
2023, the Company now expects:
- Double-digit revenue growth for the year, consistent with the
long-term double-digit semiconductor growth rate in the automotive
electronics industry;
- Gross margins to be in the mid-to-high 50% range for the year;
and
- Operating expenses for the year to be higher than 2022
primarily due to increased R&D spending, sales commissions,
variable compensation and currency effects.
Conference Call Information
A conference call discussing financial results for the third
quarter ended September 30, 2023 will follow this release today at
2 p.m. Pacific Time/5 p.m. Eastern Time. To listen to the
conference call, please dial 412-317-5788. A replay will be made
available approximately one hour after the conclusion of the call.
To access the replay, please dial 412-317-0088, access code
8633261. The conference call will also be simultaneously webcast
over the Internet; visit the Webcasts and Presentations section of
the Data I/O Corporation website at www.dataio.com to access the
call from the site. This webcast will be recorded and available for
replay on the Data I/O Corporation website approximately one hour
after the conclusion of the conference call.
About Data I/O Corporation
Since 1972, Data I/O has developed innovative solutions to
enable the design and manufacture of electronic products for
automotive, Internet-of-Things, medical, wireless, consumer
electronics, industrial controls and other electronics devices.
Today, our customers use Data I/O’s data programming solutions and
security deployment platform to secure the global electronics
supply chain and protect IoT device intellectual property from
point of inception to deployment in the field. OEMs of any size can
program and securely provision devices from early samples all the
way to high volume production prior to shipping semiconductor
devices to a manufacturing line. Data I/O enables customers to
reliably, securely, and cost-effectively bring innovative new
products to life. These solutions are backed by a portfolio of
patents and a global network of Data I/O support and service
professionals, ensuring success for our customers. Learn more at
dataio.com/Company/Patents.
Forward Looking Statements, Non-GAAP Financial Measures and
Disclaimers
Statements in this news release concerning economic outlook,
expected revenue, expected margins, expected savings, expected
results, expected expenses, orders, deliveries, backlog and
financial positions, semiconductor chip shortages, supply chain
expectations, as well as any other statement that may be construed
as a prediction of future performance or events are forward-looking
statements which involve known and unknown risks, uncertainties and
other factors which may cause actual results to differ materially
from those expressed or implied by such statements.
Forward-looking statement disclaimers also apply to the global
COVID-19 pandemic, including the effects on the Company’s business
from Shanghai’s COVID-19 lockdowns and recovery, impact on the
demand for the Company’s products, and the Russian invasion of
Ukraine including any related international trade restrictions.
These factors include uncertainties as to the ability to record
revenues based upon the timing of product deliveries, shipping
availability, installations and acceptance, accrual of expenses,
coronavirus related business interruptions, changes in economic
conditions, part shortages and other risks including those
described in the Company's filings on Forms 10-K and 10-Q with the
Securities and Exchange Commission (SEC), press releases and other
communications.
Non-GAAP financial measures, such as EBITDA and Adjusted EBITDA,
excluding equity compensation, should not be considered a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. We believe that these non-GAAP
financial measures provide meaningful supplemental information
regarding the Company’s results and facilitate the comparison of
results.
Participation in the Data I/O Fireside Chat Series is voluntary,
and no compensation is provided to guest hosts. Reference made to
guest hosts, including equity research analysts and investors, in
connection with this announcement and related interviews or any
opinions, estimates or forecasts regarding Data I/O’s performance
made by them are theirs alone and do not represent opinions,
forecasts or predictions of Data I/O or its management. Data I/O
does not by its reference above or distribution of marketing
content in connection with the Fireside Chat Series imply its
endorsement of or concurrence with such information, conclusions or
recommendations by the guest hosts.
- tables follow -
DATA I/O CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share amounts)
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net Sales
$6,561
$7,212
$21,190
$16,946
Cost of goods sold
3,041
3,101
8,995
7,774
Gross margin
3,520
4,111
12,195
9,172
Operating expenses:
Research and development
1,577
1,432
4,922
4,605
Selling, general and administrative
2,006
1,967
7,003
5,943
Total operating expenses
3,583
3,399
11,925
10,548
Operating income (loss)
(63)
712
270
(1,376)
Non-operating income (loss):
Interest income
41
9
125
11
Gain on sale of assets
-
-
-
57
Foreign currency transaction gain
(loss)
(15)
307
107
378
Total non-operating income (loss)
26
316
232
446
Income (loss) before income taxes
(37)
1,028
502
(930)
Income tax (expense) benefit
(16)
(181)
(160)
(700)
Net income (loss)
($53)
$847
$342
($1,630)
Basic earnings (loss) per share
($0.01)
$0.10
$0.04
($0.19)
Diluted earnings (loss) per share
($0.01)
$0.10
$0.04
($0.19)
Weighted-average basic shares
9,020
8,816
8,914
8,715
Weighted-average diluted shares
9,020
8,859
9,065
8,715
DATA I/O CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data)
(UNAUDITED)
September 30, 2023
December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$11,867
$11,510
Trade accounts receivable, net of
allowance for
doubtful accounts of $104 and $147,
respectively
4,900
4,992
Inventories
6,392
6,751
Other current assets
600
645
TOTAL CURRENT ASSETS
23,759
23,898
Property, plant and equipment – net
955
1,072
Other assets
1,602
2,195
TOTAL ASSETS
$26,316
$27,165
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$1,101
$1,366
Accrued compensation
1,661
1,670
Deferred revenue
1,304
1,575
Other accrued liabilities
1,511
1,596
Income taxes payable
84
112
TOTAL CURRENT LIABILITIES
5,661
6,319
Operating lease liabilities
871
1,500
Long-term other payables
174
237
COMMITMENTS
-
-
STOCKHOLDERS’ EQUITY
Preferred stock -
Authorized, 5,000,000 shares,
including
200,000 shares of Series A Junior
Participating
Issued and outstanding, none
-
-
Common stock, at stated value -
Authorized, 30,000,000 shares
Issued and outstanding, 9,020,798 shares
as of September 30,
2023 and 8,816,381 shares as of December
31, 2022
22,471
21,897
Accumulated earnings (deficit)
(2,789)
(3,131)
Accumulated other comprehensive income
(72)
343
TOTAL STOCKHOLDERS’ EQUITY
19,610
19,109
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$26,316
$27,165
DATA I/O CORPORATION
NON-GAAP FINANCIAL MEASURE
RECONCILIATION
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(in thousands)
Net Income (loss)
($53)
$847
$342
($1,630)
Interest (income)
(41)
(9)
(125)
(11)
Taxes
16
181
160
700
Depreciation and amortization
180
148
468
441
EBITDA earnings (loss)
$102
$1,167
$845
($500)
Equity compensation
300
264
929
935
Adjusted EBITDA, excluding equity
compensation
$402
$1,431
$1,774
$435
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026063330/en/
Gerald Ng Vice President and CFO Data I/O Corporation
Darrow Associates, Inc. Jordan Darrow (512) 551-9296
jdarrow@darrowir.com
Data I O (NASDAQ:DAIO)
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