Lantronix Reports Third Quarter Fiscal Year 2013 Financial Results

Lantronix Reports Third Quarter Fiscal Year 2013 Financial Results 
IRVINE, CA -- (Marketwired) -- 05/02/13 --  Lantronix, Inc. (the
"Company") (NASDAQ: LTRX), a leading global provider of smart M2M
(machine-to-machine) connectivity solutions, today reported results
for its third fiscal quarter ended March 31, 2013. 
Financial Highlights 


 
--  Net revenue of $12.2 million
--  Gross profit as a percentage of net revenue of 46.2%
--  GAAP net loss of $(801,000), or ($0.05) per share
--  Non-GAAP net loss of $(388,000), or ($0.03) per share

  
Operational Highlights 


 
--  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.
--  In February 2013, the Company announced a distribution agreement with
    Berkshire Hathaway-owned Mouser Electronics to expand availability of
    Lantronix external and embedded device enablement solutions from the
    Americas to worldwide.

  
Product Highlights 


 
--  In January 2013, the Company's award-winning Lantronix
    xPrintServer(R) was showcased at Digital Experience in Las Vegas
    and MacWorld in San Francisco.
--  In February 2013, Lantronix announced that for the second year in a
    row, an xPrintServer(R) product received the MacObserver Editors'
    Choice Award.
--  In February 2013, at the Embedded World conference in Nuremberg,
    Germany, the Company announced the introduction of the xPico(TM)
    Wi-Fi, a new wireless embedded connectivity solution. With a footprint
    of just under 4 cm2, the small module features a full IP stack, both
    client and access point functionality, advanced security features, and
    can operate in industrial environments. The Embedded World conference
    is the world's largest global embedded technology conference.
--  In March 2013, Lantronix launched and began shipping the newest
    addition to its external analog sensor networking product family, the
    xSenso(TM) Controller. Designed specifically for use in rugged and
    harsh environments, the xSenso Controller's analog and relay outputs
    provide the ability to take action by controlling industrial processes
    and equipment based on s
ensor readings and predefined thresholds to
    solve real-time problems.

  
"During the third quarter of fiscal 2013, Lantronix continued to make
progress on its strategic plan by further expanding the Company's
worldwide distribution and sales channels, introducing new products,
and increasing awareness of our solutions in the marketplace through
our enhanced marketing efforts," said Lantronix CEO Kurt Busch.
"These actions resulted in Lantronix achieving continued growth in
new product revenues." 
Financial Results for the Third Quarter of Fiscal 2013 Ended March
31, 2013  
Net revenue was $12.2 million for the third quarter of fiscal 2013,
an increase of $30,000, compared to $12.1 million for the third
quarter of fiscal 2012 and flat with the second quarter of fiscal
2013.  
Gross profit as a percentage of net revenue was 46.2% for the third
quarter of fiscal 2013, compared to 48.8% for the third quarter of
fiscal 2012 and 49.6% for the second quarter of fiscal 2013. The
decline in gross profit as a percentage of net revenue was primarily
due to increased manufacturing costs. 
Operating expenses were $6.4 million for the third quarter of fiscal
2013 compared to $5.9 million for the third quarter of fiscal 2012
and $6.4 million for the second quarter of fiscal 2013. The
year-over-year change in operating expenses was primarily due to an
increase in planned marketing activities to drive new product sales
growth and brand awareness. 
GAAP net loss for the third quarter of fiscal 2013 was ($801,000), or
($0.05) per share, compared to a GAAP net loss of ($41,000), or
($0.00) per share, for the third quarter of fiscal 2012 and a GAAP
net loss of ($412,000), or ($0.03) per share, for the second quarter
of fiscal 2013.  
Non-GAAP net loss for the third quarter of fiscal 2013 was
($388,000), or ($0.03) per share compared to non-GAAP net income of
$471,000 or $0.04 per share for the third quarter of fiscal 2012 and
non-GAAP net income of $70,000, or $0.00 per share, for the second
quarter of fiscal 2013. 
Cash and cash equivalents as of March 31, 2013 were $7.2 million,
compared 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 $9.2 million as of March 31, 2013 to support buffer
stock and new product launches. In addition, cash was used to make
scheduled payments on our existing term loan and invest in capital
assets to support product development and manufacturing. 
Conference Call and Webcast 
Lantronix will host a conference call and webcast today at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern Time) to discuss its third quarter
fiscal year 2013 financial results. Those wishing to participate in
the live call should dial 866-318-8620 (international dial-in
617-399-5139) using the passcode 11408138. A telephone replay of the
call will be available through May 9, 2013 by dialing (888) 286-8010
(international dial-in 617-801-6888) and entering passcode 39420444. 
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' products have applications
in every industry, including medical, security, industrial and
building automation, transportation, retail/POS, financial,
government, consumer electronics/appliances, IT/data center and
pro-AV/signage. 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 profitably develop new products that will
be attractive to our target markets, including products in our device
networking business and the timing and success of new product
introductions; changing market conditions and competitive landscape;
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 and xPrintServer are
registered trademarks, and xPico and xSenso 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)                               
                                                                            
                                                   March 31,      June 30,  
                                                      2013          2012    
                                                  -----------   ----------- 
Assets                                                                      
Current assets:                                                             
  Cash and cash equivalents                       $     7,154   $    11,374 
  Accounts receivable, net                              2,808         2,674 
  Contract manufacturers' receivable                      529           622 
  Inventories, net                                      9,177         5,955 
  Prepaid expenses and other current assets               437           549 
  Deferred tax assets                                     657           657 
                                                  -----------   ----------- 
    Total current assets                               20,762        21,831 
                                                                            
  Property and equipment, net                           1,751         1,605 
  Goodwill                                              9,488         9,488 
  Other assets                                             81            87 
                                                  -----------   ----------- 
    Total assets                                  $    32,082   $    33,011 
                                                  ===========   =========== 
                                                                            
Liabilities and stockholders' equity                                        
Current liabilities:                                                        
  Accounts payable                                $     4,355   $     3,563 
  Accrued payroll and related expenses                  1,580         2,100 
  Warranty reserve                                        226           232 
  Short-term debt                                         333           667 
  Other current liabilities                             3,720         3,342 
                                                  -----------   ----------- 
    Total current liabilities                          10,214         9,904 
                                                  -----------   ----------- 
Non-current liabilities:                                                    
  Long-term liabilities                                   270           303 
  Long-term capital lease obligations                      66            48 
  Long-term debt                                            -           167 
  Deferred tax liabilities                                657           657 
                                                  -----------   ----------- 
    Total non-current liabilities                         993         1,175 
                                                  -----------   ----------- 
      Total liabilities                                11,207        11,079 
                                                  -----------   ----------- 
                                                                            
Commitments and contingencies                                               
                                                                            
Stockholders' equity:                                                       
  Common stock                                              1             1 
  Add
itional paid-in capital                          203,663       203,049 
  Accumulated deficit                                (183,160)     (181,517)
  Accumulated other comprehensive income                  371           399 
                                                  -----------   ----------- 
    Total stockholders' equity                         20,875        21,932 
                                                  -----------   ----------- 
      Total liabilities and stockholders' equity  $    32,082   $    33,011 
                                                  ===========   =========== 

 
                                                                            
                                                                            
                                                                            
                              LANTRONIX, INC.                               
              Unaudited Consolidated Statements of Operations               
                   (In thousands, except per share data)                    
                                                                            
                                                                            
                           Three Months Ended            Nine Months Ended  
                   ----------------------------------  -------------------- 
                   March 31,  December 31,  March 31,        March 31,      
                   ---------  ------------  ---------  -------------------- 
                      2013        2012         2012       2013       2012   
                   ---------  ------------  ---------  ---------  --------- 
Net revenue (1)    $  12,164  $     12,162  $  12,134  $  35,528  $  33,770 
Cost of revenue        6,547         6,130      6,215     18,407     17,508 
                   ---------  ------------  ---------  ---------  --------- 
Gross profit           5,617         6,032      5,919     17,121     16,262 
                   ---------  ------------  ---------  ---------  --------- 
Operating                                                                   
 expenses:                                                                  
  Selling, general                                                          
   and                                                                      
   administrative      4,685         4,719      4,087     13,672     13,492 
  Research and                                                              
   development         1,717         1,665      1,775      4,991      5,116 
  Restructuring                                                             
   charges                 -             -         17          -        286 
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets                  -             -         18          -         54 
                   ---------  ------------  ---------  ---------  --------- 
Total operating                                                             
 expenses              6,402         6,384      5,897     18,663     18,948 
                   ---------  ------------  ---------  ---------  --------- 
Income (loss) from                                                          
 operations             (785)         (352)        22     (1,542)    (2,686)
Interest expense,                                                           
 net                     (14)          (16)       (26)       (45)       (76)
Other income                                                                
 (expense), net           10           (23)       (13)        (8)       (50)
                   ---------  ------------  ---------  ---------  --------- 
Loss before income                                                          
 taxes                  (789)         (391)       (17)    (1,595)    (2,812)
Provision for                                                               
 income taxes             12            21         24         48         50 
                   ---------  ------------  ---------  ---------  --------- 
Net loss           $    (801) $       (412) $     (41) $  (1,643) $  (2,862)
                   =========  ============  =========  =========  ========= 
Net loss per share                                                          
 (basic and                                                                 
 diluted)          $   (0.05) $      (0.03) $   (0.00) $   (0.11) $   (0.27)
                   =========  ============  =========  =========  ========= 
Weighted-average                                                            
 common shares                                                              
 (basic and                                                                 
 diluted)             14,580        14,578     10,585     14,572     10,576 
                   =========  ============  =========  =========  ========= 
Net revenue from                                                            
 related parties   $     221  $        381  $     238  $     894  $     649 
                   =========  ============  =========  =========  ========= 
                                                                            
(1) Includes net revenue from related parties                               
                                                                            
                                                                            
                                                                            

 
                              LANTRONIX, INC.                               
              Unaudited Reconciliation of Non-GAAP Adjustments              
                   (In thousands, except per share data)                    
                                                                            
                           Three Months Ended            Nine Months Ended  
                   ----------------------------------  -------------------- 
                   March 31,  December 31,  March 31,        March 31,      
                   ---------  ------------  ---------  -------------------- 
                      2013        2012         2012       2013       2012   
                   ---------  ------------  ---------  ---------  --------- 
                                                                            
GAAP net loss      $    (801) $       (412) $     (41) $  (1,643) $  (2,862)
                   ---------  ------------  ---------  ---------  --------- 
 Non-GAAP                                                                   
  adjustments:                                                              
  Cost of revenue:                                                          
   Share-based                                                              
    compensation          12            10          6         33         28 
   Depreciation                                                             
    and                                                                     
    amortization          91           103        113        293        307 
                   ---------  ------------  ---------  ---------  --------- 
  Total                                                                     
   adjustments to                                                           
   cost of revenue       103           113        119        326        335 
                   ---------  ------------  ---------  ---------  --------- 
  Selling, general                                                          
   and                                                                      
   adminstrative:                                                           
   Costs                                     
                               
    associated                                                              
    with the                                                                
    investigation          -             -          -          -        108 
   Consulting fees                                                          
    for former CEO                                                          
    and CFO                -             -          -          -        153 
   Share-based                                                              
    compensation         138           141        123        425        317 
   Employer                                                                 
    portion of                                                              
    withholding                                                             
    taxes on stock                                                          
    grants                 -             -          -          1          2 
   Depreciation                                                             
    and                                                                     
    amortization         100           110        105        326        353 
                   ---------  ------------  ---------  ---------  --------- 
  Total                                                                     
   adjustments to                                                           
   selling,                                                                 
   general and                                                              
   administrative        238           251        228        752        933 
                   ---------  ------------  ---------  ---------  --------- 
  Research and                                                              
   development:                                                             
   Share-based                                                              
    compensation          53            55         61        182        198 
   Employer                                                                 
    portion of                                                              
    withholding                                                             
    taxes on stock                                                          
    grants                 -             -          -          2          3 
   Depreciation                                                             
    and                                                                     
    amortization           3             3          6         10         22 
                   ---------  ------------  ---------  ---------  --------- 
  Total                                                                     
   adjustments to                                                           
   research and                                                             
   development            56            58         67        194        223 
                   ---------  ------------  ---------  ---------  --------- 
  Restructuring                                                             
   charges                 -             -         17          -        286 
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets                  -             -         18          -         54 
                   ---------  ------------  ---------  ---------  --------- 
 Total non-GAAP                                                             
  adjustments to                                                            
  operating                                                                 
  expenses               294           309        330        946      1,496 
                   ---------  ------------  ---------  ---------  --------- 
 Interest expense,                                                          
  net                     14            16         26         45         76 
 Other income                                                               
  (expense), net         (10)           23         13          8         50 
 Provision for                                                              
  income taxes            12            21         24         48         50 
                   ---------  ------------  ---------  ---------  --------- 
Total non-GAAP                                                              
 adjustments             413           482        512      1,373      2,007 
                   ---------  ------------  ---------  ---------  --------- 
Non-GAAP net                                                                
 income (loss)     $    (388) $         70  $     471  $    (270) $    (855)
                   =========  ============  =========  =========  ========= 
                                                                            
Non-GAAP net                                                                
 income (loss) per                                                          
 share (diluted)   $   (0.03) $       0.00  $    0.04  $   (0.02) $   (0.08)
                   =========  ============  =========  =========  ========= 
                                                                            
Denominator for                                                             
 GAAP net income                                                            
 (loss) per share                                                           
 (diluted)            14,580        14,578     10,585     14,572     10,576 
Non-GAAP                                                                    
 adjustment                -            50        361          -          - 
                   ---------  ------------  ---------  ---------  --------- 
Denominator for                                                             
 non-GAAP net                                                               
 income (loss) per                                                          
 share (diluted)      14,580        14,628     10,946     14,572     10,576 
                   =========  ============  =========  =========  ========= 
                                                                            
GAAP operating                                                              
 expenses          $   6,402  $      6,384  $   5,897  $  18,663  $  18,948 
Non-GAAP                                                                    
 adjustments to                                                             
 operating                                                                  
 expenses               (294)         (309)      (330)      (946)    (1,496)
                   ---------  ------------  ---------  ---------  --------- 
Non-GAAP operating                                                          
 expenses          $   6,108  $      6,075  $   5,567  $  17,717  $  17,452 
                   =========  ============  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                              LANTRONIX, INC.                               
             Unaudited Net Revenues by Product Line and Region              
                    (In thousands, except percentages)                      
                                                                            
                                                                            
                                                                            
                        Three Months Ended Marc
h 31,                        
                     ----------------------------------                     
                                % of              % of                      
                                Net               Net          Change       
                                                         -----------------  
                       2013   Revenue    2012   Revenue      $        %     
                     -------- -------  -------- -------  --------  -------  
                                                                            
Embedded device                                                             
 enablement          $  6,321    52.0% $  6,267    51.6% $     54      0.9% 
External device                                                             
 enablement             2,805    23.0%    3,201    26.4%     (396)   (12.4%)
Device management       3,038    25.0%    2,666    22.0%      372     14.0% 
                     -------- -------  -------- -------  --------           
    Net revenue      $ 12,164   100.0% $ 12,134   100.0% $     30      0.2% 
                     ======== =======  ======== =======  ========           
                                                                            
                                                                            
                                                                            
                         Nine Months Ended March 31,                        
                     ----------------------------------                     
                                % of              % of                      
                                Net               Net          Change       
                                                         -----------------  
                       2013   Revenue    2012   Revenue      $        %     
                     -------- -------  -------- -------  --------  -------  
                                                                            
Embedded enablement  $ 17,655    49.7% $ 16,738    49.6% $    917      5.5% 
External enablement     9,560    26.9%    9,836    29.1%     (276)    (2.8%)
Device management       8,313    23.4%    7,196    21.3%    1,117     15.5% 
                     -------- -------  -------- -------  --------           
    Net revenue      $ 35,528   100.0% $ 33,770   100.0% $  1,758      5.2% 
                     ======== =======  ======== =======  ========           
                                                                            
                                                                            
                                                                            
                        Three Months Ended March 31,                        
                     ----------------------------------                     
                                % of              % of                      
                                Net               Net          Change       
                                                         -----------------  
                       2013   Revenue    2012   Revenue      $        %     
                     -------- -------  -------- -------  --------  -------  
                                                                            
Americas             $  6,501    53.4% $  6,391    52.7% $    110      1.7% 
EMEA                    3,606    29.6%    3,945    32.5%     (339)    (8.6%)
Asia Pacific            2,057    17.0%    1,798    14.8%      259     14.4% 
                     -------- -------  -------- -------  --------           
    Net revenue      $ 12,164   100.0% $ 12,134   100.0% $     30      0.2% 
                     ======== =======  ======== =======  ========           
                                                                            
                                                                            
                                                                            
                         Nine Months Ended March 31,                        
                     ----------------------------------                     
                                % of              % of                      
                                Net               Net          Change       
                                                         -----------------  
                       2013   Revenue    2012   Revenue      $        %     
                     -------- -------  -------- -------  --------  -------  
Americas             $ 19,309    54.3% $ 17,915    53.1% $  1,394      7.8% 
EMEA                   10,258    28.9%   10,393    30.8%     (135)    (1.3%)
Asia Pacific            5,961    16.8%    5,462    16.1%      499      9.1% 
                     -------- -------  -------- -------  --------           
    Net revenue      $ 35,528   100.0% $ 33,770   100.0% $  1,758      5.2% 
                     ======== =======  ======== =======  ========           

  
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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