Lantronix Reports Second Quarter Fiscal Year 2013 Financial Results

Lantronix Reports Second Quarter Fiscal Year 2013 Financial Results 
Company Reports Fourth Consecutive Quarter of Non-GAAP Income;
Company Reports GAAP Net Loss of $(0.03) per Share and Non-GAAP
Breakeven EPS 
IRVINE, CA -- (Marketwire) -- 01/31/13 --  Lantronix, Inc. (the
"company") (NASDAQ: LTRX), a leading global provider of smart M2M
connectivity solutions, today reported results for its second fiscal
quarter ended December 31, 2012. 
Financial Highlights 


 
--  Net revenue of $12.2 million
--  Gross profit as a percentage of net revenue of 49.6%
--  GAAP net loss of $(412,000), or ($0.03) per share
--  Non-GAAP net income of $70,000, or breakeven per share

  
Operational Highlights 


 
--  In October 2012, the company entered into an agreement with Ingram
    Micro Europe, a division of Ingram Micro Inc. (NYSE: IM), the largest
    global wholesale provider of technology products and supply chain
    management services, under which Ingram Micro Europe will provide
    advanced logistics, product delivery and distribution services for
    Lantronix throughout Europe.
--  In November 2012, the company announced a sales and marketing
    partnership agreement with DataVision, New York's largest independent
    computer and vi
deo retailer, under which DataVision agreed to market
    and sell the Lantronix award-winning xPrintServer(TM) family of
    mobile printing solutions both online and through DataVision's
    flagship store.
--  In November 2012, OKI Data Americas, a leading provider of print
    management solutions, expanded its relationship with Lantronix to
    become the first printer manufacturer to resell the Lantronix
    xPrintServer mobile printing solution.
--  In January 2013, the company entered into an agreement with Arrow
    Electronics, Inc. (NYSE: ARW), to extend Arrow's product sales
    programs, product delivery and distribution services for Lantronix
    throughout the Asia-Pacific (APAC) region.

  
Product Highlights 


 
--  In October 2012, the company began shipping the xDirect(TM) device
    server -- a compact serial-to-Ethernet device server that provides
    quick and easy connectivity to virtually any device or machine with a
    serial interface. In November 2012, the company announced the launch
    and worldwide availability of its new vSLM(TM) -- the Virtual Secure
    Lantronix Management Appliance -- a software solution designed to
    enable IT (information technology) managers to seamlessly integrate
    and manage multiple pieces of IT equipment anywhere in the enterprise.
--  In November 2012, the company launched and began shipping the
    xPrintServer -- Office Edition, an enterprise version of its
    award-winning mobile printing solution.

  
"Our operational and financial results for the quarter ended December
31, 2012 reflect the continued progress we achieved in executing on
our strategic plan and marked the fourth consecutive quarter of
non-GAAP profitability," said Lantronix CEO Kurt Busch. "During the
quarter, we continued to expand our distribution and sales
relationships worldwide, launched three new products, and enhanced
Lantronix' visibility in the marketplace through increased marketing
efforts."  
Financial Results for the Second Quarter of Fiscal 2013 Ended
December 31, 2012  
Net revenue was $12.2 million for the second quarter of fiscal 2013,
an increase of $1.7 million or 16%, compared to $10.5 million for the
second quarter of fiscal 2012 and an increase of $1.0 million or 9%,
compared to $11.2 million for the first quarter of fiscal 2013. In
large part, the sequential and year-over-year revenue growth was due
to increased unit sales of our xPrintServer and SLC console server
product families. 
Gross profit as a percentage of net revenue was 49.6% for the second
quarter of fiscal 2013, compared to 48.2% for the second quarter of
fiscal 2012 and 48.8% for the first quarter of fiscal 2013.  
Operating expenses were $6.4 million for the second quarter of fiscal
2013 compared to $6.4 million for the second quarter of fiscal 2012
and increased by $0.5 million or 9%, compared to $5.9 million for the
first quarter of fiscal 2013. The sequential change in operating
expenses was primarily due to an increase in selling, general and
administrative expenses related to a marketing plan we initiated in
November 2012 to drive sales growth and brand awareness for the
xPrintServer product family. 
GAAP net loss for the second quarter of fiscal 2013 was $(412,000),
or ($0.03) per share, compared to a GAAP net loss of $(1.4 million),
or ($0.13) per share, for the second quarter of fiscal 2012 and a
GAAP net loss of $(430,000), or ($0.03) per share, for the first
quarter of fiscal 2013.  
Non-GAAP net income for the second quarter of fiscal 2013 was
$70,000, or $0.00 per share compared to non-GAAP net loss of
$(629,000) or $(0.06) per share for the second quarter of fiscal 2012
and non-GAAP net income of $48,000, or $0.00 per share, for the first
quarter of fiscal 2013. 
Cash and cash equivalents as of December 31, 2012 were $8.5 million,
c
ompared to $11.4 million as of June 30, 2012. The decrease in cash
was primarily due to an increase in inventory from $6.0 million as of
June 30, 2012 to $9.7 million as of December 31, 2012 to support
buffer stock and anticipated customer demand. 
Conference Call and Webcast 
Lantronix will host a conference call and webcast today at 2:00 p.m.
Pacific Time (5:00 p.m. ET) to discuss its second quarter fiscal year
2013 financial results. Those wishing to participate in the live call
should dial 866-700-7477 (international dial-in 617-213-8840) using
the passcode 31619690. A telephone replay of the call will be
available through February 7, 2013 by dialing (888) 286-8010
(international dial-in 617-801-6888) and entering passcode 72135803. 
About Lantronix 
Lantronix, Inc. (NASDAQ: LTRX) is a global leader of secure
communication technologies that simplify access and communication
with and between virtually any electronic device. Our smart
connectivity solutions enable sharing data between devices and
applications to 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 and securely connect electronic equipment via networks and
the Internet. Founded in 1989, Lantronix serves some of the largest
medical, security, industrial and building automation,
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,
California.  
For more information, visit www.lantronix.com. The Lantronix blog,
http://www.lantronix.com/blog, features industry discussion and
updates.  
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. 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. Management believes that
non-GAAP operating expenses, non-GAAP net income (loss) and non-GAAP
net income (loss) per share are important measures of the company's
business. 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.  
Non-GAAP operating expenses consist of operating expenses excluding
(i) share-based compensation and related payroll taxes (ii)
depreciation and amortization, and (iii) restructuring charges.  
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), and (iv) income tax
provision (benefit). 
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 for GAAP purposes is treated as proceeds assumed
to be used to repurchase shares under the GAAP treasury stock method. 
Forward-Looking Statements 
This news release contains forward-looking statements, including
statements concerning our future business plans, future financial
position, future results of operations and future product development
strategies and schedules. 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 p
rofitably 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;
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 Annual Report on Form 10-K for
the year ended June 30, 2012 and subsequent Reports on Forms 10-Q and
8-K. 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. If the company does update or correct one or more of
these forward-looking statements, investors and others should not
conclude that the company will make additional updates or
corrections. 
Copyright 2013 Lantronix, Inc. Lantronix is a registered trademark,
and vSLM, xDirect and xPrintServer are trademarks of Lantronix, Inc.  
All other trademarks and trade names are the property of their
respective holders. Specifications subject to change without notice.
All rights reserved. 


 
                                                                            
                              LANTRONIX, INC.                               
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS               
                               (In thousands)                               
                                                                            
                                                        
                                                                 Change     
                                 December 31,    June 30,    -------------- 
                                     2012          2012         $       %   
                                 ------------  ------------  -------  ----- 
Assets                                                                      
Current assets:                                                             
  Cash and cash equivalents      $      8,452  $     11,374  $(2,922)   -26%
  Accounts receivable, net              2,348         2,674     (326)   -12%
  Contract manufacturers'                                                   
   receivable                             704           622       82     13%
  Inventories, net                      9,694         5,955    3,739     63%
  Prepaid expenses and other                                                
   current assets                         598           549       49      9%
  Deferred tax assets                     657           657        -        
                                 ------------  ------------  -------        
    Total current assets               22,453        21,831      622      3%
                                                                            
  Property and equipment, net           1,426         1,605     (179)   -11%
  Goodwill                              9,488         9,488        -      0%
  Other assets                             79            87       (8)    -9%
                                 ------------  ------------  -------        
    Total assets                 $     33,446  $     33,011  $   435      1%
                                 ============  ============  =======        
                                                                            
Liabilities and stockholders'                                               
 equity                                                                     
Current liabilities:                                                        
  Accounts payable               $      5,126  $      3,563  $ 1,563     44%
  Accrued payroll and related                                               
   expenses                             1,466         2,100     (634)   -30%
  Warranty reserve                        222           232      (10)    -4%
  Short-term debt                         500           667     (167)   -25%
  Other current liabilities             3,615         3,342      273      8%
                                 ------------  ------------  -------        
    Total current liabilities          10,929         9,904    1,025     10%
                                 ------------  ------------  -------        
Non-current liabilities:                                                    
  Long-term liabilities                   281           303      (22)    -7%
  Long-term capital lease                                                   
   obligations                             78            48       30     63%
  Long-term debt                            -           167                 
  Deferred tax liabilities                657           657        -      0%
                                 ------------  ------------  -------        
    Total non-current                                                       
     liabilities                        1,016         1,175     (159)   -14%
                                 ------------  ------------  -------        
      Total liabilities                11,945        11,079      866      8%
                                 ------------  ------------  -------        
                                                                            
Commitments and contingencies                                               
                                                                            
Stockholders' equity:                                                       
  Common stock                              1             1        -      0%
 
  Additional paid-in capital          203,460       203,049      411      0%
  Accumulated deficit                (182,359)     (181,517)    (842)     0%
  Accumulated other                                                         
   comprehensive income                   399           399        -      0%
                                 ------------  ------------  -------        
    Total stockholders' equity         21,501        21,932     (431)    -2%
                                 ------------  ------------  -------        
      Total liabilities and                                                 
       stockholders' equity      $     33,446  $     33,011  $   435      1%
                                 ============  ============  =======        
                                                                            
                                                                            
                                                                            
Check figure                                -             -                 
                                                                            
Total receivables                       3,052         3,296     (244)    -7%
Working capital                        11,524        11,927     (403)    -3%
                                                                            
                                                                            
                                                                            
                              LANTRONIX, INC.                               
              Unaudited Consolidated Statements of Operations               
                   (In thousands, except per share data)                    
                                                                            
                                                                            
                              Three Months Ended           Six Months Ended 
                    -------------------------------------  ---------------- 
                      December    September     December                    
                        31,          30,          31,        December 31,   
                    -----------  -----------  -----------  ---------------- 
                        2012         2012         2011       2012     2011  
                    -----------  -----------  -----------  -------  ------- 
Net revenue (1)     $    12,162  $    11,202  $    10,452  $23,364  $21,636 
Cost of revenue           6,130        5,730        5,411   11,860   11,293 
                    -----------  -----------  -----------  -------  ------- 
Gross profit              6,032        5,472        5,041   11,504   10,343 
                    -----------  -----------  -----------  -------  ------- 
Operating expenses:                                                         
  Selling, general                                                          
   and                                                                      
   administrative         4,719        4,268        4,441    8,987    9,405 
  Research and                                                              
   development            1,665        1,609        1,646    3,274    3,341 
  Restructuring                                                             
   charges                    -                       269        -      269 
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets                     -            -           18        -       36 
                    -----------  -----------  -----------  -------  ------- 
Total operating                                                             
 expenses                 6,384        5,877        6,374   12,261   13,051 
                    -----------  -----------  -----------  -------  ------- 
Loss from                                                                   
 operations                (352)        (405)      (1,333)    (757)  (2,708)
Interest expense,                                                           
 net                        (16)         (15)         (23)     (31)     (50)
Other expense, net          (23)           5           (8)     (18)     (37)
                    -----------  -----------  -----------  -------  ------- 
Loss before income                                                          
 taxes                     (391)        (415)      (1,364)    (806)  (2,795)
Provision for                                                               
 income taxes                21           15           13       36       26 
                    -----------  -----------  -----------  -------  ------- 
Net loss and                                                                
 comprehensive loss $      (412) $      (430) $    (1,377) $  (842) $(2,821)
                    ===========  ===========  ===========  =======  ======= 
                                                                            
Net loss per share                                                          
 (basic and                                                                 
 diluted)           $     (0.03) $     (0.03) $     (0.13) $ (0.06) $ (0.27)
                    ===========  ===========  ===========  =======  ======= 
                                                                            
Weighted-average                                                            
 common shares                                                              
 (basic and                                                                 
 diluted)                14,578       14,558       10,581   14,568   10,571 
                    ===========  ===========  ===========  =======  ======= 
                                                                            
Net revenue from                                                            
 related parties    $       381  $       292  $       174  $   673  $   411 
                    ===========  ===========  ===========  =======  ======= 
                                                                            
(1) Includes net revenue from related parties                               
                                                                            
                                                                            
                                                                            
                          LANTRONIX, INC.                                   
         Unaudited Reconciliation of Non-GAAP Adjustments                   
               (In thousands, except per share data)                        
                                                                     Three  
                                                                     
Months 
                         Three Months Ended       Six Months Ended 30-Sep-12   
                   -----------------------------  ----------------  ------- 
                   December  September  December                            
                      31,       30,        31,      December 31,            
                   --------  ---------  --------  ----------------  ------- 
                     2012       2012      2011      2012     2011      $    
                   --------  ---------  --------  -------  -------  ------- 
                                                                            
GAAP net loss      $   (412) $    (430) $ (1,377) $  (842) $(2,821) $  (430)
                   --------  ---------  --------  -------  -------          
 Non-GAAP                                                                   
  adjustments:                                                              
  Cost of revenue:                                                          
   Share-based                                                              
    compensation         10         11         9       21       22       11 
   Depreciation                                                             
    and                                                                     
    amortization        103         99        99      202      194       99 
                   --------  ---------  --------  -------  -------  ------- 
  Total                                                                     
   adjustments to                                                           
   cost of revenue      113        110       108      223      216      110 
                   --------  ---------  --------  -------  -------  ------- 
  Selling, general                                                          
   and                                                                      
   adminstrative:                                                           
   Costs                                                                    
    associated                                                              
    with the                                                                
    investigation         -          -         -        -      108        - 
   Consulting fees                                                          
    for former CEO                                                          
    and CFO               -          -         -        -      153        - 
   Share-based                                                              
    compensation        141        146       113      287      194      146 
   Employer                                                                 
    portion of                                                              
    withholding                                                             
    taxes on stock                                                          
    grants                -          1         -        1        2        1 
   Depreciation                                                             
    and                                                                     
    amortization        110        116       118      226      248      116 
                   --------  ---------  --------  -------  -------  ------- 
  Total                                                                     
   adjustments to                                                           
   selling,                                                                 
   general and                                                              
   administrative       251        263       231      514      705      263 
                   --------  ---------  --------  -------  -------  ------- 
  Research and                                                              
   development:                                                             
   Share-based                                                              
    compensation         55         74        71      129      137       74 
   Employer                                                                 
    portion of                                                              
    withholding                                                             
    taxes on stock                                                          
    grants                -          2         -        2        3        2 
   Depreciation                                                             
    and                                                                     
    amortization          3          4         7        7       16        4 
                   --------  ---------  --------  -------  -------  ------- 
  Total                                                                     
   adjustments to                                                           
   research and                                                             
   development           58         80        78      138      156       80 
                   --------  ---------  --------  -------  -------  ------- 
  Restructuring                                                             
   charges                -          -       269        -      269        - 
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets                 -          -        18        -       36        - 
                   --------  ---------  --------  -------  -------  ------- 
 Total non-GAAP                                                             
  adjustments to                                                            
  operating                                                                 
  expenses              309        343       596      652    1,166      343 
                   --------  ---------  --------  -------  -------  ------- 
 Interest expense,                                                          
  net                    16         15        23       31       50       15 
 Other expense,                                                             
  net                    23         (5)        8       18       37       (5)
 Provision for                                                              
  income taxes           21         15        13       36       26       15 
                   --------  ---------  --------  -------  -------  ------- 
Total non-GAAP                                                              
 adjustments            482        478       748      960    1,495      478 
                   --------  ---------  --------  -------  -------  ------- 
Non-GAAP net                                                                
 income (loss)     $     70  $      48  $   (629) $   118  $(1,326) $    48 
                   ========  =========  ========  =======  =======  ======= 
                                                                            
Non-GAAP net                                                                
 income (loss) per                                                          
 share (diluted)   $   0.00  $    0.00  $  (0.06) $  0.01  $ (0.13) $  0.00 
                   ========  =========  ========  =======  =======  ======= 
                                                                            
Denominator for                                                             
 GAAP net income                                                            
 (loss) per share                                                           
 (diluted)           14,578     14,558    10,581   14,568   10,571   14,558 
Non-GAAP                                                                    
 adjustment              50         92         -       92        -       92 
                   --------  ---------  --------  -------  -------  ------- 
Denominator for                                                             
 non-GAAP net                                                               
 income (loss) per                                                          
 share (diluted)     14,628     14,650    10,581   14,660   10,571   14,650 
                   ========  =========  ========  =======  =======  ======= 
                                                                            
GAAP operating                                                              
 expenses          $  6,384  $   5,877  $  6,374  $12,261  $13,051  $ 5,877 
Non-GAAP                                                                    
 adjustments to                                                             
 operating                                                                  
 expenses              (309)      (343)     (596)    (652)  (1,166)    (343)
                   --------  ---------  --------  -------  -------  ------- 
Non-GAAP operating                                                          
 expenses          $  6,075  $   5,534  $  5,778  $11,609  $11,885  $ 5,534 
                   ========  =========  ========  =======  =======  ======= 
                                                                            
                                                                            
                                                                            
                              LANTRONIX, INC.                               
             Unaudited Net Revenues by Product Line and Region              
                     (In thousands, except percentages)                     
                                                                            
                                                                            
                                                                            
                             Three Months Ended December 31,                
                           ----------------------------------               
                                                                  Change    
                                   % of Net          % of Net  ------------ 
                             2012   Revenue    2011   Revenue     $     %   
                           ------- --------  ------- --------  ------ ----- 
                                                                            
Embedded device enablement $ 5,546     45.6% $ 4,994     47.8% $  552  11.1%
External device enablement   3,480     28.6%   3,349     32.0%    131   3.9%
Device management            3,136     25.8%   2,109     20.2%  1,027  48.7%
                           ------- --------  ------- --------  ------       
  Net revenue              $12,162    100.0% $10,452    100.0% $1,710  16.4%
                           ======= ========  ======= ========  ======       
                                                                            
                                                                            
                                                                            
                              Six Months Ended December 31,                 
                           ----------------------------------               
                                                                  Change    
                                   % of Net          % of Net  ------------ 
                             2012   Revenue    2011   Revenue     $     %   
                           ------- --------  ------- --------  ------ ----- 
                                                                            
Embedded enablement        $11,334     48.5% $10,471     48.4% $  863   8.2%
External enablement          6,755     28.9%   6,635     30.7%    120   1.8%
Device management            5,275     22.6%   4,530     20.9%    745  16.4%
                           ------- --------  ------- --------  ------       
  Net revenue              $23,364    100.0% $21,636    100.0% $1,728   8.0%
                           ======= ========  ======= ========  ======       
                                                                            
                                                                            
                                                                            
                             Three Months Ended December 31,                
                           ----------------------------------               
                                                                  Change    
                                   % of Net          % of Net  ------------ 
                             2012   Revenue    2011   Revenue     $     %   
                           ------- --------  ------- --------  ------ ----- 
                                                                            
Americas                   $ 6,852     56.3% $ 5,847     55.9% $1,005  17.2%
EMEA                         3,575     29.4%   2,933     28.1%    642  21.9%
Asia Pacific                 1,735     14.3%   1,672     16.0%     63   3.8%
                           ------- --------  ------- --------  ------       
  Net revenue              $12,162    100.0% $10,452    100.0% $1,710  16.4%
                           ======= ========  ======= ========  ======       
                                                                            
                                                                            
                                                                            
                              Six Months Ended December 31,                 
                           ----------------------------------               
                                                                  Change    
                                   % of Net          % of Net  ------------ 
                             2012   Revenue    2011   Revenue     $     %   
                           ------- --------  ------- --------  ------ ----- 
Americas                   $12,808     54.8% $11,524     53.3% $1,284  11.1%
EMEA                         6,652     28.5%   6,448     29.8%    204   3.2%
Asia Pacific                 3,904     16.7%   3,664     16.9%    240   6.6%
                           ------- --------  ------- --------  ------       
  Net revenue              $23,364    100.0% $21,636    100.0% $1,728   8.0%
                           ======= ========  ======= ========  ======       

  
Investor Relations Contacts:
Lantronix, Inc.
Jeremy Whitaker
Chief Financial Officer
(949) 453-3990 
E.E. Wang Lukowski
investors@lantronix.com
949-614-5879 
 
 
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